Cost segregation case study · Short-term rental
Cypress Point Retreat
Purchase + remodel
$1.15M
Depreciable basis
$952K
Year-one deduction
$364K
Where the cash went
$1.15M in, split into land, building, and remodel
The property was bought for $900,000 and remodeled for $250,000, $1,150,000 in all. Land never depreciates, so it's carved out first; everything else becomes depreciable basis the study then accelerates.
Where the $1.15M went
Every dollar in, by where it landed. Land never depreciates; building plus remodel is what the study accelerates.
$1.15Mtotal spend
Land (never depreciates)$198,000 · 17%
Building basis (from purchase)$702,000 · 61%
Remodel (capitalized)$250,000 · 22%
Building $702,000 + remodel $250,000 = $952,000 depreciable basis.
The remodel · partial disposition
A remodel does two things at once
Placed in service Dec 4, 2025, this study applies a 100% bonus rate. A remodel triggers two deductions in the same year: the old components torn out are written off, and the new short-life improvements take 100% bonus.
Partial asset disposition
The torn-out components, written off now.
Disposition write-off
$58,968
Remaining tax basis of components removed in the remodel, deducted in year one under Treas. Reg. §1.168(i)-8: a one-time loss, not spread over 27.5 years.
100% bonus on short-life
Bonus rate for property placed in service 2025.
Short-life reclassified
$304,301
5- and 15-year property pulled out of the building shell. 100% takes bonus in year one; the rest follows the normal MACRS schedule.
Inside the study
What the engine found
The deterministic engine separated the $952,000 depreciable basis into IRS recovery classes, then the engineered review confirmed every component against the source documents.
Component allocation
$952,000 depreciable basis across MACRS recovery classes.
$952Kbasis
5-year personal property$231,758 · 24%
15-year land improvements$72,543 · 8%
27.5-year building shell$588,731 · 62%
Written off this year (disposition)$58,968 · 6%
Residential rental building $444KGeneral contractor labor: c… $63KCarpet and flooring (non-pe… $28KWindow treatments $28KCabinetry (non-permanent) $28KAppliances $28KDecorative lighting $28KLinens and decor (non-perma… $28K
Year one, in dollars
Two deductions stack in the first year.
| Accelerated depreciation | $305,193 |
| Partial-asset disposition write-off | $58,968 |
| Total year-one deduction | $364,161 |
| Straight-line without a study | ~$34,618/yr |
About 11× more deduction pulled into year one than straight-line.
Depreciation by year
Year-one spike from bonus depreciation, then the building shell.
| Year 1 | $364,161 |
| Year 2 | $21,408 |
| Year 3 | $21,408 |
| Year 4 | $21,408 |
| Year 5 | $21,408 |
Method. Allocations follow the IRS Cost Segregation Audit Techniques Guide, Rev. Proc. 87-56, and MACRS (Pub. 946), with the 100% bonus rate (placed in service 2025) applied to qualifying 5- and 15-year property. The engine produces the figures deterministically; AI is used only to sort and extract from uploaded documents. Every line cleared the engineered review.
Run on Unlevered · engineered review · ULV-2025-2762