Single-family rental properties contain significant depreciable components that most CPAs miss. Under the 2026 OBBBA, 100% of reclassified assets are deductible in year one — turning a standard deduction into a powerful first-year write-off.
Get my free estimate→Flooring, cabinetry, HVAC systems, electrical panels, landscaping, driveways, fencing — these are reclassified from the 27.5-year default to 5 or 15-year recovery periods. In a typical single-family rental, 22–28% of the purchase price qualifies for acceleration.
Most rental property owners don't realize they're leaving $25,000–$55,000+ in first-year deductions on the table by letting their CPA depreciate everything over 27.5 years.
For rental property owners with AGI under $150,000, the IRS allows up to $25,000 in rental losses to offset active income each year. A cost segregation study creates large first-year depreciation deductions that maximize this allowance — and for those above the AGI threshold, the excess carries forward.
Individuals who actively participate in rental real estate activities may deduct up to $25,000 of rental losses against non-passive income. This allowance phases out between $100,000 and $150,000 AGI.
Even if your AGI exceeds $150,000, the accelerated depreciation creates passive losses that offset rental income and carry forward to future years — or to the year you sell. For real estate professionals who qualify under IRC §469(c)(7), there are no passive loss limits at all.
We analyze every component of your property. Here's what a typical rental property study identifies:
| Asset Category | Recovery Period | Examples | % of Basis |
|---|---|---|---|
| Personal Property | 5 years | Flooring, cabinetry, appliances, electrical, plumbing fixtures, carpet | 15–20% |
| Land Improvements | 15 years | Landscaping, driveway, sidewalks, fencing, outdoor lighting, retaining walls | 7–10% |
| Building Components | 27.5 years | Structural framing, foundation, roof, exterior walls | 55–70% |
| Land | Non-depreciable | Lot value | 15–25% |
On a $800K single-family rental, that typically means $130K–$200K in accelerated deductions available in year one.
How you use your depreciation losses depends on your participation level and how the property is rented. Under IRC §469 (unchanged by OBBBA), there are three paths to using cost segregation losses against your active income:
If your average guest stay is 7 days or fewer (Airbnb, VRBO, vacation rental), the activity is not treated as a rental activity. Losses can offset W-2 and business income — provided you materially participate. No REPS qualification needed.
For long-term rentals, qualify as a Real Estate Professional to treat rental losses as non-passive. You must: (1) spend more than 750 hours per year in real property trades or businesses, and (2) that time must represent more than 50% of your total working hours. One spouse can qualify for a joint return.
If you actively participate in your rental (make management decisions, approve tenants, authorize repairs) and your AGI is under $150,000, you can deduct up to $25,000 in rental losses against active income. Phases out between $100K–$150K AGI. Excess losses carry forward.
What changed in 2026: The OBBBA permanently restored 100% bonus depreciation under IRC §168(k) for qualified property acquired after January 19, 2025. This means a cost segregation study now creates larger first-year paper losses than ever — making the path you use to deduct those losses more important than ever. The passive activity rules under §469 remain unchanged.
Bottom line: If you qualify through any of these three paths, a cost segregation study combined with 100% bonus depreciation can produce $30,000–$150,000+ in first-year tax savings on a single property. We'll confirm your eligibility on a free 15-minute call before you commit to anything.
Your property is generating tax savings right now. The only difference is whether you're claiming them or leaving them for the IRS.
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