How to Use a Cost Segregation Study to Maximize 100% Bonus Depreciation in 2025

The One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025. This marked huge changes in different industries within the US. If you own or are planning to invest in an Airbnb this year, there’s probably nothing bigger news than hearing that 100% bonus depreciation is officially back.

The One Big Beautiful Bill Act restored the incentive permanently, reversing the scheduled phase-down that had dropped the rate to 40% for early 2025. For hosts running vacation rentals, this change introduces a great opportunity to wipe out a chunk of your taxable rental income in a single filing year.

And if you want to unlock the biggest possible write-offs using 100% Bonus Depreciation? You’ll want to start with a cost segregation study. In this guide, we’ll break down how cost segregation works, why it matters for short-term rental investors, and how to use it step-by-step to maximize your tax savings under the new law.

What Is a Cost Segregation Study?

A cost segregation study is an engineering-based analysis that reclassifies building components normally lumped into a 27.5- or 39-year depreciation schedule into shorter 5, 7, and 15-year classes. It typically categorizes them into assets like flooring, appliances, or landscaping, instead of lumping everything.

By identifying parts of your property that can be depreciated faster, a cost segregation study accelerates your deductions. The result? Those reclassified assets become immediately deductible under 100% bonus depreciation rather than being written off gradually.

While this strategy has been around for years, it becomes even more powerful in 2025 thanks to the return of 100% bonus depreciation.

Why 2025 Is the Year to Act: 100% Bonus Depreciation Is Back

With the passage of the One Big Beautiful Bill, real estate investors can once again take advantage of 100% bonus depreciation on qualifying property components in 2025, given that it was placed in service after January 19, 2025.

This means that instead of spreading deductions over several years, you can deduct the entire cost of short-life assets in Year 1, as long as they’re properly categorized. And that’s exactly what a cost segregation study does.

A cost segregation study not only makes it easier to categorize the components, but it also places an exact value on every applicable part, down to the cent. This helps maximize the total amount of depreciation you can claim since it puts a price on every component, instead of just the structure as a whole.

Even though we’re already halfway through 2025, there’s still time to claim 100% bonus depreciation. If you can place your Airbnb into service this year and take the right steps, you could potentially deduct thousands of dollars in 2025 alone.

How Cost Segregation Unlocks Bonus Depreciation

To understand how cost segregation and 100% bonus depreciation work together, you first need to understand one key rule in the tax code: Only assets with a useful life of 20 years or less are eligible for bonus depreciation.

When you first buy a rental property, by default, most of it isn’t going to be eligible for the 100% bonus depreciation benefit. The land itself isn’t depreciable, regardless of what method you use. However, the entire building is depreciable over a period of 27.5 or 39 years. This straight-line depreciation method is good for small annual write-offs, but it is nowhere near the amount of deductions you can get from 100% bonus depreciation.

Through a cost segregation study, you are able to identify and separate all short-life components within your property. These items can usually be depreciated over 5, 7, or 15 years, all below the 20-year bonus depreciation requirement.

Once these components are identified, 100% of their cost can be deducted in the year they’re placed in service, which, if done in 2025, qualifies them for full bonus depreciation under the newly reinstated rule.

While you can technically not get a cost segregation study done, you won’t be able to realistically list down all of the components. For the most part, you might be able to reasonably break out furniture, appliances, and equipment through their invoices. Other than that, it’ll be hard to do so, potentially missing out on major deductions.

Overall, without cost segregation, you wouldn’t be able to claim and maximize all eligible bonus depreciation components up front. Instead, you’d only get a fraction of that deduction in year one, while the rest follows traditional depreciation methods.

However, a cost segregation study is useless if you aren’t able to take advantage of the deductions. So, make sure you know how to claim your 100% bonus depreciation benefits!

How Much Does a Cost Segregation Study Cost?

So, why doesn’t everyone get a cost segregation study done on their property to maximize their bonus depreciation deductions? Well, the main reason is the cost. A cost segregation study will cost thousands of dollars, typically starting at about $2000 to $3000 and above.

While the exact price can vary, it will usually be dependent on a few factors:

• Property Type and Complexity: Simple single-family homes with minimal add-ons are generally cheaper and easier to analyze. In contrast, luxury STRs, or properties with unique construction, often cost more due to additional inspection and analysis required.
• Size and Square Footage: Larger properties require more time to review, document, and model. The more square footage, rooms, and asset types involved, the higher the cost tends to be.
• In-Person vs Desktop (Virtual) Studies: Some firms offer cheaper rates where they use photos, blueprints, and additional documentation provided by the owner. While more affordable, they may be less detailed or more scrutinized during audits. The more traditional route involves a physical site visit by an engineer or specialist, which adds to labor and travel costs, resulting in a higher price, but it will also offer better support in an audit.
• Documentation Availability: If you have detailed records, such as renovation receipts, material invoices, appraisals, and blueprints, it can lower the amount of work the firm needs to do, reducing the cost. On the flip side, if documentation is missing or unclear, the firm may charge more for estimates and modeling. So, don’t forget to keep those receipts.

Cost Segregation: DIY vs Hiring A Professional

A cost segregation study is one of the best things you can do if you truly want to maximize your 100% bonus depreciation deductions. You’ll have two main options when it comes to cost segregation. You can either DIY (do it yourself) or hire a professional firm.

Each path has its own pros and cons, and the right choice will depend on your situation. So, here’s everything you can expect from both options.

Doing a DIY Cost Segregation Study

Going DIY might make sense for smaller properties, especially if you’re just splitting out obvious items like appliances and furniture. Still, any attempt at a DIY cost segregation has to follow IRS guidelines and be properly substantiated because “guesstimates” just won’t cut it in an audit. You’ll need to have receipts, proper documentation, and invoices to back them all up.

There are tons of software and platforms that can help you throughout the process. DIY Cost Segregation is one of those properties that can make this route a bit easier. Make sure to use code BNBCALC for an extra $50 off on your reports.

Doing a DIY cost seg will cost less, but is less precise, has a greater audit risk, and has the potential to miss out on maximum deductions.

Hiring a Professional for A Cost Segregation Study

Professional firms use engineers, tax specialists, and CPAs to perform a detailed study that breaks down the building into hundreds of individual components. These reports are IRS-compliant, include full depreciation schedules, and often come with audit support.

Hiring a pro will cost a decent amount, usually in the thousands. In return, you also get a more detailed report with breakdowns, assured compliance with IRS audit guidelines, and added peace of mind. Any host looking to maximize their deductions and have high-value properties can find this method more valuable.

Doing a DIY cost segregation study is definitely the cheaper option, but it does require a lot more work, can be less precise, and can leave some deductions on the table. However, it can still be beneficial for hosts who purchase smaller properties, especially if the cost of hiring a professional eats into the deductions it produces.

This is why it’s important to have estimates for the total 100% bonus deductions you can claim and how much tax savings they produce. It helps you get a fuller picture of which route to take, leading you to make smarter and more informed decisions.

Our built-in tax calculator tool, with a bonus depreciation calculator, can help you get those estimates and see how much you can potentially save. Make sure to check it out!

Wrapping Things Up

The return of 100% bonus depreciation in 2025, through the One Big Beautiful Bill, has opened a window of opportunity for Airbnb and short-term rental investors. A cost segregation study is your key to unlocking its full potential. By identifying and reclassifying short-life assets in your property, you can fast-track major tax deductions that would otherwise take decades to realize.

Whether you choose to DIY or hire a professional, the most important thing is to take action. With the right approach and mindset, you can confidently maximize your write-offs, lower your taxable income, and improve your investment’s bottom line from year 1.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult with a qualified tax professional or CPA to determine how bonus depreciation and other deductions apply to your specific situation. Tax laws may change, and individual circumstances can significantly impact eligibility and outcomes.