Cost segregation for single-family and small residential rentals.

Yes. Single-family rentals on a 27.5-year recovery period are eligible. The economics typically work on properties with a depreciable basis above $200,000 — feasibility depends on basis, your tax bracket, and whether passive losses can be used.

On a $400,000 residential rental with roughly $320,000 depreciable basis (after backing out land), expect $50,000–$75,000 of first-year deductions under 100% bonus depreciation — versus only $11,636 of straight-line depreciation. At a 32% federal bracket, that's $16,000–$24,000 of cash tax savings in year one.

Cost segregation is a recognized, IRS-sanctioned methodology. The IRS Cost Segregation Audit Techniques Guide explicitly describes how engineering-based studies should be performed. A defensible study with proper workpapers does not increase audit risk.

5-year personal property is subject to §1245 recapture at ordinary rates if sold at a gain on those components. However, this is usually a timing issue — and 1031 exchanges, installment sales, or holding past depreciation timelines can mitigate. Your CPA should weigh the time-value-of-money benefit against future recapture.