Single-Family Rental

SFR cost segregation: $10K–$165K Year-1 deductions.

Conservative landlords care about CPA approval. The methodology is the same one large firms use — we just deliver it faster.

Illustrative cutaway of a typical single-family rental, separated into roof, framing, appliances and fixtures, shell, foundation and site. Not a specific building.
Illustrative — typical sfr property. Not a specific building.
The 30-second answer

Single-family rental cost segregation is an engineering-based study that reclassifies a rental house's components out of the default 27.5-year residential schedule into faster 5- and 15-year MACRS classes. It fits landlords who own a long-term rental, because the appliances, carpet and flooring, fixtures and cabinetry (5-year) plus the driveway, landscaping, fencing, and site work (15-year) depreciate far faster than the 27.5-year building. Across delivered single-family studies the reclassified share runs 5–32% of building basis, with a typical result near 16%. Purchase price is the largest single driver: houses under $300,000 cluster in the low-to-mid teens, because a cheaper house carries less separable site work and less premium interior finish to identify, while houses above $300,000 sit closer to the middle of the range. With 100% bonus depreciation the reclassified amount is deductible in Year 1 — but the loss is passive under IRC §469, so it offsets passive income unless you qualify as a real estate professional or materially participate; confirm your situation with your CPA.

SFR cost segregation reclassifies 5–32% of depreciable basis from the 27.5- or 39-year shell into 5-, 7-, and 15-year MACRS classes per 26 U.S.C. § 168 and Rev. Proc. 87-56. Under OBBBA's permanent 100% bonus depreciation (placed-in-service 2025+), reclassified components are deductible in year one. All credible cost-seg providers use the same federal framework — industry-standard 2026 construction cost data, MACRS classification, IRS Audit Techniques Guide (Pub 5653) compliance. What differs across property types is land-allocation share, FF&E weight, and material-participation eligibility under §469.

Property type Reclass to 5/7/15-yr Year-1 federal benefit Study cost
STR 19–39% $45K–$280K From $495
SFR this page 5–32% $10K–$165K From $495
Condo 10–17% $18K–$68K From $495
Brownstone 5–20% $60K–$640K From $495
Rowhouse 5–18% $10K–$170K From $495
Duplex 13–21% $31K–$105K From $995
Fourplex 14–29% $56K–$230K From $995
Office 16–29% $84K–$650K From $1,995
Retail 20–37% $90K–$690K From $1,995
Industrial 15–28% $78K–$840K From $2,495
Self-storage 19–36% $140K–$1.6M From $2,495
Medical office 16–29% $84K–$540K From $2,995
Mixed-use 12–23% $63K–$515K From $1,995
Multifamily 14–28% $44K–$200K From $995
Multifamily 5+ 14–26% $110K–$1.0M From $1,995
Triplex 14–26% $44K–$165K From $995
Restaurant 16–29% $72K–$430K From $2,995
Vet 19–36% $85K–$540K From $2,995
Gym 21–40% $110K–$900K From $2,995
Dealership 25–47% $465K–$4.2M From $2,995
ADU 7–14% $8K–$39K From $495
Commercial 18–34% $94K–$765K From $1,995
Data center 43–65% $2.5M–$29M $4,995–$54,995 (sub-$100M); $100M+ by proposal
Senior living 21–39% $315K–$2.3M By proposal
Funeral homes 18–30% $135K–$900K By proposal
Child day care 15–28% $56K–$630K From $2,995
Adult day care 14–26% $78K–$780K From $2,995
Church 10–22% $37K–$825K From $2,995

Reclassification ranges from internal benchmarks across 4,000+ studies; Year-1 federal benefit assumes 37% bracket and full first-year usability. Study costs are Cost Seg Smart pricing — comparable engineering studies elsewhere range $5,000–$15,000+. The ADU figure is an ADU acquired with a house; one the owner built or converted is priced on its documented construction cost, from $995. See full provider comparison.

Real examples

What sfr cost seg looks like in practice.

Atlanta SFR rental property

Atlanta, GA · $420K

1990s build, recent reno

Year-1 federal benefit
$19,900
Charlotte SFR rental property

Charlotte, NC · $385K

Standard 3/2 LTR

Year-1 federal benefit
$18,200
Tampa SFR with pool — example property

Tampa, FL · $510K

Pool + screened lanai (15-yr land improvements)

Year-1 federal benefit
$24,200

Estimates assume 37% federal bracket and full first-year usability of the loss (active income offset or REPS). Your actual benefit varies with bracket, basis allocation, and CPA's treatment.

Good fit when…
  • Landlords with REPS (real estate professional status) or active income to offset against current losses
  • Properties bought 2+ years ago where a Form 3115 lookback can recapture missed depreciation in one year
  • Owners in the 32%+ federal bracket where the cash benefit clearly justifies the study fee
Skip it when…
  • ×Properties under ~$150K basis — the study fee starts to consume the benefit
  • ×Investors planning to sell within 12 months (depreciation recapture eats the benefit on sale)
Estimate

Run the numbers on your sfr.

Pre-set to SFR defaults — adjust price + bracket to match your property.

Estimated Year-1 tax savings · Click to order →
$23,680
on $64,000 of accelerated deductions
Want this in writing for your CPA? Get a 1-page analysis →
5-yr15-yr27.5/39-yr
Study cost
$895
ROI on study
26×
Delivery
< 1 hour
Order my study — $895
Estimate based on industry-standard 2026 construction cost data and IRC §168(k). Your actual result varies with property age, condition, and basis allocation.
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Free one-page PDF with your Year-1 estimate, a 5-year depreciation chart, and a summary to share with your CPA. No account required.

Before you order

Not sure if a study makes sense for your SFR?

Free 1-page tool: when ordering pays, when it doesn't, plus the 3 numbers your CPA needs to file.

Frequently asked

SFR cost segregation, by question.

Do single-family rentals qualify for cost segregation?

Yes. Any rental house you own can be studied — the appliances, flooring, fixtures, and cabinetry reclassify to 5-year property and the driveway, landscaping, and fencing to 15-year, out of the 27.5-year residential schedule. Across delivered single-family studies the reclassified share runs 5–32% of building basis, most often near 16%, and the whole reclassified amount is deductible in Year 1 under 100% bonus depreciation.

What decides where in that range my house lands?

Two things, and a pool is the biggest single one. A swimming pool is a large 15-year land improvement — shell, decking, coping, filtration and equipment — and across delivered single-family studies the ones carrying a pool reclassified around 24% of depreciable basis against about 15% for the ones without. Every single-family study we have delivered above 30% had one. After that it is the ordinary content: separable site work outside (driveway, walks, fencing, landscaping, irrigation, retaining walls, exterior lighting, a deck) and identifiable interior content inside (appliances, floor coverings, window treatments, decorative lighting, cabinetry). Those are on nearly every house, so they set the middle of the range rather than the top. Purchase price is the other driver: houses under $300,000 cluster in the low-to-mid teens, because the lot is smaller and plainer, the finishes are ordinary rather than premium, and we will not claim an irrigation system or a premium kitchen we cannot evidence. That is a smaller deduction than a larger house gets, not a worse study — claiming components a property does not have is the part that fails review. If your house has work we would not assume from the price, send the documents: an inspection report, a renovation invoice, a survey or photos of the yard all move real dollars, and they move them toward your own property rather than the average one.

Does a swimming pool change the result?

Yes, more than anything else we can see from the outside. A pool is depreciated as a 15-year land improvement rather than as part of the 27.5-year building, and the assembly is large: the shell, the decking and coping, the filtration, the pump and the heater. Measured across delivered single-family studies, the ones carrying a priced pool ran a median near 24% of depreciable basis and a ninetieth percentile near 30%, against a median near 15% for the ones without — a gap of about nine percentage points. A hot tub or portable spa is a smaller version of the same effect. The rest of the yard matters much less than people expect: a deck, fencing, landscaping and exterior lighting each move the result by a point or two, because almost every house has them. Declare the pool on the order form and send a photo — it is the single statement most likely to move your own number.

Can I use the deduction against my W-2 income?

Usually not directly. A long-term rental loss is passive under IRC §469, so it offsets passive income unless you qualify as a real estate professional or materially participate. A short-term rental (average guest stay of 7 days or less) where you materially participate is treated differently and can offset active income. This is the single most important question to confirm with your CPA before ordering.

How much does a single-family rental study cost?

Single-family rentals are priced by value: from $495 for a sub-$300K property, $895 for $300K–$700K, and $995 up to $1M, delivered as a CPA-ready PDF, usually the same business day. Remote for most residential and small-commercial studies; on-site observation for larger commercial projects.

I bought the rental years ago — is it too late?

No. A lookback study lets you claim missed depreciation via Form 3115 on your current-year return under the IRS automatic-consent procedures, with no amended returns. The cumulative catch-up flows through in a single year.

Regulation references

The rules that govern sfr cost segregation.

  • Real estate professional status (REPS) — the 750-hour and 51% tests under 26 U.S.C. § 469(c)(7), and the seven material participation tests under Treas. Reg. § 1.469-5T. Required to offset W-2 income with long-term rental losses unless the property qualifies under the STR loophole.
  • Form 3115 (catch-up depreciation) — how to apply cost segregation to a property placed in service in a prior year. Full § 481(a) catch-up adjustment, automatic change-number 7, no IRS user fee.
  • Treas. Reg. § 1.469-1T — full reference — all six (A)–(F) exceptions that reclassify a rental as non-rental for passive activity loss purposes.
  • Regulations hub — full canonical reference for all cost segregation regulations.
  • irsdepreciationrules.com — companion plain-language reference for the underlying IRS depreciation statutes (operated by Cost Seg Smart).
Want your own numbers instead? Get a free 1-page preliminary depreciation estimate for your property — we do the work, you get the PDF.
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SFR pricing

From $495 · usually delivered the same business day.

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