Cost Segregation in Dallas, TX

More Fortune 500 headquarters than any U.S. metro, zero state income tax, and the nation's fastest corporate relocation pipeline — Dallas-Fort Worth is where institutional capital meets cost segregation opportunity.

Population
7.6M
Median Home
$380K
Rent (3BR)
$2,100
Property Tax
1.85%
Annual Job Growth
110K+
Ranking
#1 Corporate Relocations
Overview

Value Props for Investors

CORPORATE MAGNET
24 Fortune 500 HQs — More Than Any Metro

AT&T, CBRE Group (Dallas), American Airlines, Texas Instruments, and 20+ other Fortune 500 companies are headquartered in DFW. Each corporate campus creates a captive tenant pool of high-income professionals who drive premium rents and low vacancy.

RELOCATION PIPELINE
110K+ Net New Jobs Per Year

Charles Schwab, Goldman Sachs, Caterpillar, and AECOM have all relocated HQs to DFW in recent years. This sustained corporate in-migration creates the strongest demand-side fundamentals of any Texas metro with 110K+ net new jobs annually.

TAX ADVANTAGE
Zero State Tax on All Cost Seg Savings

Every dollar of federal cost segregation benefit is yours to keep. No state addback, no state depreciation recapture, no state tax filing complexity. On a $380K DFW property, that is $32.9K in clean federal savings in Year 1.

Tax Strategy

Cost Segregation & Tax Rules in Dallas, TX

Understanding how federal and Texas state tax rules interact is critical to maximizing your cost segregation benefits in Dallas.

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Typical Purchase
$380,000
Building Value
78%
22% land / 78% building
Cost Seg Range
25-38%
of building reclassified
Home Age
22 yrs
Built ~2002
What Gets Reclassified

A cost segregation study identifies building components that can be depreciated over 5, 7, or 15 years instead of the standard 27.5 or 39 years. In Dallas, typical reclassification rates are 25-38% of building value.

Purchase Price Breakdown
Building 78%$296,400
Land 22%$83,600
Building Value Reallocation (with Cost Seg)
5-Year Property18%
$53,352
15-Year Property12%
$35,568
27.5 / 39-Year (Remaining)70%
$207,480

5 & 15-year components ($88,920 = 30% of building) are eligible for bonus depreciation in Year 1.

Overline Study Cost & ROI
Overline Study Cost
$499 - $2,000
Avg. ROI
10-40x

The math: A $380,000 property with 78% building value and 30% reclassification yields ~$32,900 in Year 1 federal tax savings at the 37% bracket — significantly more ROI than traditional studies costing $5,000-$10,000+.

Housing Stock Advantage

With a median build year of 2002, Dallas's housing stock has identifiable components (HVAC, electrical, plumbing, landscaping) that are strong candidates for accelerated depreciation.

N/A — No State Income Tax
Texas Bonus Depreciation Conformity

Because Texas has no state income tax, there is no state-level depreciation deduction or conformity issue. Federal bonus depreciation under Section 168(k) applies in full and there is no state tax return to worry about.

What This Means for Dallas Investors: Texas is one of the most favorable states for cost segregation. Your entire tax benefit comes from federal savings, with zero state-level complications. No addback, no phase-out, no conformity issues — just clean, immediate federal deductions.

Federal vs. TX Depreciation Timeline
PeriodFederal TreatmentTX State Treatment
Year 1100% bonus depreciationN/A — No state income tax
Years 2+Standard MACRS schedulesN/A — No state income tax
Section 179 Expensing
State ConformityLimited

No state income tax means Section 179 operates at the federal level only in Texas. With no state tax to offset, TX investors maximize their retained cash flow — the trade-off is higher property taxes that make cost seg studies even more critical for net returns.

Key Takeaway

A $350K property with a $262,500 depreciable basis and 30% cost seg reclassification yields ~$29,138 in federal tax savings in Year 1. Because Texas has no state income tax, your total Year 1 savings = $29,138 with zero state tax friction.

Bottom Line

Texas is the simplest state for cost segregation planning. No state income tax = no state depreciation deductions = no conformity issues. Your entire savings are federal, and they are immediate and unreduced.

Local Property Tax
1.85%
Dallas effective rate
Transfer Tax
None — Texas has no transfer tax or documentary stamps
State Income Tax
0%
None
Property Tax Details

Dallas County effective rate of ~1.85% is among the highest in Texas. Collin County (Plano, Frisco) and Denton County have similar rates. Higher property taxes are the main cost headwind, offset by zero state income tax.

Assessment Methodology
MethodMarket value (100% of appraised value)
Reassessment CycleAnnually
Assessment BodyCounty Appraisal District (CAD)
Appeal WindowMay 15 or 30 days after notice (whichever is later)
Appeal Success Likelihood
Very High
LowModerateGoodVery High

Texas has the most active property tax appeal market in the U.S. — over 50% of protests in major counties result in reductions. With no state income tax, property taxes are the primary revenue source, leading to aggressive valuations. ARB (Appraisal Review Board) hearings are free and informal. Binding arbitration and district court are available for larger properties.

Work with Overline — Our team helps Dallas investors identify over-assessed properties and file tax appeals. A successful appeal can save thousands annually and compounds your cost seg savings.

Illustrative Example

Cost Seg Example for Dallas, TX

This example assumes a purchase eligible for 100% bonus depreciation. All factors below are based on averages from our historical cost segregation studies for TX properties. To see your exact savings, run a property-specific cost seg analysis below.

Typical Dallas, TX Property Details
$
50%95%
5%35%
2%25%
Total Reclassified30% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$296,400
$380,000 x 78%
Normal Annual Depreciation$10,778
$296,400 ÷ 27.5 yr (residential)
5-Year Reclassified$53,352
15-Year Reclassified$35,568
Total Accelerated$88,920
30% of $296,400 building value
Federal Tax Savings (Year 1)$32,900
$88,920 x 37% bracket
Total Year 1 Tax Savings$32,900
8.3x normal annual deduction captured in Year 1

TX State Tax: Texas is one of the most favorable states for cost segregation. Your entire tax benefit comes from federal savings, with zero state-level complications. No addback, no phase-out, no conformity issues — just clean, immediate federal deductions.

Insurance & Risk

Insurance Landscape in Dallas

Insurance costs directly impact your cash flow. Understanding Dallas's risk profile helps you budget accurately and avoid coverage gaps.

Avg. Annual Premium
$3,200
Dallas average
State Average
$3,500
52% above average
National Average
$2,300
for comparison
Key Risk Drivers
1
Hail storms (North Texas is #1 in U.S. for hail damage)
2
Tornadoes
3
Severe thunderstorms and wind
Coverage Recommendations
Wind/hail coverage with separate deductible (typically 1-2% of dwelling) — critical in North Texas
Flood insurance essential in Houston, coastal areas, and low-lying zones (separate NFIP or private policy)
Named storm deductible for Gulf Coast properties (2-5% of dwelling coverage)
Umbrella liability policy ($1M+) for rental properties given storm-related liability
Cost Seg + Insurance Connection

Texas's high insurance costs make accurate building valuation essential. A cost segregation study provides component-level documentation that supports precise replacement cost estimates — helping you avoid both over- and under-insurance while substantiating claims after storm damage.

Revenue Comparison

STR vs. Long-Term Rental in Dallas

Compare short-term (Airbnb) and long-term rental income for a typical Dallas investment property.

Long-Term Rental
Monthly Rent (3BR)$2,100
Annual Gross$25,200
Vacancy Rate5%
Net Annual$23,940
Tenant StabilityCorporate professionals on 12-24 month leases with high renewal rates due to employer stability
Depreciation Schedule27.5 years
Residential rental property
Tax TreatmentPassive Only
Losses can only offset passive income unless you qualify as a Real Estate Professional (750+ hrs/yr)
Short-Term Rental
Avg. Nightly Rate$165
Occupancy Rate70%
Annual Gross Revenue$42,158
Net Annual (after expenses)$31,618
Management20-25% of gross
Depreciation Schedule39 years
Classified as commercial / transient use property
Tax TreatmentActive Income Eligible
Losses can offset W-2 / active income if you document 100+ hrs of material participation and meet IRS criteria
Cost Seg + STR Loophole

DFW's massive business travel market (DFW Airport is the 3rd busiest globally) creates exceptional STR demand. Material participation in a furnished STR + cost seg on a $380K property yields $32.9K in Year 1 deductions while generating 67% more gross revenue than LTR.

Market Fundamentals

Economy & Housing Demand in Dallas

Strong economic engines create stable rental demand. Here is what drives Dallas's economy and housing market.

Median Income
$78,000
Rent-to-Income
26%
Healthy ratio
Vacancy Rate
4.5%
Pop. Growth
+1.8% annually
Major Employers
1
AT&T (35K+)
2
American Airlines (30K+)
3
Texas Instruments (15K+)
4
Charles Schwab (10K+)
5
Goldman Sachs (5K+)
6
State Farm (8K+)
Top Industries
Financial Services
Technology
Telecommunications
Defense & Aerospace
Healthcare
Landlord & STR Rules
Landlord Friendliness
Very Friendly
Eviction Timeline
21-30 days
STR Regulation
Permitted with registration

Dallas allows STRs with a registration and hotel occupancy tax collection (7% city + 6% state). Fort Worth and most suburbs are permissive. Some HOAs restrict STRs.

Why Invest Here

DFW has attracted more corporate relocations than any metro in America over the past decade. Charles Schwab, Goldman Sachs, Caterpillar, and dozens more have moved HQs here. Each relocation brings thousands of high-income employees who need housing, creating a perpetual demand engine.

Where to Invest

Top Neighborhoods in Dallas

#1
Frisco
Fastest-growing city in DFW with new corporate campuses, sports venues, and top schools
Price
$480K
Rent
$2,500
Yield
6.3%
PGA of America HQ, Dallas Cowboys HQ, and Universal Studios theme park (opening 2026) make Frisco the hottest growth story in DFW. Premium tenant base from corporate relocations.
$480K$2,5006.3%
PGA of America HQ, Dallas Cowboys HQ, and Universal Studios theme park (opening 2026) make Frisco the hottest growth story in DFW. Premium tenant base from corporate relocations.
PGA of America HQ, Dallas Cowboys HQ, and Universal Studios theme park (opening 2026) make Frisco the hottest growth story in DFW. Premium tenant base from corporate relocations.
#2
McKinney / Allen
Charming historic downtown meets modern suburban growth
Price
$420K
Rent
$2,200
Yield
6.3%
McKinney and Allen offer the DFW growth corridor experience at 10-15% below Frisco prices. Strong school districts and growing employment centers drive family rental demand.
$420K$2,2006.3%
McKinney and Allen offer the DFW growth corridor experience at 10-15% below Frisco prices. Strong school districts and growing employment centers drive family rental demand.
McKinney and Allen offer the DFW growth corridor experience at 10-15% below Frisco prices. Strong school districts and growing employment centers drive family rental demand.
#3
Plano / Richardson
Mature tech corridor with Toyota, State Farm, and Liberty Mutual campuses
Price
$400K
Rent
$2,150
Yield
6.5%
Toyota's North American HQ (5K+ employees), State Farm's 8K-employee campus, and the Telecom Corridor create a corporate tenant goldmine. Top Plano ISD schools make this reliable and low-vacancy.
$400K$2,1506.5%
Toyota's North American HQ (5K+ employees), State Farm's 8K-employee campus, and the Telecom Corridor create a corporate tenant goldmine. Top Plano ISD schools make this reliable and low-vacancy.
Toyota's North American HQ (5K+ employees), State Farm's 8K-employee campus, and the Telecom Corridor create a corporate tenant goldmine. Top Plano ISD schools make this reliable and low-vacancy.
#4
Arlington / Grand Prairie
Entertainment corridor between Dallas and Fort Worth with AT&T Stadium and Six Flags
Price
$310K
Rent
$1,800
Yield
7.0%
Arlington offers the best cash-on-cash returns in DFW. AT&T Stadium, Globe Life Field, and Six Flags drive strong STR demand. UT Arlington (40K+ students) provides year-round rental demand.
$310K$1,8007.0%
Arlington offers the best cash-on-cash returns in DFW. AT&T Stadium, Globe Life Field, and Six Flags drive strong STR demand. UT Arlington (40K+ students) provides year-round rental demand.
Arlington offers the best cash-on-cash returns in DFW. AT&T Stadium, Globe Life Field, and Six Flags drive strong STR demand. UT Arlington (40K+ students) provides year-round rental demand.
Local Partners

Investor-Friendly Partners in Dallas, TX

We are building a curated directory of top investor-friendly brokers, property management companies, and service providers in Dallas, TX.

Investor-Friendly Brokers

Top real estate agents who specialize in investment properties and understand cost segregation, 1031 exchanges, and cash-flow analysis.

Coming Soon
Property Management

Vetted property managers who handle tenant screening, maintenance, and rent collection for both long-term and short-term rentals.

Coming Soon
Insurance Agents

Independent insurance agents who specialize in rental property coverage and can leverage cost seg data for accurate replacement cost estimates.

Coming Soon

Are you a broker, property manager, or insurance agent serving investors in Dallas, TX?

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Frequently Asked Questions

Cost Segregation FAQ — Dallas, TX

How much can I save with cost segregation in Dallas, TX?

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On a typical $380K property in Dallas, cost segregation can yield approximately $32,900 in Year 1 combined federal and state tax savings at the 37% bracket, with a study ROI of 658%. Overline studies cost $499-$2,000.

What is the property tax rate in Dallas?

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The effective property tax rate in Dallas is approximately 1.85%. Dallas County effective rate of ~1.85% is among the highest in Texas. Collin County (Plano, Frisco) and Denton County have similar rates. Higher property taxes are the main cost headwind, offset by zero state income tax.

Is Dallas a good market for real estate investing?

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DFW has attracted more corporate relocations than any metro in America over the past decade. Charles Schwab, Goldman Sachs, Caterpillar, and dozens more have moved HQs here. Each relocation brings thousands of high-income employees who need housing, creating a perpetual demand engine.

What is the average insurance cost for rental properties in Dallas?

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The average annual homeowner insurance premium in Dallas is approximately $3,200. Dallas-Fort Worth is the hail capital of America. Multiple billion-dollar hail events have hit the metro in recent years. Impact-resistant roofing (Class 4) can reduce premiums 10-25%.

What are the STR and landlord rules in Dallas?

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Dallas is rated "Very Friendly" for landlords. STR regulation: Permitted with registration. Eviction timeline: 21-30 days. Dallas allows STRs with a registration and hotel occupancy tax collection (7% city + 6% state). Fort Worth and most suburbs are permissive. Some HOAs restrict STRs.

Who are the major employers in Dallas?

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Major employers in Dallas include AT&T (35K+), American Airlines (30K+), Texas Instruments (15K+), Charles Schwab (10K+), Goldman Sachs (5K+). Top industries: Financial Services, Technology, Telecommunications, Defense & Aerospace, Healthcare.

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