Short answer

A single-family rental is residential rental property: the house is depreciated over 27.5 years, the lot is never depreciated, and anything that is not the house or the lot, such as appliances, carpeting, window coverings, a fence, a driveway or a shed, sits in a shorter class. A cost segregation study on one house separates those items with evidence. The amounts are usually smaller than in an apartment building, because a house on a lot has less site work and fewer furnishings, and the land share of the price can be large. Whether a study is worth its fee therefore turns on what the particular house contains, whether you can use the deduction this year under the passive activity rules, and how long you will hold. This article walks through what a study finds in a house, what it does not, and how to decide. It is general education, not tax advice.

What a house is made of, for tax purposes

Part of the purchaseClassNotes
The lotNot depreciableSeparated first, by fair market value at purchase, or by the assessor's ratio when values are uncertain
The house: foundation, framing, roof, exterior, general plumbing, electrical and HVAC27.5-year residential rental propertyStraight line, mid-month convention
Driveway, walkways, fencing, retaining walls, patio, site drainage, depreciable landscaping15-year land improvementsOften the largest reclassification in a house
Appliances, carpeting, window treatments, furniture, some fixtures serving a business function5-year propertyLarger in furnished rentals; small in an unfurnished house

Every row is decided on the facts of the house and the law, and a study writes the reason down for each item.

What a study typically finds in a house

  • Land improvements. Paved driveways and parking pads, fences, patios, retaining walls, sidewalks and drainage are the usual 15-year items and often the most valuable part of a single-family study.
  • Personal property. Appliances, carpeting and window coverings conveyed with the sale. In a furnished rental, furniture as well.
  • A correct land split. Not a reclassification, but the study documents it, and an unsupported land line is the most common error in small-property schedules.

What a study usually does not find is a large share of the price inside the structure itself. A house's plumbing, wiring and heating mostly serve the building and stay in the 27.5-year class.

What changes on the return

The 15-year and 5-year property is depreciated faster than the house, and for qualified property acquired after January 19, 2025 it can be expensed in the first year under the permanent 100 percent bonus rule. The house itself is not qualified property. Small purchases after acquisition may fall under the de minimis safe harbor election your adviser makes, which keeps them out of the depreciation schedule altogether. Depreciation on the reclassified items is recaptured as ordinary income on sale; the house's depreciation is unrecaptured section 1250 gain at up to 25 percent.

The single-family decision

Because the amounts are modest, the five checks from the general "is it worth it" article matter more, not less.

  1. Basis after land. In many suburban markets the lot is a substantial share of the price; the pool the study works on is the rest.
  2. Contents. Unfurnished house, small lot, no fence or paving: little to find. Furnished house with a long driveway, fencing, a pool deck and a shed: more.
  3. Usable loss. Rental losses are generally passive. Below the phase-out, an active participant may deduct up to $25,000 of loss against other income; above $150,000 of modified adjusted gross income that allowance is gone, and unless you are a real estate professional the loss is suspended. Many single-family owners with a salary are in exactly that position, and for them the study's benefit is deferred, not current.
  4. Holding period. A house sold in a few years gives recapture time to undo the deferral.
  5. State. Ask your adviser whether your state follows federal bonus depreciation.

A practitioner who quotes a percentage or a saving before seeing the house is not running these checks; you are.

When a single-family study makes sense

  • Several houses bought together, where the fixed cost of the work is spread and the land improvements add up.
  • A furnished rental with meaningful personal property.
  • A house with unusual site work: long paved access, extensive fencing, a pool, outbuildings.
  • An owner who can use the loss now: a real estate professional, or an active participant below the phase-out range.
  • A house never studied, owned for years, where the look-back catch-up can be applied through a change in accounting method.

When it usually does not

  • An unfurnished house on a small lot with a high land share.
  • An owner whose loss will be suspended and who expects no passive income or sale for years.
  • A planned sale within a short period.
  • A fee that consumes most of the modeled benefit.

Two houses, two answers

Consider two houses bought for the same price in the same year. The first is an unfurnished three-bedroom on a small city lot where the land is most of the value; a study would find a driveway, a fence and a set of appliances. The second is a furnished house on an acre with a long paved drive, extensive fencing, a pool and a detached garage, bought by an owner who manages several rentals and qualifies as a real estate professional. The first study would reclassify little and its owner could not use the loss this year; the second would reclassify a great deal and its owner could. Same price, opposite answers, and nothing about either is visible from the purchase price alone.

Records to keep either way

The closing statement, the appraisal or assessor record used for the land split, invoices for appliances, flooring, fencing and paving, and the depreciation schedule. Even without a study, a correct land split and separate lines for later purchases keep the schedule honest and make a later study or a sale easier.

What people ask on Reddit and other forums

Single-family owners are the largest group in the "cost segregation reddit" threads on r/realestateinvesting and r/landlord. The searches that lead people to these threads are usually phrased "cost segregation single family rental", "cost segregation on a rental house" and "single family rental depreciation".

"My house was $250k. Everyone says it's too small." There is no legal minimum. Whether it is worth the fee depends on the land share, what the house contains, whether you can use the loss and how long you will hold.

"Can I just separate the appliances myself?" Items you bought separately with invoices are already separate assets. A study is about the components inside the purchase price, with evidence and a legal reason for each.

"I have a W-2 and one rental. Will the loss help?" Only within the special allowance if your income is below the phase-out, or if you are a real estate professional. Otherwise it is suspended.

"Does the driveway count?" Paved driveways and similar site work are generally 15-year land improvements, and in a house they are often the largest item.

Questions people also ask

Can you do cost segregation on a single-family rental?

Yes. The rules apply to any depreciable rental building. The question is whether it is worth the fee for your house.

What depreciates over 5 years in a rental house?

Appliances, carpeting and furniture used in the rental, per Publication 527, and similar personal property. Window coverings and some fixtures may qualify on their facts.

Is the house itself eligible for bonus depreciation?

No. The house is 27.5-year property and is not qualified property. Bonus depreciation applies to the 5- and 15-year items.

Should I do a study on a house I bought years ago?

Possibly, through a change in accounting method with a catch-up adjustment. Ask your adviser whether the amounts justify it.

How do I separate land for a house?

By fair market value at purchase using the appraisal, the contract and market evidence; the assessor's ratio is permitted when values are uncertain. Document the method.

Sources