Your short-term rental could offset your W-2 income this year.
Cost segregation used to be for big buildings with big budgets. Not anymore. We’ve spent 25 years helping investors keep more of what they earn, and we’ll show you if your rental qualifies. No cost, no pressure.
- 25 years
- Billions in client tax savings
- Licensed engineers on every study
$44K
in extra first-year depreciation
Cost seg isn't just for big buildings anymore.
For years, most investors and a lot of CPAs believed cost segregation only made sense for large commercial properties. Back then, they were mostly right. The study cost too much, and the tax benefit on a smaller property didn’t cover it.
That’s changed. Here’s what happened:
- 2017: Tax reform expanded bonus depreciation. The Tax Cuts and Jobs Act raised bonus depreciation to 100% and, for the first time, let it apply to property you buy, not just new construction. That's what put single-family homes in play.
- The industry grew up. More providers, better technology, and a more efficient process brought pricing down. The quality of the engineering held steady.
- 2025: 100% bonus depreciation is back for good. The One Big Beautiful Bill Act made 100% bonus depreciation permanent for property acquired after January 19, 2025.
Put it together: the cost came down, the service stayed the same, and the value went up. The bar to get in dropped. A single-family rental that wasn’t worth studying ten years ago can make a lot of sense today.
- 2017
TCJA
100% bonus, now for property you buy.
- Since
Pricing comes down
Same engineering, lower cost.
- 2025
100% bonus is permanent
For property acquired after Jan 19, 2025.
Then
Big buildings only
Now
A $248K house qualifies
Why short-term rentals changed the game for W-2 earners.
Normally, rental losses are passive. They can offset other passive income, but not your paycheck. That’s why most people with a day job never see a real benefit from owning rentals.
Short-term rentals work differently. If your guests stay an average of 7 days or less, the IRS doesn’t treat it as a rental activity under the passive loss rules. If you also materially participate, the losses from your cost seg study can offset your W-2 income.
For a lot of people, the easiest way to materially participate is the 100-hour test: you put in at least 100 hours during the year, and more than anyone else, including your cleaner, co-host, or property manager.
Your average guest stay is 7 days or less
You materially participate (100+ hours and more than anyone else, or one of the other IRS tests)
A cost seg study creates the depreciation
Tip
Keep a log. Guest messages, cleaning turnovers, repairs, listing updates, restocking. It all counts, and a simple log is your best proof.
Heard "it's not worth it"? Here's why that advice may be out of date.
New Plymouth, OH
"It's too expensive for a property that size."
What you might hear
"You make over $150K, so you can't use rental losses."
What you might hear
"You're just pushing the depreciation forward. You'll pay it all back when you sell."
Some of it can be recaptured when you sell, yes. But that’s not the whole story:
- A dollar saved today is worth more than a dollar paid years from now, and you can put it to work in the meantime.
- A 1031 exchange can defer the tax when you sell and buy again.
- If you hold the property for life, your heirs get a step-up in basis, and the recapture goes away.
- Planning at the time of sale can reduce how much gets recaptured.
Real homes. Real numbers.
Covington, KY
Placed in service Dec 2024
$44,321
New Plymouth, OH
Placed in service Apr 2024
$79,936
Galveston, TX
Placed in service Aug 2023
$351,553
How each basis was split
- 5-year
- 15-year
- 27.5 / 39-year
- Moved to faster categories
Figures from final ETS engineering reports. Extra first-year depreciation is the difference with vs. without cost seg in the year placed in service. Tax savings assume a 37% bracket and are estimates only. Your results depend on your property and your tax situation.
Don't take our word for it.
144
★★★★★
on Google
★★★★★
We worked with ETS for a cost segregation study on our latest rental property purchase. The entire process went very smooth, with good communication from start to finish. We were very happy with the results of the study and its implication on our tax liability. We’ll definitely be using ETS to run studies on our other properties.
★★★★★
I worked with engineered tax services on two different sets of cost segregations. One when I purchased some rental properties, and again when I did major improvements on a few of the rental properties. Both times I’ve used them, they were professional, and very easy to work with. The last rehab I had done took way longer than expected and they were there waiting patiently for it to be completed to do the cost segregation. I’m very happy with the results, and I will be using them again for any cost segregations I do in the future.
Brett W.
Google review
★★★★★
I had cost segregation studies done on several of my rental properties. The entire process was transparent, easy for me and easy for the tenants. I highly recommend Engineered Tax services.
Ryan L.
Google review
★★★★★
I’m so happy I just learned about the advantages of cost segregation! With the help of an experienced advisor, I was able to determine which parts of my business property were eligible for accelerated depreciation, which led to considerable tax savings. The analysis was thorough and simple to comprehend, and the procedure was simple. I’m already excited to see how this strategy will work out in the long run.
Nadine A.
Google review
Tax equality for all.
Our founder, Julio Gonzalez, started ETS on a simple belief: the tax strategies the top 1% use should be within reach for every taxpayer.
That’s what this is really about. You bought a rental to build something, whether that’s extra income, more time with your family, or a path to financial freedom. We help make the strategy behind that dream achievable.
We’ve grown a lot in 25 years. That growth lets us do something we’re proud of: we pass our economies of scale on to our clients. You get the same engineering-based study that big commercial owners pay top dollar for, at a fraction of the cost.
25 years
doing this work
Billions in tax savings
for our clients
Licensed engineers on every study
built to hold up if you're ever audited
"The tax code has the same rules for everyone. The difference is who has someone showing them how to use them. I started ETS so that the investor with one rental gets the same strategy as the owner with a hundred buildings."
Julio Gonzalez
Founder & CEO, Engineered Tax Services
How it works
See if you qualify form.
Some quick questions to tell us if your rental is a fit.
Get your free estimate.
We'll show you what a study could mean for your taxes before you commit to anything.
We do the work.
Our engineers study your property. You just send a few documents.
Hand it to your CPA.
You get a full engineering report, and we're here for any questions from you or your CPA.
FAQ
Is this legit, or will it get me audited?
Cost segregation has been around for decades and is recognized by the IRS. Our studies are done by licensed engineers and built to hold up. If you're ever audited, we're there to support you.
Is my property too small?
Probably not. One of the homes above had a $248K basis and picked up $44K in extra first-year depreciation. Our free estimate will tell you for sure.
What if I sell in a few years?
Some depreciation may be recaptured when you sell. There are ways to plan for it, like a 1031 exchange. We'll talk it through with you and your CPA before you decide.
Do I have to switch CPAs?
No. We work with your CPA and give them everything they need.
What do I need to get started?
Your closing statement, the property address, and a few details about how you rent it.
What if I bought my rental a few years ago?
You may still be able to claim the depreciation you missed, without amending past returns. Ask us about a lookback study.
Let's see what your rental can do for you.
It takes about two minutes to find out if you qualify, and there’s no cost to check.
This page is for general information and isn’t tax advice. Talk to your tax advisor about your situation.