If you own a single-family rental acquired after January 19, 2025, this is one of the best planning environments for cost segregation in years. 100% bonus depreciation is back — and it's now permanent.
For properties acquired earlier, the planning picture is different. Understanding which rules apply to your client's situation is the starting point.
What changed: the OBBBA restored 100% bonus depreciation
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored 100% bonus depreciation for qualifying property. The prior TCJA phase-down schedule — which had reduced bonus to 60% in 2024 and was heading toward zero — no longer applies to newly acquired property.
The key threshold is the acquisition date:
- Acquired after January 19, 2025: 100% bonus depreciation applies to eligible components (permanent, no sunset)
- Acquired under a binding contract before January 20, 2025: TCJA phase-down schedule applies based on placed-in-service year
TCJA phase-down schedule (pre-January 20, 2025 acquisitions)
For properties where the binding contract predates January 20, 2025, bonus depreciation is governed by the TCJA schedule:
| Placed-in-service year | Bonus depreciation rate |
|---|---|
| 2022 | 100% |
| 2023 | 80% |
| 2024 | 60% |
| 2025 | 40% |
| 2026 | 20% |
| 2027+ | 0% |
CPAs should confirm the acquisition date and binding contract date for each client before determining the applicable rate. IRS Notice 2026-11 provides interim guidance.
Why acquisition date matters more than placed-in-service date
Under the OBBBA, the controlling date is when the property was acquired (based on the binding contract date), not when it was placed in service. A property under contract before January 20, 2025 remains on the TCJA schedule even if it was placed in service in 2025 or later.
Eligible short-life components for bonus depreciation include:
- 5-year property (appliances, carpet, fixtures)
- 7-year property (certain specialty items)
- 15-year land improvements (driveways, landscaping, fencing)
The 27.5-year structural building component does not qualify for bonus depreciation regardless of acquisition date.
Real-world impact
For a property acquired after January 19, 2025 with $400,000 in total purchase price:
- Estimated reclassifiable basis: ~$48,000 (5-year + 15-year components)
- Year 1 depreciation from short-life components at 100% bonus: $48,000 fully deducted
- vs. the same components spread over 5 and 15 years without bonus: ~$5,500 in Year 1
The difference is substantial — and for clients with taxable income to offset, the timing matters.
Why this matters for residential properties
Residential-focused workflows make cost segregation practical for single-family and small portfolio clients. Traditional studies were often operationally heavy and geared toward large commercial properties. A streamlined residential process changes the cost-benefit equation significantly.
RentalWriteOff: built for residential rentals
RentalWriteOff is an IRS-compliant cost segregation platform designed for residential properties. Every report includes:
- Full depreciation breakdowns by asset class
- Classified assets with allocated basis
- Bonus depreciation applicability analysis based on acquisition and placed-in-service dates
- Supporting property documentation
- Methodology with IRS references
Every report includes a final quality check before delivery.
Planning checklist
- Confirm acquisition date and binding contract date
- Determine applicable bonus depreciation rate (OBBBA 100% vs. TCJA phase-down)
- Confirm basis and placed-in-service facts
- Review component-level classifications
- Coordinate federal and state filing positions (state conformity varies)
Need a CPA-friendly delivery workflow? See our white-label platform.