Owning property is a major investment — and one of the smartest ways to reduce your tax bill. Cost segregation is a proven tax strategy that lets you accelerate deductions, improve cash flow, and reinvest more of your profits now instead of waiting decades.

When paired with bonus depreciation, the savings can be dramatic. Let’s break down how it works and how you can benefit in 2025.

Breaking Down Your Property for Bigger Tax Savings

Instead of treating your building as a single asset that depreciates over 27.5 years (residential) or 39 years (commercial), cost segregation identifies components that can be depreciated over shorter periods — 5, 7, or 15 years.

These components can include:

• Carpeting, flooring, and wall coverings
  
• Cabinetry and millwork
  
• Decorative lighting
  
• Landscaping, irrigation, paving, sidewalk
  
• Specialty mechanical systems, plumbing, and electrical infrastructure
  

By reclassifying these assets, you can deduct their value much faster. When you add bonus depreciation, many of these items can be fully deducted in year one.

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2025 Legislative Update: Bigger, Faster Deductions

Recent changes under the latest tax legislation mean:

• 100% Bonus Depreciation for qualifying assets placed in service after January 19, 2025
  
• 40% Bonus Depreciation for assets placed in service before that date
  
• Applies to both new and used property
  
• Can be applied retroactively through a lookback study and Form 3115 if you missed deductions for properties purchased or built in prior tax years
  

Example: A $1M apartment building could have $250K–$300K in short-life assets. With 100% bonus depreciation, you could deduct nearly the entire amount in the first year — saving potentially $75K–$120K in taxes (assuming a 30–40% combined tax rate).

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Short-Term Rental Advantage

If you operate a short-term rental (average stays of 7 days or less) and materially participate in managing it, you may avoid the passive loss limitations — meaning you could use these deductions to offset W-2 or business income.

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Who Can Benefit (Hint: Not Just Big Investors)

• Residential rental owners – Deduct more on appliances, carpet, fencing, and more.
  
• Commercial building owners – Reclassify parking lots, high end interior finishes, speciality HVAC and electrical systems, and interior improvements.
  
• Short-term rental operators – Take advantage of the active participation rules and bonus depreciation.
  
  

Making Tax Planning Simple

1. Schedule a Cost Segregation Study – Hire a qualified provider to analyze your property.
   
2. Apply IRS Guidelines – Assign components to proper asset classes.
   
3. File With Confidence – Work with your CPA to capture the deductions correctly on your current year estimated tax payments and tax return filings.
   
   

Turn Real Estate Into Real Returns

Whether you’re buying your first rental or expanding a large portfolio, cost segregation can make your properties more profitable.

We help you:

• Identify every eligible asset
  
• Apply the latest IRS rules
  
• Maximize first-year deductions
  
• Stay compliant and audit-ready
  

Don’t leave money on the table. Contact us today to schedule your cost segregation study and start saving more in 2025.

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