Cost segregation and bonus depreciation are often discussed together because they solve different parts of the same planning problem.
What bonus depreciation does
Bonus depreciation can allow an accelerated first-year deduction on eligible assets instead of spreading those deductions over longer recovery periods. Eligibility and percentage treatment depend on acquisition date, placed-in-service date, and current law.
Current bonus depreciation rules (OBBBA update)
The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored 100% bonus depreciation for qualifying property. The applicable rate depends on the acquisition date:
- Acquired after January 19, 2025: 100% bonus depreciation (permanent, no phase-out)
- Acquired under binding contract before January 20, 2025: TCJA phase-down schedule applies:
- 2023 placed-in-service: 80%
- 2024 placed-in-service: 60%
- 2025 placed-in-service: 40%
- 2026 placed-in-service: 20%
- 2027+ placed-in-service: 0%
The controlling date is the binding contract (acquisition) date, not the placed-in-service date. CPAs should confirm which regime applies before filing. IRS Notice 2026-11 provides interim guidance.
How cost segregation makes bonus depreciation relevant
A residential building is generally 27.5-year property, which does not qualify for bonus depreciation. A cost segregation study identifies shorter-life components, often in 5-, 7-, and 15-year classes, that may qualify depending on timing and elections.
What CPAs should verify before filing
- Placed-in-service date and acquisition date
- Final asset classifications and basis support
- Current-year bonus depreciation rules and elections
- State treatment differences from federal rules
RentalWriteOff provides the supporting classification package and bonus depreciation applicability analysis. The CPA controls final filing position and elections.