How RentalWriteOff Creates an IRS-Compliant Cost Segregation Report

When you order a cost segregation study from RentalWriteOff, here's exactly what happens between the moment you hit "submit" and the moment your report lands in your inbox 2 business days later. No black box, no marketing language, just the actual workflow.

Step 1: Intake (your part, about 5 minutes)

You submit your property through our intake form. The information you provide:

• Property address: We use this to pull public records (county assessor data, tax bills) and satellite imagery.
• Purchase price and closing date: This establishes your cost basis (what you paid, the starting point for depreciation) and your placed-in-service date (the day the property was ready and available to rent). That date determines which bonus depreciation rules apply, meaning how much of the short-life assets you can deduct in Year 1.
• Land value: Land can't be depreciated, so we need to know how much of your purchase price belongs to it. If you don't know, we can help estimate it from the tax bill, appraisal, or comparable sales.
• Interior and exterior photos: Photos are the single most impactful input. The more coverage, the better we can classify higher-value short-life assets.
• Renovation notes or invoices, if any: Recent renovations often create meaningful reclassification opportunities that don't show up in public records.

That's everything we need from you. You don't have to understand MACRS (the IRS depreciation system that assigns each asset a recovery period, the number of years you deduct it over) or know what belongs in 5-year property vs. 15-year property. Our team handles that.

Step 2: Engineering-based analysis

This is where the actual cost segregation work happens. Our team:

1. Verifies basis and land allocation. Land allocation is the split of your purchase price between the land and the building. We cross-check your inputs against public records and flag anything that looks off. If your land value is clearly too high, a common issue, we'll note it: every extra $10,000 assigned to land is $10,000 you can never depreciate.
2. Reviews photos and satellite imagery. Every photo you submit is reviewed. We identify flooring, cabinetry, appliances, fixtures, finishes, HVAC systems, site improvements, landscaping, and exterior features. Satellite imagery covers what's outside the building.
3. Classifies components into MACRS recovery periods. Every identified asset is mapped to the correct category (5-year property, 7-year property, 15-year property, or 27.5-year property) using IRS guidelines and our standardized residential methodology.
4. Calculates cost basis allocations. We use the Residual Estimation Method: each short-life asset is valued directly, and the remainder of your building basis stays with the 27.5-year building. The calculation produces property-specific allocations rather than ZIP-code averages.
5. Runs bonus depreciation analysis. Bonus depreciation is the rule that lets you deduct qualifying short-life assets in the first year instead of over their full schedule. We determine how it applies to your components based on the acquisition and placed-in-service dates.

Step 3: Report assembly

Once the analysis is complete, the findings get assembled into a full IRS-compliant report. Every report includes:

• Executive summary: High-level findings, first-year depreciation impact, and estimated tax savings.
• Reclassified asset schedules: Every classified component with its recovery period and cost basis allocation.
• Depreciation schedule: Year-by-year depreciation forecast across the recovery periods.
• Photo documentation: The photos that support each major classification, annotated with context.
• Methodology notes: How we got from your property to the final numbers. This is the part that matters in an audit.
• Form 4562 / Form 3115 supporting detail: Form 4562 is the form that reports depreciation on your tax return. Form 3115 is the form your CPA files to catch up missed depreciation on a property you've owned for a while (a "look-back"). The report includes the specific line-item detail your CPA or tax software needs for either one. RentalWriteOff does not file Form 3115; we provide the data that makes it easy for your tax professional to do so.

Step 4: Final quality review

Before the report goes to you, it goes through a final review. A second reviewer checks:

• That classifications match IRS guidelines for residential rentals
• That cost basis allocations are reasonable relative to the property type, condition, and furnishing
• That the bonus depreciation treatment lines up with the acquisition date
• That the documentation package is complete and internally consistent

Nothing ships without this check. It's the step that keeps the turnaround at 2 business days without cutting corners on quality.

Step 5: Delivery

The finished report arrives in your inbox as a PDF, typically on Day 2 or 3 after submission. You forward it to your CPA or tax preparer, and they apply the classifications to your return on Form 4562, or prepare Form 3115 if you're catching up depreciation on a property you've owned for a while. The report is self-explanatory enough that most CPAs can work from it directly without needing to contact us.

If questions come up during tax prep, we're available. And if the return is ever audited, the audit support is included: we respond to inquiries from the IRS or state taxing authority about the study's methodology and documentation at no additional cost.

What's NOT in the process (and why)

A few things you might expect but won't see:

• Site visit. We don't do them. Photos, public records, and satellite imagery cover what a walkthrough would, and skipping the site visit is the main reason we can deliver in 2 business days at a flat fee. On complex commercial properties, a site visit matters. On a residential rental, it doesn't add enough to justify the cost and delay.
• Hundreds of pages of filler. Traditional engineering reports can run 150+ pages. A lot of that is boilerplate. Our reports include everything that actually matters for classification, audit support, and tax preparation, without padding.
• Surprise fees. The flat fee is the flat fee. There's no upsell, no hourly tail, no additional charge for bonus depreciation analysis or look-back calculations.

Next steps

If you want to see what a study could mean for your specific property before committing, use the free cost segregation calculator. When you're ready, submit your property and you'll have a complete report in 2 business days.