Breaking Down Cost Segregation & Bonus Depreciation

Powerful Tax Strategies for Real Estate Investors

As real estate investors look for ways to maximize returns and improve cash flow, cost segregation and bonus depreciation have become two of the most valuable tax planning tools available. When used strategically, these techniques can significantly reduce taxable income and help investors keep more capital working in their portfolios. 

What Is Cost Segregation? 

Cost segregation is a tax strategy that allows real estate owners to accelerate depreciation deductions on certain components of a property. Rather than depreciating an entire building over the standard 27.5 years for residential property or 39 years for commercial property, a cost segregation study identifies assets that can be depreciated over shorter periods, typically 5, 7, or 15 years. 

Examples may include: 

• Flooring and carpeting 

• Appliances and fixtures 

• Decorative lighting 

• Landscaping and site improvements 

• Parking lots and sidewalks 

By separating these components from the building structure, investors can recognize a larger portion of depreciation expenses earlier in the property’s life cycle. 

What Is Bonus Depreciation? 

Bonus depreciation allows investors to immediately deduct a significant percentage of qualifying assets identified through a cost segregation study. Instead of spreading these deductions over several years, investors can take advantage of accelerated write-offs in the year the property is placed into service or the cost segregation study is completed. 

When combined with cost segregation, bonus depreciation can create substantial upfront tax savings that improve liquidity and preserve capital for future investments. 

How These Strategies Benefit Real Estate Investors 

For many investors, the primary advantage is increased cash flow. Lower taxable income can result in reduced tax liability, allowing owners to retain more of their investment capital. 

Potential benefits include: 

• Increased after-tax cash flow 

• Enhanced return on investment 

• Greater capital available for acquisitions and improvements 

• Improved portfolio growth opportunities 

• Tax-efficient wealth preservation strategies 

These benefits can be especially impactful for investors with larger portfolios, high-income earners, and those actively acquiring rental properties. 

Who Should Consider Cost Segregation? 

Cost segregation is often most beneficial for investors who: 

• Own rental properties with substantial building value 

• Have recently purchased or constructed real estate 

• Expect significant taxable income from real estate or other investments 

• Plan to hold properties long enough to realize the tax advantages 

Because every investment situation is unique, investors should work closely with qualified tax professionals to determine whether a cost segregation study aligns with their financial goals and tax strategy. 

A Strategic Tool for Long-Term Wealth Building 

Real estate investing offers numerous opportunities to build wealth, but understanding the tax advantages available can be just as important as selecting the right property. Cost segregation and bonus depreciation provide investors with powerful tools to accelerate deductions, increase cash flow, and create greater flexibility for future growth. 

At Auben, we believe successful investing starts with understanding every tool available to maximize returns. For investors focused on scaling their portfolios and preserving capital, cost segregation and bonus depreciation remain two of the most effective strategies in today’s real estate market! 

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This week’s blog comes to us from our Houston Market Sales Manager, Kristen Brady!

Tune in to the latest episode of Real Estate Rewind on Thursday, August 27th, and be sure to leave a review, subscribe, and share it with your friends!

American Homeownership: Does our population actually own 65% of their homes? Not Exactly.

For decades, homeownership has been hovering around 65%.  However, this closely monitored statistic may have a glaring flaw that The Federal Reserve Bank of Minneapolis just uncovered.  The flaw being counting legal adults that still live at home with their parents, as part of the general population that actually own their own home.  Naturally, this inclusion is inflating American homeownership by approximately 12%, or millions of people.  The Minneapolis Fed developed a new way, a more accurate way in my opinion, to calculate homeownership in America.  They dubbed it the Homeowners-To-Population Ratio, or HPOP. 

How does HPOP affect the numbers?

• It removes the obvious flaw from this decades old calculation and gives us a much more accurate percentage of homeownership, which is actually hovering around 53%.
• This statistic worsens as you further fragment the population, i.e. HPOP for 35 years of age and younger hovers around 22%. 
• If traditionally calculated, homeownership is represented as 37%, a swing of 15 points! 

This new statistic negatively impacts the optics surrounding American homeownership and, more crucially, elevates the issue of housing affordability to new heights.  It raises the obvious question, why is true homeownership so low in the largest, most robust, most diverse economy in the world?

A silver lining surrounding this topic, until affordability is addressed at a federal level, is individuals seeking homeownership that have some degree of means and/or the opportunity to move states, can find housing that truly fits their needs and their budget.  For example, Hawaii, New Mexico, Delaware, California, and New Jersey have some of the worst percentage drops in homeownership between the traditional calculation and HPOP, while other states like North Dakota, South Carolina, West Virginia, Kentucky and Alabama have less of a percentage drop between the calculations.

Looking Ahead

In conclusion, HPOP is a much more accurate way to calculate American homeownership, and it negatively impacts the optics and the realities surrounding homeownership and housing affordability.  Armed with this new statistic, hopefully the public and private sectors can continue to work and collaborate together and increase American homeownership overall, and at a minimum, provide enough high quality, affordable rental housing to bridge the gap.

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This week’s blog post comes to us from Blake Collier!

Connect with our Houston team to learn more about how build-to-rent homes offer an alternative route!

Chattanooga Isn’t the Same City I Grew Up In — And It’s a Good Thing

I was born and raised in Chattanooga, and if you’ve lived here for any length of time, you’ve seen the transformation firsthand.

The Chattanooga I remember growing up in is very different from the Chattanooga we see today. What was once viewed as a small city tucked between Nashville and Atlanta has become a destination in its own right. Over the years I’ve watched new businesses move in, tourism explode, outdoor recreation become part of the city’s identity, and investment pour into neighborhoods that many people overlooked for decades.

As someone who works in property management and real estate every day with Auben Realty, I have also had a front-row seat to how those changes have impacted housing.

When people ask me if Chattanooga is still growing, my answer is simple: just look around.

Look at the development taking place downtown. Look at the restaurants opening across the city. Look at the investment along the riverfront. Look at the number of people moving here from larger markets looking for a better quality of life. Chattanooga is no longer a city people pass through. It is increasingly becoming a city people intentionally choose.

One of the most interesting things I’ve witnessed is how many different types of people are arriving here. Young professionals are attracted by remote work opportunities and the outdoor lifestyle. Families appreciate the affordability compared to larger metropolitan areas. Retirees are discovering they can enjoy four seasons, access quality healthcare, avoid a state income tax, and still maintain a lower cost of living than many traditional retirement destinations.

The numbers support what many of us have been seeing with our own eyes. Over the past decade, household growth in the Chattanooga area has significantly outpaced new housing inventory. More people are moving here than the market has been able to accommodate with new housing construction. Vacancy rates have tightened, and demand for both rental housing and homeownership remains strong.

For those of us in property management, this creates both opportunities and challenges. 

The opportunity is obvious. Demand remains healthy. People want to live here. Investors continue to recognize Chattanooga as one of the most attractive secondary markets in the Southeast.

The challenge is ensuring that housing supply keeps pace with growth while maintaining the character that makes Chattanooga special in the first place.

What excites me most about Chattanooga’s future is that many of the factors driving growth today are not temporary trends. The outdoor amenities aren’t going anywhere. The mountain views aren’t going anywhere. The Tennessee River isn’t going anywhere. The investments being made in infrastructure, economic development, healthcare, and tourism continue to strengthen the city’s foundation for long-term growth. 

At Auben Realty, we see this every day through the investors, residents, and property owners we work with throughout the region. Demand for well-managed housing continues to grow, and I believe Chattanooga remains in the early stages of what could be another decade of meaningful expansion.

No one can predict the future perfectly, but after spending most of my life here and watching Chattanooga reinvent itself over the years, I remain optimistic about where we’re headed. 

The Chattanooga of today is stronger than the Chattanooga I grew up in, and the Chattanooga of ten years from now may be even better.

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This week’s blog is brought to us by Jason Weathers!

Hear more about Jason’s insights on upcoming episodes of Real Estate Rewind with Tyson Schuetze, available on Spotify, Apple Podcasts, and YouTube!

Why Rent Payments Finally Matter

And What It Means for Residents, Investors, and Property Managers

For years, renters have faced a frustrating reality: paying rent on time every single month often did little to help them qualify for a mortgage in the future. Meanwhile, one missed credit card payment could significantly impact their credit profile. 

That may finally be changing. 

Recent updates involving Fannie Mae and Freddie Mac are creating a major shift in how mortgage lenders evaluate borrowers by allowing newer scoring models to consider rent and utility payment history during the underwriting process. 

This is a significant moment for the housing industry — especially for renters who have consistently paid on time but have limited traditional credit history. 

Why This Matters 

Historically, most credit scoring systems focused heavily on: 

• Credit cards  

• Auto loans  

• Mortgages  

• Installment debt  

Rent payments — often a person’s largest monthly expense — typically were not counted unless reported through a third-party service. 

The new scoring models, including VantageScore 4.0 and FICO 10T, are designed to incorporate alternative data such as: 

• Rent payments  

• Utility payments  

• Banking trends and recurring expenses  

For millions of renters, this could create a clearer path to homeownership. 

According to estimates referenced by housing and lending sources, factoring in rental history could help millions of Americans cross minimum mortgage qualification thresholds. 

What This Means for Property Owners and Managers 

This shift is not just beneficial for residents — it could also create opportunities for investors and property managers. 

Stronger Resident Retention 

Residents who know their on-time rent payments may positively impact their future homeownership goals are often more motivated to: 

• Pay consistently on time  

• Maintain good standing  

• Stay engaged with lease obligations  

Better Resident Relationships 

This creates an opportunity for property management companies to become more than just rent collectors. We now have the ability to help residents build financial credibility while they rent. 

That changes the conversation. 

Increased Interest in Rent-to-Own Strategies 

One of the more interesting impacts is how this may strengthen rent-to-own opportunities. Historically, one of the biggest concerns with rent-to-own programs was uncertainty around whether tenants could eventually qualify for financing. 

If rent history becomes a more meaningful factor in mortgage approvals, investors may feel more confident offering pathways to ownership for long-term residents. 

The Human Side of the Conversation 

This shift also highlights something the industry has known for years: 

Many renters are financially responsible — they simply have “thin” credit files. 

A resident may have: 

• Paid rent on time for 5 years  

• Never missed utilities  

• Maintained stable employment  

…but still struggle to qualify for a traditional mortgage because they lacked enough revolving debt or traditional loan history. 

That disconnect has prevented many qualified individuals from becoming homeowners. 

This update begins to close that gap. 

Important Reality Check 

While this is a positive step, rent reporting is not automatic in many cases. Reporting still often requires: 

• A landlord or property manager participating in a reporting program  

• A third-party reporting service  

• Or lender verification through bank statements and lease documentation  

Additionally, rent history alone will not offset major financial issues such as: 

• High debt  

• Collections  

• Late credit payments  

• Excessive utilization  

But for renters with strong payment habits and limited credit history, this could be a meaningful advantage. 

What Property Management Companies Should Consider 

As the industry evolves, property management companies should begin evaluating: 

• Rent reporting partnerships  

• Resident financial education  

• Lease-to-own opportunities  

• Improved resident communication around credit building  

This is especially important in the single-family rental space, where many residents already view the home as long-term housing rather than temporary living. 

Final Thoughts 

The housing industry is continuing to evolve, and this change reflects a broader shift toward recognizing real-life financial responsibility — not just traditional debt usage. 

For residents, it creates hope and opportunity. 

For investors, it may create stronger long-term residents and new exit strategies. 

And for property managers, it is another reminder that the resident experience goes beyond maintenance requests and lease renewals. Helping residents succeed financially can ultimately strengthen the entire rental ecosystem. 

In many ways, the industry is finally beginning to recognize something renters have known all along: 

Paying your rent on time should count for something. 

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This week’s blog post comes to us from Brandie Mejia!

South Carolina Hit Pause on Affordable Housing–Here’s How

South Carolina is in the middle of an affordable housing crisis. Rents are maxed. Working families are being stretched thin. And the state just quietly passed a bill that makes it harder to build the housing those families need. 

It’s called S.853. It passed on May 14, 2026. Most people haven’t heard of it because it was sold as a bill about abandoned buildings. And most of it is exactly that. But Section 5 is different. 

Section 5 freezes a property tax exemption that affordable housing developers depend on. For the next two years, if you file an application for that exemption after June 30, 2026, the state won’t even look at it. They’ll hold it in a drawer until 2027. 

Why does a property tax exemption matter? Because property taxes are a real expense. When that exemption disappears, the cost of operating an affordable housing project goes up. When costs go up, rents go up or the project doesn’t get built at all. 

Here’s an analogy. Remember when Spirit Airlines shut down? One of the only carriers keeping ticket prices genuinely low was gone, and without that competition, the bigger airlines had less reason to stay affordable. Housing works the same way. When the incentives that make below-market housing pencil out financially are stripped away, fewer developers can afford to build it and everyone else pays the price in higher rents. 

The law has one exception: nonprofits that own their properties 100% on their own, no private investment involved. That sounds reasonable until you realize almost no affordable housing gets built that way. The model that works, and that has been working, is a partnership between nonprofits and private developers. The nonprofit provides the mission and the structure. The developer provides the money, the construction team, and the risk. The tax exemption makes the whole thing viable. 

That partnership model is exactly what this freeze leaves out in the cold.

As of March 18, 2026, Governor McMaster hasn’t signed it yet. If you want to do something, call your South Carolina state representative. Ask them to amend Section 5. The window is narrow, but it’s still open.

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This week’s blog was brought to us by Ivan Jenkins!

What South Carolina’s Population Boom Means for Real Estate

This week’s blog is brought to us by Market Director Claudia Gibson!

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South Carolina is experiencing a population boom unlike anything seen in decades—and it’s not slowing down anytime soon. According to recent data highlighted by Fox News, the Palmetto State has officially become the fastest-growing state in the nation, driven largely by an influx of people relocating from other parts of the United States.  

A Record-Breaking Surge 

Between July 2024 and July 2025, South Carolina’s population grew by 1.5%, outpacing every other state in the country.  
Even more telling is how that growth is happening: 

• Over 66,000 new residents moved into the state from elsewhere in the U.S. in just one year  

• Nearly 80,000 total new residents were added during that same period  

• A previous spike saw 100,000+ new residents in a single year (2022–2023)  

This surge is not being driven by international migration or birth rates—it’s people choosing South Carolina on purpose. 

Why Everyone Is Moving to South Carolina 

So what’s fueling this migration wave? 

1. Affordability & Cost of Living 
Compared to states like New York and California, South Carolina offers significantly lower housing costs and taxes, making it attractive for both families and retirees. 

2. Job Growth & Economic Expansion 
Cities like Columbia and Greenville are seeing growth in healthcare, manufacturing, and tech industries, creating new opportunities for workers.  

3. Lifestyle & Climate 
From coastal living in Charleston to quieter suburban and rural communities, the state offers a mix of lifestyle options with a generally mild climate. 

4. Remote Work Shift 
The post-pandemic workforce has changed where people choose to live—many are leaving expensive urban centers for more space and value in states like South Carolina. 

Growth Isn’t Even—It’s Concentrated 

While the entire state is growing, the majority of that growth is happening in key areas. More than 80% of population gains since 2020 have been concentrated in just ten counties, including: 

• Charleston  

• Greenville  

• Lexington  

• Richland  

• Horry  

• York  

This means urban and suburban hubs are expanding rapidly, while some rural areas are seeing slower growth. 

A Bigger National Trend 

South Carolina’s rise is part of a larger shift happening across the U.S. 

While overall U.S. population growth slowed to just 0.5% between 2024 and 2025, southern states continue to dominate growth due to domestic migration.  

Americans are increasingly “voting with their feet,” leaving higher-cost states and relocating to more affordable regions in the Southeast.  

What This Means for Real Estate & Communities 

For someone like you—deep in property management and real estate—this trend is huge. 

1. Increased Housing Demand 
More people moving in = more demand for rentals and home purchases. Expect continued pressure on inventory and pricing. 

2. Rising Property Values 
Growing populations often drive appreciation, especially in high-demand counties. 

3. Infrastructure Pressure 
Rapid growth can strain roads, schools, and utilities—creating both challenges and opportunities for development. 

4. Shifts in Tenant Demographics 
With newcomers arriving from higher-cost states, expectations around service, amenities, and pricing may evolve. 

The Bottom Line 

South Carolina isn’t just growing, it’s transforming. 

With strong domestic migration, expanding job markets, and an attractive cost of living, the state has positioned itself as a top destination for Americans seeking opportunity and lifestyle. But with that growth comes responsibility: managing infrastructure, housing supply, and community development will be key to sustaining this momentum. 

For real estate professionals, investors, and business owners, one thing is clear: 

South Carolina isn’t just on the map—it’s becoming the destination.

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Related Reading

Dougherty, Conor; Kaysen, Ronda. “Single-Family Home Gets Caught in a Political Vise,” New York Times, 25 March.2026

John Burns Research and Consulting. “Congress’ housing bill is already freezing homebuilding—and it hasn’t even passed.” LinkedIn, 25 March.2026

DeSilver, Drew. “As national eviction ban expires, a look at who rents and who owns in the U.S.” Pew Research Center, 2 August.2026

Goodman, Laurie. “Will Regulating Large Institutional Investors Actually Make Housing More Affordable?” Urban Institute, 26 January.2026

Munis, Jacqueline. “Banning institutional investors from buying homes will backfire for many Americans, experts say.” Fortune, 15 March.2026

Crisman, Emily. “‘Homes not hedge funds’ bill fails in Tennessee state House.” Chattanooga Times Free Press, 15 March.2026

Bisaha, Stephen. “America has a housing affordability crisis. Building houses for rent can help.” NPR, 4 March.2026 

Furlan Nunes, Flavia. “Trade groups raise alarms over 21st Century ROAD to Housing Act before Senate floor vote.” Housingwire, 12 March.2026

Hunter, Brad. “Housing Bill’s Latest Amendments Could Undercut its Core Goals” Forbes, 5 March.2026

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