RALEIGH, N.C. – September 2nd, 2026 – For years, commercial property owners considering a cost segregation study faced a shrinking window of opportunity: bonus depreciation, once set at 100%, was on a legislated phase-down path toward full expiration by 2027. That uncertainty is gone. With the passage of the One Big Beautiful Bill Act (OBBBA) in July 2025, Congress permanently restored 100% bonus depreciation for qualifying property — a change K-38 Consulting says fundamentally shifts the economics of cost segregation for property owners nationwide.
The IRS followed with Notice 2026-11, issued in January 2026, providing interim guidance clarifying how the permanent 100% rate applies in practice. Combined, the law change and subsequent guidance mean property owners no longer need to race against a declining bonus percentage or time their acquisitions around an expiring deduction.
“This isn’t a minor tweak — it’s the difference between a shrinking benefit and a permanent one,” said Dallas Alford IV, CPA, Founder of K-38 Consulting. “Property owners who assumed cost segregation had lost its punch in recent years need to take another look. The math has changed significantly in their favor.”
What Changed, and Why It Matters
Cost segregation is an engineering-based analysis that reclassifies components of a commercial or investment property — electrical systems, plumbing fixtures, flooring, land improvements, specialized HVAC components — out of the standard 39-year (commercial) or 27.5-year (residential) depreciation schedule and into much shorter 5-, 7-, or 15-year categories. Historically, this reclassification allowed property owners to accelerate deductions well ahead of the standard depreciation timeline.
Under the bonus depreciation rules in place before OBBBA, that acceleration was losing value each year as the bonus percentage declined from 100% toward an eventual expiration. Under the new permanent rule, every dollar a cost segregation study reclassifies into a short-life category can generate a dollar of first-year deduction — restoring the full acceleration benefit that made cost segregation so valuable under the original 2017 Tax Cuts and Jobs Act.
On a typical commercial or multifamily property, a cost segregation study commonly identifies 20% to 35% of the depreciable basis as qualifying for short-life, bonus-eligible treatment. For a property with several million dollars in depreciable basis, that percentage translates into a substantial first-year deduction rather than a benefit spread thinly across decades.
“Property owners who put off a cost segregation study during the phase-down years because the numbers didn’t pencil out should run those numbers again,” Alford said. “For most of them, the calculation looks completely different now.”
Retroactive Opportunities Also Available
Property owners who acquired qualifying property in recent years — even before the OBBBA changes took effect — may still be able to benefit. A cost segregation study can generally be applied retroactively through a change in accounting method, allowing owners to capture previously missed accelerated depreciation as a catch-up adjustment in the current tax year, without the need to amend prior returns.
This retroactive option is particularly relevant for property owners who placed assets in service during the bonus depreciation phase-down and assumed the opportunity for a full-value study had passed.
Who Benefits Most
K-38 Consulting says the permanent 100% bonus depreciation rule creates meaningful opportunity across several types of property owners:
Commercial real estate owners and investors, particularly those who acquired or renovated property in the past several years and haven’t yet had a cost segregation study performed.
Real estate professionals, who can often apply the resulting deductions immediately against other income, rather than facing passive activity loss limitations.
Manufacturers and capital-intensive businesses, whose facilities frequently include the specialized equipment and infrastructure components that a cost segregation study is designed to identify.
Multifamily and mixed-use property owners, where the mix of building systems and improvements often yields a higher-than-average share of short-life, bonus-eligible components.
What K-38 Consulting Recommends
Given the permanence of the new rule, K-38 Consulting is advising property owners to:
- Order a cost segregation study on any commercial property acquired, built, or substantially renovated in recent years, even if a study wasn’t pursued previously — the retroactive catch-up option may still capture the full value.
- Reassess older assumptions about bonus depreciation. Owners who ran the numbers during the phase-down period and decided against a study should revisit that decision under the new permanent rule.
- Coordinate the study with a broader tax and cash flow strategy, rather than treating it as a standalone filing exercise. The resulting deduction can meaningfully change a business’s near-term tax position and available cash.
- Work with a specialist to properly document the engineering-based analysis, since the reclassification must be substantiated to withstand IRS review.
- Time new acquisitions and renovations with the permanent rule in mind, since owners no longer need to rush to beat a declining bonus percentage.
How K-38 Consulting Supports Property Owners
K-38 Consulting’s cost segregation services help commercial property owners and investors identify and document accelerated depreciation opportunities, generating the kind of near-term cash flow that owners often reinvest directly into their business. The firm frequently pairs this work with its broader outsourced CFO services for clients in construction and real estate, helping property owners understand not just the tax savings available, but how to deploy that additional cash flow strategically.
“A cost segregation study generates real cash — the question is what a business does with it,” Alford said. “The owners who get the most value pair the tax strategy with a broader financial plan, so that cash flow gets reinvested with intention instead of just sitting on the balance sheet.”
About K-38 Consulting
K-38 Consulting provides fractional and outsourced CFO services, controller services, and tax strategy — including R&D tax credit and cost segregation services — to startups and midsize businesses across the country. The firm serves clients in SaaS, biotech, healthcare, law, ecommerce, CPG, construction, and real estate, delivering the financial leadership, forecasting tools, and strategic guidance typically available only to companies with a full in-house finance team. K-38 Consulting is headquartered in Raleigh, North Carolina, with clients nationwide.
Media Contact: K-38 Consulting 3809 La Costa Way, Raleigh, NC 27610 (910) 262-4412 [press contact email] https://k38consulting.com
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Company Name: K38 Consulting, LLC
Contact Person: Dallas Alford
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Phone: 9102624412
Address:3809 La Costa Way
City: Raleigh
State: NC
Country: United States
Website: https://www.k38consulting.com/
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