Cost Segregation in San Antonio, TX

The military city — Joint Base San Antonio is the largest military installation in the DoD, and combined with USAA headquarters and booming tourism, San Antonio delivers recession-proof rental demand at Texas's most affordable big-city prices.

Population
2.6M
Median Home
$275K
Rent (3BR)
$1,550
Property Tax
1.55%
Annual Job Growth
30K+
Ranking
Military City USA
Overview

Value Props for Investors

MILITARY ANCHOR
Joint Base SA: 80K+ Personnel, BAH-Guaranteed Rent

The Department of Defense's largest installation combines Lackland AFB, Randolph AFB, and Fort Sam Houston. Military BAH provides government-guaranteed monthly rent payments — the gold standard for landlord income security.

USAA ANCHOR
35K USAA Employees + Insurance Hub

USAA is San Antonio's largest private employer and one of the most stable companies in America. USAA employees earn $70K-$150K and represent premium, long-term tenants. The cybersecurity corridor adds tech worker demand.

AFFORDABLE ENTRY
$275K Median Price + Zero State Tax

San Antonio offers the most affordable entry point among Texas's big four metros. Combined with zero state income tax and $22.8K in Year 1 federal cost seg savings, you can build a multi-property portfolio here for the price of a single Austin home.

Tax Strategy

Cost Segregation & Tax Rules in San Antonio, TX

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

Cost Seg Overview
State vs. Federal Rules
Tax Landscape
Typical Purchase
$275,000
Building Value
80%
20% land / 80% building
Cost Seg Range
22-35%
of building reclassified
Home Age
24 yrs
Built ~2000
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 San Antonio, typical reclassification rates are 22-35% of building value.

Purchase Price Breakdown
Building 80%$220,000
Land 20%$55,000
Building Value Reallocation (with Cost Seg)
5-Year Property17%
$36,960
15-Year Property11%
$24,640
27.5 / 39-Year (Remaining)72%
$158,400

5 & 15-year components ($61,600 = 28% 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 $275,000 property with 80% building value and 28% reclassification yields ~$22,792 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 2000, San Antonio'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 San Antonio 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
1.55%
San Antonio effective rate
Transfer Tax
None — Texas has no transfer tax or documentary stamps
State Income Tax
0%
None
Property Tax Details

Bexar County effective rate of ~1.55%. Military homestead exemptions available. Investment properties pay the full rate but benefit from Texas's lack of 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 San Antonio 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 San Antonio, 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 San Antonio, TX Property Details
$
50%95%
5%35%
2%25%
Total Reclassified28% of building
10%37%
Estimated Year 1 Tax Savings
Building Value$220,000
$275,000 x 80%
Normal Annual Depreciation$8,000
$220,000 ÷ 27.5 yr (residential)
5-Year Reclassified$37,400
15-Year Reclassified$24,200
Total Accelerated$61,600
28% of $220,000 building value
Federal Tax Savings (Year 1)$22,792
$61,600 x 37% bracket
Total Year 1 Tax Savings$22,792
7.7x 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 San Antonio

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

Avg. Annual Premium
$2,800
San Antonio average
State Average
$3,500
52% above average
National Average
$2,300
for comparison
Key Risk Drivers
1
Hail and severe thunderstorms
2
Flash flooding from Hill Country runoff
3
Occasional tornado risk
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 San Antonio

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

Long-Term Rental
Monthly Rent (3BR)$1,500
Annual Gross$18,000
Vacancy Rate5%
Net Annual$17,100
Tenant StabilityMilitary personnel with BAH provide government-guaranteed rent and typically sign 12-month leases aligned with duty station assignments
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$130
Occupancy Rate72%
Annual Gross Revenue$34,164
Net Annual (after expenses)$25,623
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

San Antonio's tourism (Riverwalk, Alamo, theme parks) creates strong STR demand downtown. Material participation in a furnished STR + cost seg yields $22.8K in federal deductions while the Riverwalk-area STR can gross nearly double an LTR.

Market Fundamentals

Economy & Housing Demand in San Antonio

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

Median Income
$60,000
Rent-to-Income
25%
Healthy ratio
Vacancy Rate
4.8%
Pop. Growth
+1.3% annually
Major Employers
1
Joint Base San Antonio (80K+)
2
USAA (35K+)
3
H-E-B HQ (10K+)
4
Valero Energy (5K+)
5
Methodist Healthcare (12K+)
6
iHeartMedia HQ (3K+)
Top Industries
Military & Defense
Insurance & Finance
Healthcare
Tourism & Hospitality
Cybersecurity
Landlord & STR Rules
Landlord Friendliness
Very Friendly
Eviction Timeline
21-30 days
STR Regulation
Permitted with registration

San Antonio allows STRs with registration and requires hotel occupancy tax collection (16.75% combined). The Riverwalk and downtown area see strong STR demand from tourists.

Why Invest Here

San Antonio is the ultimate military market. Joint Base SA is the DoD's largest installation, with 80K+ military and civilian personnel. Military BAH provides government-guaranteed rent. USAA's 35K employees add a second recession-proof tenant pool. At $275K median prices with zero state income tax, this is the best risk-adjusted cash flow play in Texas.

Where to Invest

Top Neighborhoods in San Antonio

#1
Stone Oak / North San Antonio
Upscale suburban with medical corridor, top schools, and newer construction
Price
$380K
Rent
$2,000
Yield
6.3%
Baptist Health System and the South Texas Medical Center corridor drive healthcare tenant demand. Highly-rated North East ISD attracts families willing to pay premium rents.
$380K$2,0006.3%
Baptist Health System and the South Texas Medical Center corridor drive healthcare tenant demand. Highly-rated North East ISD attracts families willing to pay premium rents.
Baptist Health System and the South Texas Medical Center corridor drive healthcare tenant demand. Highly-rated North East ISD attracts families willing to pay premium rents.
#2
Helotes / Far West Side
Rapidly growing suburban corridor with USAA commuter appeal
Price
$320K
Rent
$1,750
Yield
6.6%
Close proximity to USAA's campus makes Helotes a favorite for insurance professionals. New master-planned communities provide modern homes with strong cost seg components.
$320K$1,7506.6%
Close proximity to USAA's campus makes Helotes a favorite for insurance professionals. New master-planned communities provide modern homes with strong cost seg components.
Close proximity to USAA's campus makes Helotes a favorite for insurance professionals. New master-planned communities provide modern homes with strong cost seg components.
#3
Converse / Universal City
Military family corridor between Randolph AFB and Fort Sam Houston
Price
$240K
Rent
$1,450
Yield
7.3%
Ground zero for military BAH-paying tenants. Randolph AFB and Fort Sam Houston personnel fill rentals year-round. Sub-$250K entry with the highest cash-on-cash returns in the metro.
$240K$1,4507.3%
Ground zero for military BAH-paying tenants. Randolph AFB and Fort Sam Houston personnel fill rentals year-round. Sub-$250K entry with the highest cash-on-cash returns in the metro.
Ground zero for military BAH-paying tenants. Randolph AFB and Fort Sam Houston personnel fill rentals year-round. Sub-$250K entry with the highest cash-on-cash returns in the metro.
#4
Downtown / Riverwalk Area
Tourist destination with Alamo, Riverwalk, and convention center
Price
$300K
Rent
$1,600
Yield
6.4%
STR goldmine near the Riverwalk. San Antonio attracts 34M+ visitors annually. Condos and small units can gross $34K+/year as STRs. The older building stock near downtown yields higher cost seg reclassification rates.
$300K$1,6006.4%
STR goldmine near the Riverwalk. San Antonio attracts 34M+ visitors annually. Condos and small units can gross $34K+/year as STRs. The older building stock near downtown yields higher cost seg reclassification rates.
STR goldmine near the Riverwalk. San Antonio attracts 34M+ visitors annually. Condos and small units can gross $34K+/year as STRs. The older building stock near downtown yields higher cost seg reclassification rates.
Local Partners

Investor-Friendly Partners in San Antonio, TX

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

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Frequently Asked Questions

Cost Segregation FAQ — San Antonio, TX

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

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On a typical $275K property in San Antonio, cost segregation can yield approximately $22,792 in Year 1 combined federal and state tax savings at the 37% bracket, with a study ROI of 570%. Overline studies cost $499-$2,000.

What is the property tax rate in San Antonio?

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The effective property tax rate in San Antonio is approximately 1.55%. Bexar County effective rate of ~1.55%. Military homestead exemptions available. Investment properties pay the full rate but benefit from Texas's lack of income tax.

Is San Antonio a good market for real estate investing?

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San Antonio is the ultimate military market. Joint Base SA is the DoD's largest installation, with 80K+ military and civilian personnel. Military BAH provides government-guaranteed rent. USAA's 35K employees add a second recession-proof tenant pool. At $275K median prices with zero state income tax, this is the best risk-adjusted cash flow play in Texas.

What is the average insurance cost for rental properties in San Antonio?

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The average annual homeowner insurance premium in San Antonio is approximately $2,800. San Antonio's inland location avoids hurricane risk, keeping insurance below Gulf Coast levels. Hail and severe storms are the primary risks. Flash flooding from Hill Country runoff is a concern in specific areas.

What are the STR and landlord rules in San Antonio?

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San Antonio is rated "Very Friendly" for landlords. STR regulation: Permitted with registration. Eviction timeline: 21-30 days. San Antonio allows STRs with registration and requires hotel occupancy tax collection (16.75% combined). The Riverwalk and downtown area see strong STR demand from tourists.

Who are the major employers in San Antonio?

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Major employers in San Antonio include Joint Base San Antonio (80K+), USAA (35K+), H-E-B HQ (10K+), Valero Energy (5K+), Methodist Healthcare (12K+). Top industries: Military & Defense, Insurance & Finance, Healthcare, Tourism & Hospitality, Cybersecurity.

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