COST SEG SMART
Landlord Tax Guide
Every Tax Deduction Your
Rental Property Qualifies For

Most landlords claim 5-6 deductions. There are 23. This checklist covers every one the IRS allows — including the biggest one most investors miss entirely.

The average rental property owner leaves $15,000-$40,000 in Year 1 deductions unclaimed by using only straight-line depreciation. Cost segregation is the single largest missed deduction for landlords.

Operating Expenses (Annual)
1.Mortgage interest
2.Property taxes
3.Property insurance (landlord policy)
4.Property management fees
5.HOA dues
6.Utilities (if landlord-paid)
7.Advertising & listing fees
8.Legal & professional fees (attorney, CPA)
9.Accounting & bookkeeping software
Repairs & Maintenance
10.Routine repairs (plumbing, electrical, appliance fixes)
11.Pest control
12.Landscaping & lawn care
13.Snow removal
14.Cleaning between tenants
Travel & Auto
15.Mileage to/from property (IRS rate: 70¢/mile for 2025)
16.Travel expenses for out-of-state properties (airfare, hotel, meals at 50%)
Depreciation (The Big One)
17. Standard depreciation (27.5-year straight-line)
The baseline. Your CPA files this automatically every year. Spreads the building cost evenly over 27.5 years.
Everyone claims this
18. Cost segregation (5/7/15-year accelerated)
Reclassifies 20-40% of your building into shorter-life components. Dramatically increases Year 1 deductions.
Most landlords miss this
19. Bonus depreciation (100% Year 1 under OBBBA 2025+)
The One Big Beautiful Bill Act permanently restored 100% first-year bonus. All reclassified components are fully deductible in Year 1.
100% restored — new law
Other Deductions
20.Closing costs (title insurance, recording fees, transfer taxes)
21.Startup costs (pre-rental expenses up to $5,000)
22.Home office deduction (if you manage from home)
23.Casualty & theft losses (subject to limitations)
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COST SEG SMART
Landlord Tax Guide
The Depreciation Deep Dive
Why Depreciation Is Your Biggest Lever
Standard Only With Cost Seg
Year 1 Deduction ($500K property) $14,545 $100,000 - $140,000
Year 1 Tax Savings (37%) $5,382 $37,000 - $52,000
ROI on $795 Study N/A 47x - 65x
Avoid These
Common Mistakes Landlords Make
1
Only claiming standard depreciation
This is the default. Your CPA files it automatically. But it leaves 70-80% of available Year 1 deductions on the table.
2
Not tracking repair vs. improvement
Repairs are fully deductible in the year incurred. Improvements must be capitalized and depreciated. The distinction matters.
3
Forgetting to depreciate improvements separately
New roof, HVAC, kitchen remodel — each should be depreciated on its own schedule, not lumped into the building.
4
Waiting too long to do a cost seg study
You can do a lookback study on any property you already own via Form 3115. Every year you wait is money left on the table.
About Cost Seg Smart
CPA-Ready Guarantee: Every report is designed for direct filing by your CPA — Form 4562 or Form 3115 (lookback). If your CPA has questions, we resolve them at no extra cost.
Methodology: Engineering-based analysis using RSMeans cost data, IRS MACRS schedules (Rev. Proc. 87-56), and Audit Techniques Guides. 30+ page reports with component-level depreciation schedules.
Pricing: Studies from $795. Delivered in under 1 hour. No site visit required.
See your exact depreciation breakdown in 60 seconds
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Free Estimate
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© 2026 Cost Seg Smart · Page 2 of 2
Cost segregation accelerates the timing of depreciation deductions; total lifetime depreciation remains unchanged. For informational purposes only. Not tax advice. Based on IRS MACRS schedules (Rev. Proc. 87-56). Consult your CPA.