I needed a cost segregation study. So I built an app for that.

It’s tax time, and I was going to have a massive tax bill for 2025.

Then I remembered: Oh, right, I still know a few things about tax planning.

Last February, I purchased a new rental property, upon which I’m currently building a tiny house village to provide affordable housing to friends.

Normally, the IRS allows real estate investors to deduct a portion of the purchase price each year, called depreciation. Normal residential rental property is depreciated over the course of 27.5 years. So, you take your purchase price, divide it by 27.5, and you get a deduction of that amount each year.

But that’s the default.

The tax code is incredibly complex, and it includes a lot of nuance. Some people like to call these nuances loopholes.

Here’s the loophole on that 27.5 year thing: Not everything in a rental property is a building.

See, the rental house itself needs to be depreciated over 27.5 years. But many other things on a property — the carpet, appliances, light fixtures, etc. — are understood to have a working lifespan of only 5 years, or 7 years, or 15 years. Then they theoretically need to be replaced.

Therefore, these other items are allowed to be deducted faster.

Oh, and it gets better (or worse, depending on your perspective, but that’s a conversation for a different venue). Occasionally through history, Congress passes a law that allows people to gather up all that 5 year, 7 year, etc. depreciation and deduct some larger percentage of it in year 1. It’s called bonus depreciation.

Such a law was passed in 2025, and it’s a doozy. That law allows every dollar of that shorter timeframe depreciation to be deducted in year 1.

In short, the new law allows up to 20 years of depreciation to be deducted in 1 year.

I’m pretty sure that some high falutin’ lobbyists were popping champagne corks after that law passed.

And yes, this absolutely is a tax break for the wealthy. There’s no getting around that. But at the same time, the tax code applies equally to everybody, so at least in theory, anybody and everybody can benefit from this tax law gift — all the way down to the accidental landlord that begrudgingly inherits a headache property in another state.

Here’s the real challenge with taking advantage of tax code changes like this, though: There are hoops to jump through, and those hoops cost money.

In this case, the acrobatic feat in question is called a cost segregation study. In order to take advantage of this 100% bonus depreciation, you need proof breaking down the dollar values of just the carpet, just the light fixtures, just the furnace, and this price breakdown needs to be performed by somebody that the IRS deems qualified to do so.

And guess what? Those experts are expensive.

That’s why tax loopholes like this are often considered only a gift to the wealthy, because they can afford to hire the engineers and accountants required to do this kind of work. A typical cost segregation study will run between $5,000 and $15,000 if performed by an engineering firm.

On a large, commercial project, that cost is negligible. For a small-time real estate investor (like me), it’s cost prohibitive.

Yes, of course, there are some “questionable” ways to generate these kind of reports so you can then claim the deduction. But, good luck when you get audited.

There are also a handful of DIY online software tools that will prepare this cost segregation study for you. I closely examined five of them on the market. In my professional opinion as a licensed tax professional, I don’t believe that 3 of the 5 would stand up at all in an audit. One of them was decent and would likely survive scrutiny, but it also produces pretty conservative numbers. One of them was what I would personally consider “solid” — but it was also the most expensive.

So I built a better one.

Enter: SegDesk.app

I needed a legit, audit-proof cost segregation study for my own property. This will literally save me tens of thousands of dollars in taxes for 2025. I built this to solve my own problem, and because I’d rather spend that money building another tiny house instead of gifting it to my Uncle Sam.

It just happens that I have the proverbial “unique set of skills” to make something like this. I have several years of construction experience, used to be an electrician, have held a real estate license, have invested in residential rentals for over a decade, and have nearly 18 years of tax experience. I also have the skills to build data models and use modern coding tools to actually build the software.

SegDesk was built from the get-go to precisely follow the guidelines for an audit-proof cost segregation study as outlined in the IRS manual for auditors looking at such studies. It uses a component-level engineering cost approach, using highly-regarded construction industry data from Craftsman. Instead of using standardized percentages (which are not accurate), users enter actual measurements to create accurate engineering take-offs. Reports are generated in the proper format that the IRS demands, with full citations and the mark-up they want to see.

There’s a lot to this software. It was a complicated project, but also incredibly fun. Yeah, I’m a nerd.

If you’re a real estate investor and want to save on your taxes, check it out at https://SegDesk.app.

If you’re a tax professional preparing returns with rental properties on them, this could save your client thousands and thousands of dollars. If you have a client with multiple rentals, or have multiple clients with rentals, reach out to me directly to discuss volume pricing on cost segregation reports.

OK, time for me to grab a tape measure and go measure all the hog panels and countertops.

Gee, I wonder what software I’ll build this week? If you have an idea for a web app you’d like built, let’s schedule a chat.