For 1031 Qualified Intermediaries

Add $55K+ of Year-1 Tax Savings to Every 1031 Exchange.

Illustrative: $600K excess basis, 22% reclassification, 37% combined federal+state rate, OBBBA 100% bonus on 5/15-year property. Actual results vary.

A software platform that runs full cost segregation studies on 1-4 unit residential replacement properties — RCNLD methodology, $499, delivered in minutes. Your exchangers unlock 100% OBBBA bonus depreciation on the excess basis of their replacement property. You add a high-value deliverable to every exchange without changing your workflow.

Request the Partner Packet Or walk the sample report first →

OBBBA 100% Bonus · RCNLD Methodology · IRS Publication 5653 · Form 3115 §481(a) · Zero Competitive Tension

The excess basis problem every QI knows. Now solved.

Every 1031 exchange splits the replacement property's basis into two buckets: exchanged basis (carries over from the relinquished property on its original MACRS schedule) and excess basis (any new cash or debt, treated as a fresh acquisition on a new 27.5-year life). Most exchanges trade up, producing substantial excess basis — often $200K to $2M+.

Bucket 1

Exchanged basis

The carryover from the relinquished property. Stays on its original MACRS schedule and useful life — no fresh acquisition, no bonus depreciation, no cost-seg reset.

Cost seg does NOT reach this bucket.

Bucket 2 — where the money is

Excess basis

Any new cash or debt added to acquire the replacement property. Treated as a fresh acquisition on a brand-new 27.5-year life — fully eligible for cost seg + OBBBA 100% bonus on the reclassified §1245/§1250 portions.

This is the bucket cost segregation accelerates.

Before OBBBA, cost seg on the excess basis was worth pursuing but rarely urgent — traditional engineering studies cost $3K–$15K, and for a sub-$1M residential replacement property the math barely justified the fee. So most exchangers skipped it, and the acceleration opportunity stayed dormant.

OBBBA changes the calculation. Replacement properties both acquired AND placed in service on or after 1/19/2025 qualify for 100% bonus depreciation on the reclassified §1245 personal property and land improvements of the excess basis. That's immediate first-year write-off of 20-30% of the excess basis — typically $40K–$400K on a residential replacement property. Your exchanger wants that deduction in the year of the exchange, not 27.5 years amortized.

Example: $800K replacement property with $600K excess basis

Reclassified §1245 components ~$150K (25% of excess basis, typical for residential)

OBBBA 100% bonus in Year 1 $150K first-year deduction

Tax benefit at 37% marginal $55,500 in Year 1

Assumes residential 1-4 unit property acquired and placed in service on or after 1/19/2025. Actual reclassification % varies by property type and condition. Confirm with your exchanger's CPA.

Zero competitive tension. A true value-add.

You earn on exchange fees. We earn on studies.

QIs make a flat fee on the exchange. CostSegX makes $499 per study. Our revenue doesn't come out of your exchange fee and your revenue doesn't come out of our study price. Both sides win when the exchanger completes both transactions.

The timing is perfect.

Your exchanger closes the replacement property and the clock starts immediately on Year 1 depreciation. You're already in the room with the client at the moment they need to decide on cost seg. No cold referral — just "while we're here, you should look at this."

We never touch the exchange itself.

CostSegX doesn't advise on identification rules, exchange timing, replacement property selection, or any exchange mechanics. That's your domain. We handle only the post-close cost segregation — and only if your exchanger chooses to engage us.

"But won't cost seg ruin the §1250 recapture on eventual sale?"

The traditional concern: cost seg reclassifies some §1250 structural basis into §1245 personal property and land improvements. §1245 recapture at sale is taxed as ordinary income, while unrecaptured §1250 gain on structural is capped at 25%. So reclassifying makes the recapture story harder at disposition — in theory.

This objection breaks under OBBBA. Two reasons:

1. Chain deferral.

If the exchanger's plan is to 1031 out of the replacement property at eventual sale (which is the whole point of 1031 strategy), there is no taxable sale event. The recapture never triggers. Every subsequent exchange rolls the deferred gain forward, indefinitely, until a taxable event the exchanger controls.

2. Time value of money.

Even if the exchanger eventually has a taxable disposition, the 100% bonus depreciation deduction happens in Year 1 at a 37% marginal rate. The recapture happens in Year N at a 25%-to-37% rate. Discount the future tax cost back to present value at any reasonable rate and the Year 1 acceleration wins — usually by a wide margin.

Cost seg on a 1031 replacement property is a calculated acceleration, not a tax trap. The objection was valid in 2019 when bonus was phasing down. It's the wrong instinct in 2026 when OBBBA restored 100% bonus.

This section is deliberately blunt because QIs asking this question are evaluating methodology, not marketing.

The study your exchanger would receive.

CostSegX generates a reconciled RCNLD study (Replacement Cost New Less Depreciation) — the methodology the IRS describes in the Cost Segregation Audit Techniques Guide (IRS Publication 5653) as appropriate for residential property. Every component is priced from Marshall & Swift unit costs and cross-walked into §1245 personal property, §1245 land improvements (15-year), and §1250 structural. Prepared consistent with IRS Publication 5653 methodology.

Study Deliverables

✓ Component-level classification into §1245 personal property, §1245 land improvements, and §1250 structural
✓ MACRS depreciation schedules for 5-, 15-, and 27.5-year recovery periods
✓ Form 3115 package for DCN 7 automatic method change (if the exchanger elects method change)
✓ §481(a) catch-up worksheet for look-back years
✓ §1245 recapture disclosure schedule at disposition
✓ State conformity flags for CA, NY, NJ (non-conforming bonus depreciation)
✓ OBBBA placed-in-service qualification check (dates must be on or after 1/19/2025 for 100% bonus)

Same documentation standard a CCSP-credentialed engineer produces. CostSegX is a software platform, not a CPA firm — we do not provide tax advice.

Walk a sample report before we talk.

Download a complete anonymized cost segregation report for a fictional Tampa residential rental. This is exactly what your exchanger would receive. Review the methodology, the component-level reclassification, the Form 3115 §481(a) package, and the recapture schedule. No sales call required.

The 1031 Partner Packet

We'll send you the sample report, the partner terms sheet, integration notes for your existing referral workflow, and a co-marketing kit. Respond within 1 business day.

FAQ — QI Edition

No. CostSegX is a post-close referral — it runs after the replacement property closes and the 1031 exchange is complete. We don't touch the exchange documents, the identification process, or the replacement property selection. The referral happens at the same point you'd normally hand the exchanger off to their CPA for tax filing support.

Residential rental properties with 4 or fewer units and a depreciable basis under $1 million. Single-family rentals, duplexes, triplexes, fourplexes, and short-term rental properties. Commercial, 5+ unit multifamily, and replacement properties above $1M basis are out of scope — we can refer those exchangers to a full-service engineering firm.

The study operates on the replacement property's total depreciable basis and generates the full reclassification. The exchanger's CPA applies the result correctly against the exchanged basis (on its original carryover schedule) and the excess basis (on its new 27.5-year schedule). The study doesn't determine how the two buckets are tracked — that's the CPA's workpaper responsibility — but it gives them the component reclassification they need.

Pre-OBBBA replacements follow the TCJA bonus depreciation phase-down: 80% in 2023, 60% in 2024, 40% in 2025. Cost seg is still valuable — the reclassified §1245 components benefit from the available phase-down bonus plus the accelerated MACRS schedule. Form 3115 look-back also works for properties placed in service in prior years. OBBBA 100% is the headline, but the math works on earlier acquisitions too.

You probably shouldn't, if your current partner serves your exchangers well on 1-4 unit residential. But if they're primarily engineering firms priced at $3K–$15K, your sub-$1M residential clients are probably being told "the math doesn't work" and walking away without cost seg. CostSegX covers that gap at $499 — you keep your current partner for commercial and multifamily, and refer residential sub-$1M exchangers to us. It's additive, not replacement.

Case-by-case, based on volume. We don't publish fixed percentages because the right deal differs for a boutique QI with 40 exchanges a year versus a top-10 QI with thousands. Submit the partner packet request and we'll respond with terms tailored to your volume.

$55K+

Sample Year 1 Tax Benefit on $600K Excess Basis¹

$499

Wholesale Study Price

Cost to Evaluate the Partnership

¹ Based on a residential replacement property with $600K excess basis, ~25% reclassification into §1245 personal property and land improvements, 100% OBBBA bonus depreciation (placed in service on or after 1/19/2025), and a 37% combined federal and state marginal tax rate. Actual first-year benefit varies by property type, reclassification percentage, acquisition and placed-in-service dates, applicable bonus rules, and the exchanger's individual tax situation. CostSegX is a software tool and does not provide tax advice — confirm applicability with the exchanger's CPA.