{"id":13509,"date":"2025-05-25T20:31:50","date_gmt":"2025-05-26T02:31:50","guid":{"rendered":"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/"},"modified":"2026-01-27T08:21:29","modified_gmt":"2026-01-27T08:21:29","slug":"cost-segregation-study","status":"publish","type":"epkb_post_type_3","link":"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/","title":{"rendered":"Cost Segregation Study"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 ez-toc-wrap-right counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table Of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Cost_Segregation_Study_Mechanics\" >Cost Segregation Study Mechanics<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Do_It_Yourself_Cost_Segregation_Study\" >Do It Yourself Cost Segregation Study<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Opted_Out_of_Bonus_Depreciation\" >Opted Out of Bonus Depreciation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Cost_Segregation_Pitfalls\" >Cost Segregation Pitfalls<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Summary\" >Summary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#I_Just_Got_A_Rental_What_Do_I_Do_2026_Edition\" >I Just Got A Rental, What Do I Do? 2026 Edition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Rental_Expert_Pod_the_REP\" >Rental Expert Pod (the REP)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Talk_to_a_Real_Estate_CPA_About_Your_Rental_Property\" >Talk to a Real Estate CPA About Your Rental Property<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/#Schedule_Discovery_Meeting_Now\" >Schedule Discovery Meeting Now<\/a><\/li><\/ul><\/nav><\/div>\n<div class=\"wpb-content-wrapper\"><p>[vc_row][vc_column][vc_column_text css=&#8221;&#8221; woodmart_inline=&#8221;no&#8221; text_larger=&#8221;no&#8221;]<img decoding=\"async\" class=\"alignright wp-image-31591 size-full\" title=\"Cost Segregation Study\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/183708_522195224_cost_segregation_300-2.webp\" alt=\"Cost Segregation Study\" width=\"300\" height=\"200\" \/>By <strong>Jason Watson, CPA<\/strong><br \/>\nPosted Sunday, May 25, 2025<\/p>\n<p>When you buy real estate for business or rental use, you can depreciate the entire purchase price, minus the land value, over 27.5 or 39.0 years depending on the designated use (residential versus nonresidential \/ commercial \/ short-term). This can feel like forever. Not just forever, but forever and ever.<\/p>\n<p>For example, if you purchase a $400,000 single-family rental property and $100,000 is attributed to the land, you can depreciate about $10,909 annually. This is 3.64% of the $300,000 value attributed to the building.<\/p>\n<p>At a mid-range marginal tax rate of 24%, this puts $2,618 into your pocket. Not shabby. But what if you could depreciate in big chunks? What about $60,000 in one year (which is a good starting point using our example above)? Now you get to put $14,400 extra in your pocket during the first year. Accelerated cash flow is always nice. Time-value of money. All that stuff. Yay!<\/p>\n<p>How did we get here? Several items in a building do not last 27.5 or 39.0 years. Recall that one of the fundamentals to depreciation is to expense the asset over its useful life. However, carpeting, lighting, heating or cooling systems, cabinets, landscaping, and land improvements might not last as long as the building itself.<\/p>\n<p>Thankfully the tax court recognized this issue in <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/taxcourt\/WhitecoIndustries.v.Commissioner.pdf\" target=\"_blank\" rel=\"noopener\">Hospital Corporation of America v. Commissioner, 109 Tax Court 21 (1997)<\/a>. In response, the IRS issued an <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRSActiononDecision1999-008.pdf\" target=\"_blank\" rel=\"noopener\">Action on Decision (AOD) 1999-008<\/a> on August 30, 1999. In part, it reads-<\/p>\n<p style=\"padding-left: 40px;\">On their tax returns for 1985 through 1988, the taxpayers classified as tangible personal property certain items in hospital facilities constructed in those years and took depreciation deductions for them using a 5-year recovery period \u2026 The Commissioner determined that the items were structural components of the hospital facilities and not tangible personal property and, therefore, should be depreciated over the same recovery period as the facilities to which they related.<\/p>\n<p style=\"padding-left: 40px;\">In the Tax Court, the taxpayers argued that the items constituted section 1245 property, and, therefore, were appropriately depreciated using a 5-year recovery period \u2026 Further, the Commissioner argued that section 168(f)(1) effectively operates to change the definition of tangible personal property after 1981, thereby precluding such property item from being classified as section 1245 property, if it is attached to a building and has utility beyond its relation to a particular piece of property. It was the Commissioner\u2019s position that the items were structural components and thus section 1250 property and, therefore, should be depreciated over the same recovery period as the building to which they relate.<\/p>\n<p style=\"padding-left: 40px;\">The Tax Court found that most of the assets at issue were section 1245 property. The Court rejected the Commissioner\u2019s primary argument stating that the test developed with respect to ITC and Treas. Reg. \u00a7 1.48-1(e) were inappropriate after the enactment of ACRS in 1981. The court concluded, after reviewing the statutory and regulatory language and case law, that, while Congress did prohibit the use of component depreciation, there was no intent to redefine section 1250 property under ACRS to include property that had been section 1245 property for purposes of the investment tax credit.<\/p>\n<p>As a result, the IRS relented, and stated in their AOD,<\/p>\n<p style=\"padding-left: 40px;\">We acquiesce in this decision to the extent that the Tax Court held that the term \u201ctangible personal property,\u201d as defined under a pre-1981 ITC analysis, has continued viability under ACRS and MACRS. The issue as to whether the various disputed items are structural components or tangible personal property is a factual question. We do not agree with the court\u2019s determination with respect to the various disputed properties. We cannot state, however, that the court was clearly erroneous.<\/p>\n<p>We\u2019ll review what 1245, 1250, investment tax credit, and the terms above mean.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Cost_Segregation_Study_Mechanics\"><\/span>Cost Segregation Study Mechanics<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>How does all this black magic work? With a cost segregation report, or some say a cost segregation study, all the sticks, bricks and stuff inside are figuratively torn down and put into different piles. Some piles are eligible for instant depreciation (unlike the hominy grits in My Cousin Vinny), one pile might be a 5-year pile, another be a 15-year pile, and the remaining pile might revert to the 27.5- or 39.0-year typical residential or non-residential commercial use depreciation.<\/p>\n<p style=\"padding-left: 40px;\"><span style=\"color: #a08750;\"><strong>Sidebar:<\/strong><\/span> A short-term rental property that has an average guest stay of 7 days or fewer where you materially participate in the activity is considered a commercial activity, and as such will be 39.0 years. We discuss the short-term rental (STR) loophole in great detail.<\/p>\n<p>Technically, and with full-on geek-speak, cost segregation separates property elements that are \u201cdedicated, decorative or removable\u201d from those that are \u201cnecessary and ordinary for operation and maintenance of the building.\u201d These piles are called asset classes, and they are maintained separately within your property\u2019s depreciation schedule.<\/p>\n<p>From there, and with the help of bonus depreciation and in some cases Section 179 expensing, you compress the multiple years into one. Yay! Whether this accelerated rental property depreciation or expensing yields a tax deduction \/ tax benefit and therefore increased cash flow (an improved IRR) is contingent on three general things-<\/p>\n<ul>\n<li>Short-term rental (7 days average guest stay + material participation), or<\/li>\n<\/ul>\n<ul>\n<li>Real Estate Professional designation, or<\/li>\n<\/ul>\n<ul>\n<li>Net rental income (profit) from the rental property, other rental properties, or other real estate investments that can be reduced by the loss.<\/li>\n<\/ul>\n<p>Or some combination of the above. We\u2019ll dig in deep on these goodies.<\/p>\n<p>Please don\u2019t groan as we go into the weeds with more nerdy accounting terms like Section 1245 and Section 1250 Property. This one is important, and we\u2019ll try to keep it relevant. A building that is or has been depreciable is considered Section 1250 property. When a cost segregation study is performed, certain asset classes are deemed personal property and when depreciable, they become Section 1245 property.<\/p>\n<p>Why do you care? Not to get too far of track, but one of the big benefits of identifying property as Section 1245 property is that it becomes eligible for Section 179 expensing (there are additional exceptions as Qualified Improvement Property or QIP for short). There is a downside too- depreciation recapture, which we have not discussed yet, is limited to 25% on Section 1250 property, but Section 1245 property is recaptured at your ordinary income tax rate. As such, this becomes a big tax planning consideration. Also, Section 1245 property does not always escape depreciation recapture in a Section 1031 Like-Kind Exchange either. We expand on this and the wonderful 15% exception.<\/p>\n<p>Quick recap-<\/p>\n<ul>\n<li>5- or 7-year property is Section 1245 property.<\/li>\n<\/ul>\n<ul>\n<li>15-year property can be either Section 1245 or Section 1250 property. However, it is usually Section 1250 if attached to the land. Can you dig up a shrub and relocate it? Maybe. However, if you accelerate depreciation on 15-year property, such as land improvements, then it becomes Section 1245 property (which alters depreciation recapture slightly).<\/li>\n<\/ul>\n<ul>\n<li>27.5- or 39.0-year property, such as the building and its structural components, is Section 1250 property.<\/li>\n<\/ul>\n<p style=\"padding-left: 40px;\"><strong><span style=\"color: #a08750;\">Sidebar:<\/span><\/strong> Asset Class 00.3, as defined by the IRS, refers to Land Improvements and mentions that they can be either Section 1245 or Section 1250 property. This is because assets that are integral to the manufacturing \/ production process are defined as Section 1245 property in IRC Section 1245(a)(3)(B). Therefore, a plant could have inherently permanent improvements to the land that would be considered Section 1245 property because they support the manufacturing \/ production process. A massive diversion in a book about rental properties, but you\u2019re better for it.<\/p>\n<p>How does the IRS distinguish between Section 1245 and Section 1250 property? According to <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRS_Cost_Segregation_Audit_Technique_Guide_Publication_5653.pdf\" target=\"_blank\" rel=\"noopener\">IRS Publication 5653 Cost Segregation Audit Technique Guide (ATG)<\/a>&#8211;<\/p>\n<p style=\"padding-left: 40px;\">From a regulatory standpoint, the primary test for determining whether an asset is \u00a7 1245 property eligible for ITC [investment tax credit] is to ascertain that it is not a building or other inherently permanent structure, including items which are structural components of such buildings or structures. In other words, if an asset is not a building or a structural component of a building, then it can be deemed to be \u00a7 1245 property. The determination of structural component hinges on what constitutes an inherently permanent structure, how permanently the asset is attached to such a structure and whether it relates to the operation or maintenance of the structure. See Treas. Reg. \u00a7\u00a7 1.48-1(c)-(e).<\/p>\n<p>ITC references investment tax credit. How does that matter? <a href=\"https:\/\/www.law.cornell.edu\/uscode\/text\/26\/1245\" target=\"_blank\" rel=\"noopener\">IRC Section 1245(a)(3)<\/a> and <a href=\"https:\/\/www.law.cornell.edu\/cfr\/text\/26\/1.1245-3\" target=\"_blank\" rel=\"noopener\">Treasury Regulations Section 1.1245-3(b)(1)<\/a> read that the distinction between tangible personal property (Section 1245) and structural components (Section 1250) should be based on the criteria once used to determine whether property qualified for the now repealed investment tax credit (ITC) under IRC Section 38.<\/p>\n<p>Huh? The IRS is using old tax code to define current tax code. You still awake? In 1975, the IRS refined its definition and stated in <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRS_Revenue_Ruling_75-178.pdf\" target=\"_blank\" rel=\"noopener\">Revenue Ruling 75-178<\/a>,<\/p>\n<p style=\"padding-left: 40px;\">Rather, the problem of classification of property as \u2018personal\u2019 or \u2018inherently permanent\u2019 should be made on the basis of the manner of attachment to the land or the structure and how permanently the property is designed to remain in place.<\/p>\n<p>As such, the inherently permanent test, is illustrated in the landmark <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/taxcourt\/WhitecoIndustries.v.Commissioner.pdf\" target=\"_blank\" rel=\"noopener\">Whiteco Industries, Inc. v. Commissioner, 65 Tax Court 664 (1975)<\/a> court case. No, we don\u2019t bore you with all the factors, but it is an interesting read if you cannot get enough.<\/p>\n<p>You see the IRS Publication 5653 Cost Segregation Audit Technique Guide (ATG) here-<\/p>\n<p><a href=\"https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRS_Cost_Segregation_Audit_Technique_Guide_Publication_5653.pdf\" target=\"_blank\" rel=\"noopener\">https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRS_Cost_Segregation_Audit_Technique_Guide_Publication_5653.pdf<\/a><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Do_It_Yourself_Cost_Segregation_Study\"><\/span>Do It Yourself Cost Segregation Study<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The fee for a cost segregation study varies between $750 to a bajillion dollars. There are two types of cost seg reports- one is routinely called \u201cdo it yourself\u201d and the other is a fully engineered report. The fully-engineered report is very similar to a property appraisal- there is a site visit, a bunch of measurements and pictures are taken, and a qualified person dissects the property to create the 5-, 7- and 15-year piles. Costs range from $2,500 to $6,000 for most rental properties under $2 million(ish).<\/p>\n<p>There is a depreciable property value of about $1,500,000 where things change. Below that value, the statistical reliability and therefore predictability is very good, and most cost segregation reports can rely on basic property vitals such as address, age, price, square footage, etc. plus a quickie survey of the stuff inside. What stuff? According to CostsegEZ.com, here is a quick list-<\/p>\n<ul>\n<li>Removable floor coverings (i.e., carpet, vinyl, LVP, floating wood)<\/li>\n<\/ul>\n<ul>\n<li>Kitchen cabinets and countertops<\/li>\n<\/ul>\n<ul>\n<li>Kitchen appliances (including mechanical, electrical, plumbing connections)<\/li>\n<\/ul>\n<ul>\n<li>Laundry appliances (including mechanical, electrical, plumbing connections)<\/li>\n<\/ul>\n<ul>\n<li>Window treatments<\/li>\n<\/ul>\n<ul>\n<li>Ceiling fans<\/li>\n<\/ul>\n<ul>\n<li>Electrical wiring and outlets for telephones (really?!), televisions, internet<\/li>\n<\/ul>\n<ul>\n<li>Closet shelving<\/li>\n<\/ul>\n<ul>\n<li>Decorative trim and wall coverings<\/li>\n<\/ul>\n<ul>\n<li>Decorative light fixtures (including electrical connections)<\/li>\n<\/ul>\n<ul>\n<li>Hot tubs and pool equipment (see our hot tub conundrum)<\/li>\n<\/ul>\n<ul>\n<li>Security systems<\/li>\n<\/ul>\n<ul>\n<li>Furniture and decor<\/li>\n<\/ul>\n<ul>\n<li>Window air conditioning units<\/li>\n<\/ul>\n<p><strong><span style=\"color: #5d3fd3;\">WCG CPAs &amp; Advisors<\/span><\/strong> has a similar list that we use for renovations where we do a \u201cpoor man\u2019s\u201d version of cost segregation when a rental property owner details out a renovation or rental rehab. We discuss this later. Riveting!<\/p>\n<p>How does a do it yourself cost segregation report work again? Said another way, the cost segregation report is relying on a slew of prior reports to homogenize the data and draw correlations to the basic property vitals and a survey of certain components. Plus, this technique has been successfully defended in multiple courts. Is there a risk? Are there standards?<\/p>\n<p>According to <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/tax\/IRS_Cost_Segregation_Audit_Technique_Guide_Publication_5653.pdf\" target=\"_blank\" rel=\"noopener\">IRS Publication 5653 Cost Segregation Audit Techniques Guide (ATG)<\/a>&#8211;<\/p>\n<p style=\"padding-left: 40px;\">Neither the Internal Revenue Service (Service) nor any group or association of practitioners has established any requirements or standards for the preparation of cost segregation studies. The courts have addressed component depreciation but have not specifically addressed the methodologies of cost segregation studies.<\/p>\n<p style=\"padding-left: 40px;\">The Service has addressed this issue but only briefly, i.e., Revenue Ruling 73-410, 1973-2 C.B. 53, Private Letter Ruling (PLR) 7941002 (June 25, 1979), Chief Counsel Advice Memorandum 199921045 (April 1, 1999). These documents all emphasize that the determination of \u00a7 1245 property is factually intensive and must be supported by corroborating evidence. In addition, an underlying assumption is that the study is performed by &#8220;qualified individuals\u201d and \u201cprofessional firms\u201d that are competent in design, construction, auditing, and estimating procedures relating to building construction (See PLR 7941002).<\/p>\n<p style=\"padding-left: 40px;\">Despite the lack of specific requirements for preparing cost segregation studies, taxpayers still must substantiate their depreciation deductions and classifications of property. Substantiation using actual costs is more accurate that using estimates. However, in situations where estimation is the only option, the methodology and the source of any cost data should be clearly documented. In addition, estimated costs should be reconciled back to actual costs or purchase price.<\/p>\n<p>The big takeaway from the blurb is the phrase \u201cfactually intensive.\u201d It appears 7 times in the ATG. When shopping for a DIY cost seg provider, ensure you are comfortable with their reporting and see if their results feel \u201cfactually intensive.\u201d However, do not be discouraged from using a do-it-yourself cost segregation provider- many are extensions of fully-engineered cost seg experts, and will prepare a full report should you be audited.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Opted_Out_of_Bonus_Depreciation\"><\/span>Opted Out of Bonus Depreciation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Bonus depreciation election is assumed. Rental property owners who fail to elect out of bonus depreciation and do not claim bonus depreciation are using an improper accounting method. Sounds naughty, right? You would need to file Form 3115 Application for Change in Accounting Method to cure.<\/p>\n<p>There are some tax planning opportunities since opting out of bonus depreciation can be asset class specific. For example, you could opt out of 5-year property but not 7-year or 15-year property. This allows you to thread the needle on balancing today\u2019s tax deduction with tomorrow\u2019s future tax deductions relative to your taxable income.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Cost_Segregation_Pitfalls\"><\/span>Cost Segregation Pitfalls<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>There are two big pitfalls and a fewof gotchas.<\/p>\n<p>Pitfall #1. If you are considering a cost segregation study on a rental property, and that activity is considered a passive activity, your tax deduction is limited to $25,000 (passive loss limit). If you earn over $150,000 as a household, your tax deduction might be limited to $0. Yes, you are reading that zero correctly. We discuss passive activity loss limitations later on page xx.<\/p>\n<p>There are two ways to get around this. First, if you qualify as a real estate professional, then your passive activity loss limits go away. To be a real estate professional as defined by the IRS and not what you hear at the bar, an individual must spend more than half of the personal services performed in all businesses and activities during the year in real estate activities. As a reminder, this includes the following-<\/p>\n<p style=\"padding-left: 40px;\">real property development, redevelopment, construction, reconstruction, acquisition, conversion, rental, operation, management, leasing, or brokerage trade or business.<\/p>\n<p>Read this again! If you have another full-time job in which you work 40 hours a week, you will need to work more than 40 hours per week in your real estate business and related activities. Having a W-2 is a red flag, as they say, straight out of the <a href=\"https:\/\/wcginc.com\/wp-content\/documents\/ATG-PAL.pdf\" target=\"_blank\" rel=\"noopener\">Passive Activities Loss Audit Techniques Guide (ATG)<\/a> from the IRS.<\/p>\n<p>Next, your hours worked in real estate activities must be more than 750 hours. Any work performed as an investor cannot be counted. There are a bunch of other devils in the details. Yes, most real estate agents qualify, not because they are real estate agents but rather time spent on real estate activities.<\/p>\n<p>Finally, you must materially participate as defined by the IRS in each rental activity. We dive deep into real estate professional or REP status or just \u201cREPS\u201d as the cool kids say in a later section.<\/p>\n<p>The other way to get around the passive loss limits is to have the activity not be considered passive. Makes sense right? Let\u2019s just pencil-whip this activity and add the word \u201cnon-\u201c in front of it all. Done!<\/p>\n<p>To be a non-passive activity, the average stay in the rental must be 7 days or less. Your typical VRBO Airbnb situation. However, you must also materially participate (there\u2019s that darn word again) in the activity. Alternatively, for average stays of 30 days or less, you provide hotel-like services like changing linens during the stay or providing tours (think hunting lodge).<\/p>\n<p>These two situations are considered non-passive activities and losses are not limited. As a small sidebar, or perhaps a minibar, the first example is reported on Schedule E, and the second is on Schedule C possibly subject to self-employment taxes.<\/p>\n<p>Pitfall #2. If you can\u2019t escape the passive activity loss limits, then you must have net rental income from the rental property or from other properties or real estate investments to absorb the accelerated depreciation expense and grab that accelerated cash flow. Self-rentals, where you own the building and lease it back to your business, do not usually absorb passive losses from other rentals. We talk about self-rentals later.<\/p>\n<p>Gotcha #1. Recall that depreciation is a tax deferral. When you sell the property, you have depreciation recapture which simply means you must pay back the deferred taxes. There is some tax arbitrage here, however, since recapture is limited to a 25% tax rate on Section 1250 property (remember our mini chat about this) where you might have deducted depreciation at a 37% marginal tax rate. You can also escape this gotcha with a Section 1031 Like-Kind Exchange.<\/p>\n<p style=\"padding-left: 40px;\"><strong><span style=\"color: #a08750;\">Sidebar:<\/span><\/strong> Recall that Section 1245 property, which might be \u201ccreated\u201d with a cost segregation report, is recaptured at ordinary income tax rates. We stated that earlier. However, the intersection of Section 1031 and Section 1245 can be problematic since you cannot like-kind exchange Section 1245 property. As such, you can perform a pretty Section 1031 Like-Kind Exchange, and still have a tax bill because of the sale of Section 1245 property in connection with the overall rental property sale.<\/p>\n<p>Gotcha #2. The cost of the report or cost segregation study must be significantly lower than the improved time-value of the accelerated cash flow. In other words, the juice must be worth the squeeze, including the audit risk.<\/p>\n<p>Another way to look at Gotcha #2- accelerated depreciation is not extra depreciation. Two rentals, one with a cost segregation study and one without, will be fully depreciated at 27.5 years. As such, it is purely a time-value of money compared to fee consideration. Then again, if you take the tax savings (deferral in reality) and blast off on a fun vacation, that has value too, right?<\/p>\n<p>Gotcha #3. The last gotcha is one that is often overlooked. A cost segregation study and the subsequent big depreciation deduction is a one and done event. The following tax year, your depreciation comes down to earth and is actually less than it would normally be. Keep mind that cost segregation accelerates depreciation; it does not create new or phantom depreciation. Take a $780,000 building that would normally depreciate $20,000 per year. If you accelerate $150,000 in depreciation the first year, years 2 through 39 will be $16,600ish (versus $20,000).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Summary\"><\/span>Summary<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A cost segregation study, or \u201ccost seg\u201d as your bartender advises, can be extremely beneficial. But there are problems to navigate through, and like Robert Plant used to sing, (not) all that glitters is gold and sometimes words have two meanings.<\/p>\n<p>Another consideration- should you benefit from a cost segregation study and the related big tax deduction, then perhaps pairing this with a Roth conversion on your traditional IRA makes sense as well. Tax planning is a must!<\/p>\n<p>At the risk of repeating ourselves, whether this accelerated rental property depreciation yields a tax deduction \/ tax benefit and therefore increased cash flow (an improved IRR) is contingent on three general things-<\/p>\n<ul>\n<li>Short-term rental loophole (7 days average guest stay + material participation), or<\/li>\n<\/ul>\n<ul>\n<li>Real Estate Professional designation (REP status), or<\/li>\n<\/ul>\n<ul>\n<li>Net rental income (profit) that can be reduced<\/li>\n<\/ul>\n<p>Go forth and cost seg![\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_empty_space height=&#8221;25px&#8221;][vc_column_text css=&#8221;&#8221;]<style data-type=\"vc_shortcodes-custom-css\">#wd-69d2f9fcf009f .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-69d2f9fcf009f .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-69d3e2e584de8 .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-69d3e2e584de8 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68e97e561482c .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-68e97e561482c .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68460abfbd4d1 .info-box-title{line-height:60px;font-size:50px;color:#473d3c;}#wd-68460abfbd4d1 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-6880833b7bd6b .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-6880833b7bd6b .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-6880834fd8436 .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-6880834fd8436 .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-6880835d3a0fb .info-box-title{line-height:26px;font-size:16px;color:#473d3c;}#wd-6880835d3a0fb .info-box-inner{line-height:22px;font-size:12px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-title{line-height:40px;font-size:30px;color:#473d3c;}#wd-68bcf7fc8516a .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}#wd-68bcfc71da664 .info-box-title{line-height:46px;font-size:36px;color:#473d3c;}#wd-68bcfc71da664 .info-box-inner{line-height:26px;font-size:16px;color:#473d3c;}@media (max-width: 1199px) {#wd-69d2f9fcf009f .info-box-title{line-height:34px;font-size:24px;}#wd-69d2f9fcf009f .info-box-inner{line-height:24px;font-size:14px;}#wd-69d3e2e584de8 .info-box-title{line-height:34px;font-size:24px;}#wd-69d3e2e584de8 .info-box-inner{line-height:24px;font-size:14px;}#wd-68e97e561482c .info-box-title{line-height:34px;font-size:24px;}#wd-68e97e561482c .info-box-inner{line-height:24px;font-size:14px;}#wd-68460abfbd4d1 .info-box-title{line-height:50px;font-size:40px;}#wd-6880833b7bd6b .info-box-title{line-height:25px;font-size:15px;}#wd-6880834fd8436 .info-box-title{line-height:25px;font-size:15px;}#wd-6880835d3a0fb .info-box-title{line-height:25px;font-size:15px;}#wd-68bcf7fc8516a .info-box-title{line-height:34px;font-size:24px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfc71da664 .info-box-title{line-height:36px;font-size:26px;}#wd-68bcfc71da664 .info-box-inner{line-height:24px;font-size:14px;}}@media (max-width: 767px) {#wd-69d2f9fcf009f .info-box-title{line-height:28px;font-size:18px;}#wd-69d2f9fcf009f .info-box-inner{line-height:24px;font-size:14px;}#wd-69d3e2e584de8 .info-box-title{line-height:28px;font-size:18px;}#wd-69d3e2e584de8 .info-box-inner{line-height:24px;font-size:14px;}#wd-68e97e561482c .info-box-title{line-height:28px;font-size:18px;}#wd-68e97e561482c .info-box-inner{line-height:24px;font-size:14px;}#wd-68460abfbd4d1 .info-box-title{line-height:40px;font-size:30px;}#wd-6880833b7bd6b .info-box-title{line-height:24px;font-size:14px;}#wd-6880834fd8436 .info-box-title{line-height:24px;font-size:14px;}#wd-6880835d3a0fb .info-box-title{line-height:24px;font-size:14px;}#wd-68bcf7fc8516a .info-box-title{line-height:28px;font-size:18px;}#wd-68bcf7fc8516a .info-box-inner{line-height:24px;font-size:14px;}#wd-68bcfc71da664 .info-box-title{line-height:28px;font-size:18px;}#wd-68bcfc71da664 .info-box-inner{line-height:24px;font-size:14px;}}<\/style><div class=\"wpb-content-wrapper\">[vc_row][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-69d2f9fcf009f\" class=\" wd-rs-69d2f9fcf009f wd-info-box wd-wpb text-center box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p style=\"text-align: center;\"><em>Jason Watson, CPA, is a partner and the CEO of <strong>WCG CPAs &amp; Advisors,<\/strong> a boutique yet progressive tax, accounting and <\/em><em>rental property consultation and real estate CPA firm with over 90 team members and 7 partners headquartered in Colorado serving real estate investors worldwide.<\/em><\/p>\n<div style=\"display: flex; justify-content: center;\"><a href=\"https:\/\/www.linkedin.com\/in\/jason-watson-cpa\/\"><img decoding=\"async\" class=\"alignnone wp-image-17327 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/linkedin-150x150-1.png.webp\" alt=\"Jason Watson CPA LinkedIn\" \/><\/a>\u00a0\u00a0\u00a0\u00a0\u00a0<a href=\"mailto:jason@wcginc.com\"><img decoding=\"async\" class=\"alignnone size-thumbnail wp-image-17334 entered lazyloaded\" style=\"height: 35px!important; width: auto!important;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/mail-150x150-1.png.webp\" alt=\"Jason Watson CPA Email\" \/><\/a><\/div>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row][vc_row][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-69d3e2e584de8\" class=\" wd-rs-69d3e2e584de8 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title img-right kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-800 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"I_Just_Got_A_Rental_What_Do_I_Do_2026_Edition\"><\/span>I Just Got A Rental, What Do I Do? 2026 Edition<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p><img decoding=\"async\" class=\"alignright wp-image-100749 size-full\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Web-and-Social-GFX-2026_300.jpg\" alt=\"\" width=\"300\" height=\"360\" \/>This KB article is an excerpt from our 530+ page book (yeah, thick, there are some picture pages, but no scratch and sniff) which was <span style=\"color: #ff0000;\"><strong>updated April 5, 2026<\/strong><\/span>, and is available in paperback from <a href=\"https:\/\/wcginc.com\/amazon-rental\" target=\"_blank\" rel=\"noopener\">Amazon<\/a>, as an eBook for\u00a0<a href=\"https:\/\/wcginc.com\/kindle-rental\" target=\"_blank\" rel=\"noopener\">Kindle<\/a>\u00a0and as a\u00a0<a href=\"https:\/\/wcginc.com\/pdf-rental\" target=\"_blank\" rel=\"noopener\">PDF<\/a>\u00a0from ClickBank. We used to publish with iTunes and Nook, but keeping up with two different formats was brutal. You can cruise through these KB articles online, click on the fancy buttons below or\u00a0<a href=\"\/business-services\/book\/\" target=\"_blank\" rel=\"noopener\">visit our webpage<\/a>\u00a0which provides more information.<\/p>\n<table class=\"purchase-table\">\n<tbody>\n<tr>\n<td style=\"text-align: center;\"><a href=\"\/amazon-rental\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6657 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/amazon-imageresized.png.webp\" alt=\"I Just Got A Rental, What Do I Do? 2025 Edition | Amazon version\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/kindle-rental\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6658\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/kindle-imageresized.png.webp\" alt=\"I Just Got A Rental, What Do I Do? 2025 Edition | Kindle Version\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<td style=\"text-align: center;\"><a href=\"\/pdf-rental\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" class=\"alignnone size-full wp-image-6659 aligncenter\" style=\"float: none;\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/PDFresized.png.webp\" alt=\"I Just Got A Rental, What Do I Do? 2025 Edition | PDF version\" width=\"50\" height=\"50\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"text-align: center;\"><strong>$32.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$21.95<\/strong><\/td>\n<td style=\"text-align: center;\"><strong>$18.95<\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row][vc_row][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68e97e561482c\" class=\" wd-rs-68e97e561482c wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title img-right kb \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-800 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Rental_Expert_Pod_the_REP\"><\/span>Rental Expert Pod (the REP)<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>WCG's tax team structure is built around Pods \u2014 small, agile groups of tax professionals (4-6 total) who embrace team camaraderie while achieving client intimacy. Each Pod is led by a seasoned tax manager or partner, and together they make up the core of our tax return preparation.<\/p>\n<p>For the 2026 tax season, we\u2019re thrilled to introduce the <a href=\"https:\/\/wcginc.com\/blog\/rental-expert-pod\/\" target=\"_blank\" rel=\"noopener\">Rental Expert Pod<\/a> or REP for short. This is WCG\u2019s dedicated team of real estate CPAs and rental property tax specialists focused on optimizing your tax position, ensuring compliance, and helping you build long-term wealth through smart real estate strategies. [<a href=\"https:\/\/wcginc.com\/blog\/rental-expert-pod\/\" target=\"_blank\" rel=\"noopener\">Learn More<\/a>]<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" el_id=\"consultation-secc\" woodmart_css_id=\"6756f7d427735\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzU2ZjdkNDI3NzM1Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460c6336e7f\" class=\" wd-rs-68460c6336e7f wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title kb-fix \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title box-title-style-default wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Talk_to_a_Real_Estate_CPA_About_Your_Rental_Property\"><\/span>Talk to a Real Estate CPA About Your Rental Property<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Please use the form below to tell us a little about yourself, and what you have going on with your investments and wealth-building objectives. <strong>WCG CPAs &amp; Advisors<\/strong> are real estate CPAs, tax strategists and rental property consultants, and we look forward to talking to you!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner el_id=\"consultation-inner\" woodmart_css_id=\"66fd6caf92fc0\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NmZkNmNhZjkyZmMwIiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner][vc_raw_js el_class=\"defaultBot\"]JTNDc2NyaXB0JTIwdHlwZSUzRCUyMnRleHQlMkZqYXZhc2NyaXB0JTIyJTIwc3JjJTNEJTIyaHR0cHMlM0ElMkYlMkZ3Y2dpbmMuam90Zm9ybS5jb20lMkZqc2Zvcm0lMkYyNTE2NjU1MjUzNjk5NzElMjIlM0UlM0MlMkZzY3JpcHQlM0UlMEE=[\/vc_raw_js][\/vc_column_inner][\/vc_row_inner]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68460abfbd4d1\" class=\" wd-rs-68460abfbd4d1 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title defaultBot \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>The tax advisors, business consultants and rental property experts at <strong>WCG CPAs &amp; Advisors<\/strong> are not salespeople; we are not putting lipstick on a pig expecting you to love it. Our job remains being professionally detached, giving you information and letting you decide within our ethical guidelines and your risk profiles.<\/p>\n<p>We see far too many crazy schemes and half-baked ideas from attorneys and wealth managers. In some cases, they are good ideas. In most cases, all the entities, layering and mixed ownership is only the illusion of precision. As Chris Rock says, just because you can drive your car with your feet doesn\u2019t make it a good idea. In other words, let\u2019s not automatically convert \u201cyou can\u201d into \u201cyou must.\u201d<\/p>\n<p><strong>Let\u2019s chat so you can be smart about it.<\/strong><\/p>\n<p>We typically schedule a 20-minute complimentary quick chat with one of our Partners or our amazing Senior Tax Professionals to determine if we are a good fit for each other, and how an engagement with our team looks. Tax returns only? Business advisory? Tax strategy and planning? Rental property support?<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner equal_height=\"yes\" el_class=\"boxes--pack\" woodmart_css_id=\"673b5f334f247\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzNiNWYzMzRmMjQ3Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6880833b7bd6b\" class=\" wd-rs-6880833b7bd6b wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Text-WCG-Offices-1.jpg\" class=\"attachment-full size-full\" alt=\"Text WCG Offices\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Text WCG Offices<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Need to get in touch through a quick text?\u00a0 We\u2019ll respond back within a day and get going!<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"sms:+17193452100?&amp;body=Hey%20WCG!%20Please%20call%20me%20to%20discuss%20your%20CPA%20services\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6880834fd8436\" class=\" wd-rs-6880834fd8436 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-Our-Amazing-Team-1.jpg\" class=\"attachment-full size-full\" alt=\"Chat our amazing team\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Call Our Amazing Team<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p class=\" \">If you need to speak to a tax professional now, give us a call and we'll get you connected.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<a class=\"wd-info-box-link wd-fill\" aria-label=\"Infobox link\" href=\"tel:719-387-9800\" title=\"\"><\/a>\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"1\/3\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-6880835d3a0fb\" class=\" wd-rs-6880835d3a0fb wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none business-boxes nav-button-chat \">\n\t\t\t\t\t\t\t\t\t\t\t<div class=\"box-icon-wrapper  box-with-icon box-icon-simple\">\n\t\t\t\t\t\t\t<div class=\"info-box-icon\">\n\n\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"622\" height=\"622\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/Chat-With-a-Tax-Pro-2.jpg\" class=\"attachment-full size-full\" alt=\"Chat with a tax pro\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\n\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h4 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\">Chat With a Tax Pro<\/h4>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Taxes can be tricky. Chat with a WCG human now and get questions answered.<\/p>\n<\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row][vc_row equal_height=\"yes\" content_placement=\"top\" woodmart_css_id=\"684abef7ecaa9\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2ODRhYmVmN2VjYWE5Iiwic2hvcnRjb2RlIjoidmNfcm93IiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\" el_class=\"kb-consult\"][vc_column]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcf7fc8516a\" class=\" wd-rs-68bcf7fc8516a wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none border-btm-title \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t<h2 class=\"info-box-title title wd-font-weight-600 box-title-style-default font-primary wd-fontsize-m\"><span class=\"ez-toc-section\" id=\"Schedule_Discovery_Meeting_Now\"><\/span>Schedule Discovery Meeting Now<span class=\"ez-toc-section-end\"><\/span><\/h2>\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><\/div>\n\n\t\t\t\t\t\t\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[vc_row_inner content_placement=\"middle\" el_class=\"client-review-secs box--card\" woodmart_css_id=\"672e712482714\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzJlNzEyNDgyNzE0Iiwic2hvcnRjb2RlIjoidmNfcm93X2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_gradient_switch=\"no\" woodmart_box_shadow=\"no\" wd_z_index=\"no\" woodmart_disable_overflow=\"0\" row_reverse_mobile=\"0\" row_reverse_tablet=\"0\"][vc_column_inner width=\"1\/3\" woodmart_css_id=\"671780b35b49a\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBiMzViNDlhIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t<div id=\"wd-68874e76cd7bc\" class=\"wd-image wd-wpb wd-rs-68874e76cd7bc text-left \">\n\t\t\t\n\t\t\t<img decoding=\"async\" width=\"300\" height=\"200\" src=\"https:\/\/wcginc.com\/wp-content\/uploads\/265518_2057667071_tax_consultation_300-1.webp\" class=\"attachment-full size-full\" alt=\"Request a Meeting with WCG Inc\" \/>\n\t\t\t\t\t<\/div>\n\t\t[\/vc_column_inner][vc_column_inner width=\"2\/3\" woodmart_css_id=\"671780c0415fb\" parallax_scroll=\"no\" woodmart_sticky_column=\"false\" wd_collapsible_content_switcher=\"no\" wd_column_role_offcanvas_desktop=\"no\" wd_column_role_offcanvas_tablet=\"no\" wd_column_role_offcanvas_mobile=\"no\" wd_column_role_content_desktop=\"no\" wd_column_role_content_tablet=\"no\" wd_column_role_content_mobile=\"no\" mobile_bg_img_hidden=\"no\" tablet_bg_img_hidden=\"no\" woodmart_parallax=\"0\" woodmart_box_shadow=\"no\" responsive_spacing=\"eyJwYXJhbV90eXBlIjoid29vZG1hcnRfcmVzcG9uc2l2ZV9zcGFjaW5nIiwic2VsZWN0b3JfaWQiOiI2NzE3ODBjMDQxNWZiIiwic2hvcnRjb2RlIjoidmNfY29sdW1uX2lubmVyIiwiZGF0YSI6eyJ0YWJsZXQiOnt9LCJtb2JpbGUiOnt9fX0=\" wd_z_index=\"no\"]\t\t\t<div class=\"info-box-wrapper\">\n\t\t\t\t<div id=\"wd-68bcfc71da664\" class=\" wd-rs-68bcfc71da664 wd-info-box wd-wpb text-left box-icon-align-top box-style- color-scheme- wd-bg-none with-btn box-btn-static \">\n\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-content\">\n\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"info-box-inner reset-last-child\"><p>Ready to schedule now and talk all things rentals? Let's do it! Here is a link to a Discovery Meeting with one of our Partners or Senior Tax Professionals to understand your tax footprint and objectives, and how <strong>WCG CPAs &amp; Advisors<\/strong> might help.<\/p>\n<\/div>\n\n\t\t\t\t\t\t<div class=\"info-btn-wrapper\"><div id=\"wd-6a31c43858460\" class=\"  wd-button-wrapper text-left\"><a href=\"https:\/\/calendly.com\/wcg-cpas-advisors\/discovery-meeting-instant\" title=\"\" target=\"_blank\" class=\"btn btn-style-default btn-shape-rectangle btn-size-default\">Schedule Meeting<\/a><\/div><\/div>\t\t\t\t\t<\/div>\n\n\t\t\t\t\t\n\t\t\t\t\t<style><\/style>\t\t\t\t<\/div>\n\t\t\t<\/div>\n\t\t[\/vc_column_inner][\/vc_row_inner][\/vc_column][\/vc_row]<\/div>[\/vc_column_text][\/vc_column][\/vc_row]<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"<p>For example, if you purchase a $400,000 single-family rental property and $100,000 is attributed to the land, you can depreciate about $10,909 annually. This is 3.64% of the $300,000 value attributed to the building. At a mid-range marginal tax rate of 24%, this puts $2,618 into your pocket. Not shabby. But what if you could depreciate in big chunks? Accelerated cash flow is always nice. Time-value of money.<\/p>\n","protected":false},"author":6,"featured_media":31591,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":""},"epkb_post_type_3_category":[185],"epkb_post_type_3_tag":[],"class_list":["post-13509","epkb_post_type_3","type-epkb_post_type_3","status-publish","has-post-thumbnail","hentry","epkb_post_type_3_category-chap-6-cost-segregation-study"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.8 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Cost Segregation Study for Real Estate &amp; Rental Properties<\/title>\n<meta name=\"description\" content=\"A cost segregation study accelerates depreciation by separating property components, boosting cash flow, and offering tax benefits for real estate investors.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/wcginc.com\/kb-rental-property\/cost-segregation-study\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cost Segregation Study for Real Estate &amp; 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