1. What a cost segregation study does
A building normally depreciates over 27.5 years (residential) or 39 years (commercial). A cost segregation study breaks the purchase price apart and reclassifies components like flooring, cabinetry, dedicated electrical, and land improvements into 5, 7, and 15-year property, so a large slice of the basis depreciates on much shorter schedules.
On the federal return, that reclassified property also qualifies for bonus depreciation, which restores a 100% first-year write-off for qualifying property acquired and placed in service after January 19, 2025. States set their own rules, which is where Nevada comes in.
2. Nevada and federal bonus depreciation
Not applicable in the usual sense: Nevada imposes no individual income tax (the Nevada Constitution, Art. 10, Sec. 1(9), bars any tax on the wages or personal income of natural persons) and no corporate income tax, so there is no state return on which IRC 168(k) bonus depreciation could be allowed or disallowed. The full 100% permanent bonus under the One Big Beautiful Bill Act (July 2025, property acquired after Jan 19, 2025) flows through on the federal return with zero state-level addback, recovery schedule, or decoupling adjustment. Nothing in Nevada's 2025 legislative session changed this; Nevada's business taxes (Commerce Tax and Modified Business Tax) are gross-receipts and payroll based and do not reference federal taxable income or IRC depreciation at all.
Worked example
A $1,000,000 building, with and without a study
Illustrative only. A residential rental purchased for $1,000,000 of building basis (land excluded), acquired and placed in service after January 19, 2025.
Building basis
$1,000,000
Reclassified to 5, 7, and 15-year property (25%)
$250,000
Federal first-year deduction at 100% bonus
$250,000
Year 1 on that $250,000 without a study (27.5-year straight line)
about $9,100
Nevada levies no individual income tax, so the federal deduction above is the whole story for individual owners and pass-through investors.
Model your own numbers with the tax strategy projector.
3. Section 179 in Nevada
No state income tax means no state-level Section 179 limitation, cap, or addback. The full federal 179 deduction (OBBBA raised the cap to $2.5M with a $4M phase-out threshold for 2025) is effectively the only 179 computation a Nevada taxpayer does. Section 179 and bonus have no effect on the Nevada Commerce Tax, which is computed on gross revenue with only statutorily enumerated deductions (NRS 363C.210) that do not include depreciation or any expense deductions.
4. Does it still help in Nevada?
There is no state return, so the entire benefit of a cost segregation study is realized federally with no state haircut: reclassified 5/7/15-year property gets permanent 100% bonus on the federal return and Nevada takes nothing back. MACRS recovery periods are likewise a federal-only concern for Nevada residents.
- •Nevada's constitution (Art. 10, Sec. 1(9), adopted by voters in 1988/1990) outright prohibits a tax on the wages or personal income of natural persons, so decoupling risk is structurally zero, not just a current policy choice.
- •Nevada's Commerce Tax (NRS 363C) applies only when Nevada-sourced gross revenue exceeds $4,000,000 and allows only enumerated deductions (NRS 363C.210); depreciation, bonus, and Section 179 are irrelevant to it.
- •The Modified Business Tax is a quarterly payroll (wage) tax and also ignores depreciation.
- •Nevada residents who own rentals in income-tax states (e.g. California) still face that state's bonus rules on the nonresident return; CA fully decouples from 168(k) and caps 179 at $25,000.
- •No state depreciation schedule means no dual-basis tracking and no state-level recapture differences when the property is sold.
5. The exit: recapture and timing
The accelerated deductions come back into view when you sell. Gain attributable to the 5, 7, and 15-year property is Section 1245 recapture, taxed at ordinary rates, and the straight-line depreciation on the building itself is unrecaptured Section 1250 gain, taxed at up to 25%. A study does not create that bill, it moves deductions forward, but the timing of the sale decides how much of the benefit you keep.
Two levers manage the exit. A 1031 exchange defers both flavors of recapture along with the rest of the gain, and simply holding the property lets the time value of the early deductions do its work; most owners want a 3 to 5 year horizon before a taxable sale for the math to stay comfortably positive. Model the exit before you commission the study, not after.