Let's walk through a real-world scenario. An investor, Sarah, buys a single-family home to use as a rental property for $500,000. Her county assesses the land value at $100,000, so her building's basis for depreciation is $400,000.
Without Cost Segregation
Standard depreciation would allow Sarah to deduct her $400,000 basis over 27.5 years. Her annual depreciation deduction would be approximately $14,545.
With Rental Write Off
Sarah uses our platform to perform a cost segregation study. The process is simple:
- She answers our guided questions about the property.
- She takes photos of each room and key exterior features using our checklist.
- Our AI analyzes the data and identifies that $85,000 of the property's value can be reclassified into shorter-life assets (carpets, appliances, fixtures, driveway, etc.).
Thanks to 100% bonus depreciation (check current tax law for applicability), Sarah can deduct the entire $85,000 of reclassified assets in the first year. Her total first-year depreciation deduction is now:
- $85,000 (from 5 and 15-year property)
- $11,454 (from the remaining 27.5-year property)
- Total: $96,454
This is an additional $81,909 in deductions in the first year alone. If Sarah is in the 24% tax bracket, this translates to a direct, first-year tax savings of approximately $19,658. The cost of the report paid for itself many times over in the very first year.