By the iQTAXX tax team, 6360 S Rainbow Blvd, Suite 101, Las Vegas
Updated October 28, 2026. Bonus depreciation rules checked against IRS Notice 2026-11 (January 14, 2026).
Quick answerCost segregation is a study that splits a rental or commercial building into parts the IRS lets you depreciate faster: 5-year items (appliances, carpet, cabinets, some electrical), 15-year land improvements (pools, fencing, paving, landscaping), and the building itself (27.5 years for a long-term rental, 39 years for commercial and many short-term rentals). In 2026, property bought and placed in service after January 19, 2025 gets 100% bonus depreciation, so the 5- and 15-year parts can be deducted in the first year. On a $450,000 Las Vegas rental, that can move about $87,000 of deductions into year one. Whether you can use them this year depends on the passive loss rules. iQTAXX does the study in house and puts the results on your return. Call 702.871.7884.
Ask if cost segregation fits your property: call 702.871.7884 or contact us.
Key facts (updated October 26, 2026)
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Sources: IRS Notice 2026-11 and news release IR-2026-06 (January 14, 2026); IRS Publication 946. A written binding contract signed on or before January 19, 2025 counts as acquired before that date.
Section 179 is a different deduction. For 2026 it is capped at $2,560,000 and starts phasing out once you place more than $4,090,000 of property in service (Revenue Procedure 2025-32). It generally can't be used for long-term residential rentals, so for most Las Vegas rental owners, bonus depreciation does the work.
Example figures, not a client. A single-family home bought for $450,000 and rented starting March 2026. Land is 20%, so the building basis is $360,000.
Year one uses 100% bonus on the 5- and 15-year parts and the IRS mid-month table for March (2.879%) on the building.
What $87,409 is worth, if you can use it: about $20,978 at a 24% federal bracket, $27,971 at 32%, or $30,593 at 35%. Nevada has no state income tax, so there is no state savings and no state recapture.
The catch: a long-term rental is passive. If your income is over $150,000 and you are not a real estate professional, the loss usually carries forward instead of cutting this year's tax. It is not wasted. It offsets future rental income or is freed up when you sell. Some owners can use up to $25,000 of rental losses a year under the active participation allowance, which phases out between $100,000 and $150,000 of income (IRS Publication 925).
Example figures, not a client. A furnished home bought for $650,000 and listed in May 2026, plus $40,000 of furniture. Land is 20%, so the building basis is $520,000. Because guests stay a few nights at a time, this example uses the 39-year life. Furnished short-term rentals often have more 5-year property, so this example uses 30%.
If the average guest stay is 7 days or less and you materially participate (for example, more than 100 hours and more than anyone else, including your cleaner), the loss is not passive. Then $153,496 is worth about $49,119 at 32%, $53,724 at 35%, or $56,794 at 37%. Without material participation, the loss is passive and usually carries forward.
You don't need to buy a property this year. Example figures: a rental bought in June 2022 for $400,000, building basis $320,000, depreciated straight line since. A 2026 study moves $80,000 into 5- and 15-year property. Property placed in service in 2022 qualified for 100% bonus, so the full $80,000 was allowable. Straight-line depreciation already taken on that $80,000 from 2022 through 2025 was about $10,302. With Form 3115 on the 2026 return, the difference, about $69,698, is deducted in 2026. No amended returns are needed. The bonus rate for a catch-up follows the year the property was placed in service (see the table above), and your preparer confirms the method for your facts.
The exact split depends on the study. A newer home with a pool, a large backyard, and upgraded finishes usually has more short-life property than a plain older home.
A study also gives you a value for each part of the building. If you later replace the roof, the HVAC system, or the flooring, you can usually deduct the remaining value of the old part in that year (a "partial disposition"), instead of depreciating the old and new parts at the same time. Without a study, it is harder to support what the old part was worth. Tell us before you remodel, because the election is made on the return for the year of the work.
If you built the property or bought it new from a builder, the builder's cost breakdown and your closing papers make a study easier and often cheaper. If you paid a builder for upgrades like a pool or an outdoor kitchen, keep the separate invoices. Those items are often 15-year or 5-year property on their own.
The short-term rental tax benefit depends on hours you can prove. Keep a simple log during the year: the date, what you did (guest messages, cleaning checks, restocking, repairs, pricing), and how long it took. Cleaners and property managers' hours count against you in the "more than anyone else" test, so write down their hours too. A log rebuilt at tax time is much weaker if the IRS ever asks.
It usually makes sense when:
It may not be worth it when:
Online residential studies are advertised from about $500, and engineer-led studies on larger buildings often cost several thousand dollars. Ask what is included: a site visit, a written report, and help if the IRS asks questions. At iQTAXX, studies are done in house, and we quote the study fee in writing before we start.
Faster depreciation now means more tax when you sell, unless you do a 1031 exchange or hold the property until death. On a sale, the 5- and 7-year parts are recaptured at ordinary income rates, and the building depreciation is taxed at up to 25%. Cost segregation still helps most investors because a dollar saved today is worth more than a dollar of tax years from now, and the 15-year and building portions are taxed at the lower 25% cap. If you plan to sell soon, we run the numbers both ways first.
We are tax preparers, not engineers, CPAs, or enrolled agents. We can't promise a specific deduction or tax savings. The study sets the numbers, and the tax law decides when you can use them.
Is cost segregation worth it on a single-family rental in Las Vegas?It often is when the building is worth more than about $300,000 and you can use the extra deduction this year. On a $450,000 home, a study can add roughly $87,000 of year-one depreciation with 100% bonus. If the loss would only carry forward, the benefit is smaller and comes later.
Is bonus depreciation 100% in 2026?Yes, for property bought and placed in service after January 19, 2025. The 2025 tax law made 100% bonus permanent, and IRS Notice 2026-11 gives the rules. Property bought before January 20, 2025 and placed in service in 2026 gets 20%.
Can I do cost segregation on a property I bought years ago?Yes. You file Form 3115 with your current return and deduct the missed depreciation in one year. You don't amend old returns. The bonus rate depends on the year the property was placed in service.
Does cost segregation work for an Airbnb?Yes, and furnished short-term rentals often have more 5-year property. If the average stay is 7 days or less and you materially participate, the loss can offset your other income. If not, the loss is usually passive.
What is depreciation recapture after cost segregation?When you sell, the faster depreciation is taxed back. Appliances, carpet, and other 5- and 7-year items are taxed at ordinary income rates, and building depreciation at up to 25%. A 1031 exchange can defer it.
Does Nevada tax the savings or the recapture?No. Nevada has no personal income tax, so cost segregation is a federal-only calculation for Nevada residents with Nevada property. If you live in another state, that state may have its own rules.
Will cost segregation trigger an IRS audit?Cost segregation is a normal, IRS-recognized method, and the IRS publishes an audit techniques guide for it. What matters is a well-documented study. Keep the report for as long as you own the property and at least 3 years after the sale return.
How much does a cost segregation study cost?Prices depend on the property size and type. Online residential studies are advertised from about $500, and engineer-led studies on larger buildings often cost several thousand dollars. Call iQTAXX at 702.871.7884 for a quote on your property.
Send us your closing statement and last year's return, and we'll tell you whether a study is likely to pay off before you spend anything on one.
iQTAXX · 6360 S Rainbow Blvd, Suite 101, Las Vegas, NV 89118 · 702.871.7884 · Contact us
Tax-season hours: Monday to Friday 9 AM to 7 PM, Saturday 9 AM to 5 PM, closed Sunday. Off-season hours: Monday to Friday 9 AM to 5 PM. Closed federal holidays except Columbus Day, and closed Nevada Day. Walk-ins and same-day clients are welcome; call ahead at 702-871-7884 to check availability. We speak English, Armenian, and Russian.
Related: Tax planning · Business tax · IRS notice help · how our Las Vegas tax preparation fees are determined
Example figures are for illustration, not results for any client. Study results vary by property. This page is general information, not tax advice. Sources: IRS Notice 2026-11 and IR-2026-06 (January 14, 2026); Revenue Procedures 2025-23 and 2025-32; IRS Publications 527, 925, and 946; IRS Cost Segregation Audit Techniques Guide. Checked October 17, 2026.
See how our tax preparation fees are determined.
Renting the property out on Airbnb or VRBO? Short stays change the depreciation life and the passive-loss rules, so read our guide to short-term rental taxes in Las Vegas before you plan a study.
