4620 Coyote Ridge Rd
| Property type | Short-Term Rental · Single-Family Residence |
|---|---|
| Year built | 2021 |
| Square feet | 2,759 |
| Lot size | 4.23 acre |
Executive summary
This study reclassifies a portion of the property's depreciable basis from 39-year nonresidential into shorter recovery periods, accelerating deductions into year one under current bonus depreciation rules.
Basis of this study. This study covers 4620 Coyote Ridge Rd, a single-family home placed in service Jan 1, 2026, operated as a short-term rental. The entire property is in scope at 100% business use. Depreciation runs on the 39-year transient-occupancy schedule, applied to a depreciable basis of $1,481,525 ($453,681 land excluded from $1,935,206 total). The residual structural shell is classified as 39-year nonresidential real property because the property is operated as transient lodging.
| Step | What it is | Basis |
|---|---|---|
| Original acquisition | Purchase price of the lot and the structure that stood on it | $810,000 |
| Land | Carried forward at its basis; land is never depreciated | $453,681 |
| Original structure | Destroyed by fire; its remaining cost is a casualty loss, not added to the land | $356,319 |
| New construction · placed in service 2026 | Reconstruction cost: a new depreciable asset, the basis this study depreciates | $1,481,525 |
The home that was destroyed isn't carried over for tax. The rebuilt home is treated as a brand-new property, placed in service in 2026: its depreciation starts then, and we depreciate its full reconstruction cost. The original structure's basis isn't added to the land or rolled into the new building.
Expand for defensible details
The original structure was destroyed by casualty (e.g. fire) and a new structure was rebuilt and placed in service as a rental. The rebuild is a NEW depreciable asset, with its own placed-in-service date and a basis equal to the reconstruction cost, fully eligible for cost segregation. The pre-placement construction retired no depreciating component, so there is no §1.168(i)-8 partial-asset disposition; and §280B does not apply: it reaches only a voluntary demolition (Treas. Reg. §1.280B-1), and IRS Notice 90-21 confirms its capitalize-to-land rule does not reach a casualty (a §165 loss / §1033 involuntary conversion), so the rebuild basis is not added to land. The preparer confirms any §1033 involuntary-conversion basis reduction and, if the rebuilt home was used personally before the rental, the lesser-of-cost-or-FMV conversion basis.
| Tax year | Detail | Deduction | Cumulative |
|---|---|---|---|
| Year 1 | FY 2026 · Short-life + shell (partial) | $509,449 | $509,449 |
| Year 2 | FY 2027 · 39-yr shell | $25,553 | $535,002 |
| Year 3 | FY 2028 · 39-yr shell | $25,553 | $560,555 |
| Year 4 | FY 2029 · 39-yr shell | $25,553 | $586,108 |
| Year 5 | FY 2030 · 39-yr shell | $25,553 | $611,661 |
| Years 6–40 | FY 2031–2065 · 39-yr shell | $869,865 | $1,481,526 |
| Year 6 | FY 2031 · 39-yr shell | $25,553 | $637,214 |
| Year 7 | FY 2032 · 39-yr shell | $25,553 | $662,767 |
| Year 8 | FY 2033 · 39-yr shell | $25,553 | $688,320 |
| Year 9 | FY 2034 · 39-yr shell | $25,553 | $713,873 |
| Year 10 | FY 2035 · 39-yr shell | $25,553 | $739,426 |
| Year 11 | FY 2036 · 39-yr shell | $25,553 | $764,979 |
| Year 12 | FY 2037 · 39-yr shell | $25,553 | $790,532 |
| Year 13 | FY 2038 · 39-yr shell | $25,553 | $816,085 |
| Year 14 | FY 2039 · 39-yr shell | $25,553 | $841,638 |
| Year 15 | FY 2040 · 39-yr shell | $25,553 | $867,191 |
| Year 16 | FY 2041 · 39-yr shell | $25,553 | $892,744 |
| Year 17 | FY 2042 · 39-yr shell | $25,553 | $918,297 |
| Year 18 | FY 2043 · 39-yr shell | $25,553 | $943,850 |
| Year 19 | FY 2044 · 39-yr shell | $25,553 | $969,403 |
| Year 20 | FY 2045 · 39-yr shell | $25,553 | $994,956 |
| Year 21 | FY 2046 · 39-yr shell | $25,553 | $1,020,509 |
| Year 22 | FY 2047 · 39-yr shell | $25,553 | $1,046,062 |
| Year 23 | FY 2048 · 39-yr shell | $25,553 | $1,071,615 |
| Year 24 | FY 2049 · 39-yr shell | $25,553 | $1,097,168 |
| Year 25 | FY 2050 · 39-yr shell | $25,553 | $1,122,721 |
| Year 26 | FY 2051 · 39-yr shell | $25,553 | $1,148,274 |
| Year 27 | FY 2052 · 39-yr shell | $25,553 | $1,173,827 |
| Year 28 | FY 2053 · 39-yr shell | $25,553 | $1,199,380 |
| Year 29 | FY 2054 · 39-yr shell | $25,553 | $1,224,933 |
| Year 30 | FY 2055 · 39-yr shell | $25,553 | $1,250,486 |
| Year 31 | FY 2056 · 39-yr shell | $25,553 | $1,276,039 |
| Year 32 | FY 2057 · 39-yr shell | $25,553 | $1,301,592 |
| Year 33 | FY 2058 · 39-yr shell | $25,553 | $1,327,145 |
| Year 34 | FY 2059 · 39-yr shell | $25,553 | $1,352,698 |
| Year 35 | FY 2060 · 39-yr shell | $25,553 | $1,378,251 |
| Year 36 | FY 2061 · 39-yr shell | $25,553 | $1,403,804 |
| Year 37 | FY 2062 · 39-yr shell | $25,553 | $1,429,357 |
| Year 38 | FY 2063 · 39-yr shell | $25,553 | $1,454,910 |
| Year 39 | FY 2064 · 39-yr shell | $25,553 | $1,480,463 |
| Year 40 | FY 2065 · 39-yr shell | $1,063 | $1,481,526 |
| Total over 40 years | $1,481,526 | ||
Short-life property is deducted in full now; only the 39-year shell spreads forward.
How the asset depreciates
This year's deduction comes from reclassifying short-life property out of the building basis: the 5- and 15-year components take bonus depreciation now, and the rest depreciates on the regular schedule.
This parcel carries more than one building. Each is a separate depreciable asset; itemized costs are attributed to each below. Shared site improvements (pool, landscaping, site work) are listed separately; the un-itemized structural shell is split evenly across the buildings.
Component allocation
$484,960 of short-life property, accelerated out of the $1,481,525 depreciable basis. The rollup below organizes the full basis by recovery period, then down to each component and its verified source.
Recovery bucket → component line item.
5-year personal property$227,690
| Relocatable prefab gym studio, 288 sqft (Havenform Studio 288), delivered + set on pad | §1245 | $92,500 | Contractor invoice · Havenform Prefab Co. |
| Relocatable prefab cedar sauna (Havenform Cedar Sauna 6), delivered + commissioned | §1245 | $27,925 | Contractor invoice · Havenform Prefab Co. |
| Permits & fees · 2 draws | §1245 | $21,048 | Multiple |
| General contractor: supervision, site management + final completion draw (§263A allocated → 5-yr) | §1245 | $17,409 | Contractor invoice · Meridian Ridge Builders |
| Custom kitchen cabinetry: shaker fronts, maple, soft-close (cabin 1) | §1245 | $16,400 | Contractor invoice · Meridian Ridge Builders |
| Custom kitchen cabinetry: shaker fronts, maple, soft-close (cabin 2) | §1245 | $16,400 | Contractor invoice · Meridian Ridge Builders |
| Countertops · 2 draws | §1245 | $16,400 | Contractor invoice · Meridian Ridge Builders |
| Cabinetry · 4 draws | §1245 | $14,800 | Contractor invoice · Meridian Ridge Builders |
| Lighting · 2 draws | §1245 | $1,641 | Multiple |
| Civil engineering: grading + drainage plans (§263A allocated → 5-yr) | §1245 | $1,236 | Contractor invoice · Carrow & Field Civil Engineering |
| Geotechnical investigation + soils report (§263A allocated → 5-yr) | §1245 | $956 | Contractor invoice · Terrafirm Geotechnical |
| Structural engineering: moment-frame calcs + framing inspections (§263A allocated → 5-yr) | §1245 | $573 | Contractor invoice · Halvorsen Structural Engineering |
| Title 24 energy compliance reports (§263A allocated → 5-yr) | §1245 | $346 | Contractor invoice · Valley Energy Compliance |
| Septic system evaluation report (§263A allocated → 5-yr) | §1245 | $55 | Contractor invoice · Sonoma Septic & Site Services |
15-year land improvements$257,271
| Pool & spa · 4 draws | §1250 | $86,053 | Multiple |
| Landscape package: planting, drip irrigation + gravel paths | §1250 | $45,000 | Contractor invoice · Meridian Ridge Builders |
| Deck & patio · 2 draws | §1250 | $40,000 | Contractor invoice · Meridian Ridge Builders |
| Excavation & grading · 2 draws | §1250 | $26,397 | Multiple |
| Permits & fees · 2 draws | §1250 | $23,783 | Multiple |
| General contractor: supervision, site management + final completion draw (§263A allocated → 15-yr) | §1250 | $19,671 | Contractor invoice · Meridian Ridge Builders |
| Site drainage: french drains + culvert | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Wiring · 2 draws | §1250 | $3,941 | Multiple |
| Geotechnical investigation + soils report (§263A allocated → 15-yr) | §1250 | $1,080 | Contractor invoice · Terrafirm Geotechnical |
| Structural engineering: moment-frame calcs + framing inspections (§263A allocated → 15-yr) | §1250 | $647 | Contractor invoice · Halvorsen Structural Engineering |
| Lighting design + fixture scheduling (§263A allocated → 15-yr) | §1250 | $636 | Contractor invoice · Atelier Vance Architecture |
| Septic system evaluation report (§263A allocated → 15-yr) | §1250 | $63 | Contractor invoice · Sonoma Septic & Site Services |
39-year nonresidential shell$996,565
| Permits & fees · 2 draws | §1250 | $92,126 | Multiple |
| Deck & patio · 2 draws | §1250 | $85,000 | Contractor invoice · Meridian Ridge Builders |
| General contractor: supervision, site management + final completion draw (§263A allocated → 39-yr) | §1250 | $76,196 | Contractor invoice · Meridian Ridge Builders |
| Framing · 3 draws | §1250 | $69,507 | Multiple |
| Foundation · 2 draws | §1250 | $60,000 | Contractor invoice · Meridian Ridge Builders |
| Wiring · 5 draws | §1250 | $51,513 | Multiple |
| Paint & finishes · 4 draws | §1250 | $48,500 | Contractor invoice · Meridian Ridge Builders |
| Aluminum-clad wood windows, both cabins (23 units) | §1250 | $43,000 | Contractor invoice · Meridian Ridge Builders |
| Siding · 2 draws | §1250 | $38,000 | Contractor invoice · Meridian Ridge Builders |
| Structural steel · 2 draws | §1250 | $37,000 | Contractor invoice · Meridian Ridge Builders |
| Septic · 3 draws | §1250 | $30,242 | Contractor invoice · Sonoma Septic & Site Services |
| Flooring · 2 draws | §1250 | $28,855 | Contractor invoice · Golden State Hardwood Co. |
| Standing-seam metal roofing, both cabins | §1250 | $26,500 | Contractor invoice · Meridian Ridge Builders |
| Insulation · 2 draws | §1250 | $26,000 | Contractor invoice · Meridian Ridge Builders |
| Mechanical · 4 draws | §1250 | $24,000 | Contractor invoice · Meridian Ridge Builders |
| Lighting · 3 draws | §1250 | $22,465 | Multiple |
| Plumbing · 3 draws | §1250 | $22,058 | Multiple |
| Residential fire sprinkler system: completion + commissioning | §1250 | $20,000 | Contractor invoice · Meridian Ridge Builders |
| Drywall & plaster · 2 draws | §1250 | $19,500 | Contractor invoice · Meridian Ridge Builders |
| Main service panels: 200A mains + subpanels, both cabins | §1250 | $18,000 | Contractor invoice · Redwood Electric Co. |
| Exterior doors: entries, french doors + sliders, both cabins | §1250 | $15,000 | Contractor invoice · Meridian Ridge Builders |
| Top-out plumbing: supply + waste risers (cabin 1) | §1250 | $15,000 | Contractor invoice · Meridian Ridge Builders |
| Top-out plumbing: supply + waste risers (cabin 2) | §1250 | $15,000 | Contractor invoice · Meridian Ridge Builders |
| Underfloor plumbing rough-in (cabin 1) | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Underfloor plumbing rough-in (cabin 2) | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Utility meter hookup + service connection | §1250 | $10,000 | Contractor invoice · Redwood Electric Co. |
| Fire sprinkler design + rough-in, both cabins | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Water service hookup + pressure regulator | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Interior doors, casing + trim carpentry (cabin 1) | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Interior doors, casing + trim carpentry (cabin 2) | §1250 | $10,000 | Contractor invoice · Meridian Ridge Builders |
| Tongue-and-groove hemlock ceiling (cabin 1) | §1250 | $8,000 | Contractor invoice · Meridian Ridge Builders |
| Tongue-and-groove hemlock ceiling (cabin 2) | §1250 | $8,000 | Contractor invoice · Meridian Ridge Builders |
| Low-voltage prewire: network, AV + security, both cabins | §1250 | $5,910 | Contractor invoice · Redwood Electric Co. |
| Civil engineering: grading + drainage plans (§263A allocated → 39-yr) | §1250 | $5,410 | Contractor invoice · Carrow & Field Civil Engineering |
| Gutters + downspouts, both cabins | §1250 | $5,000 | Contractor invoice · Meridian Ridge Builders |
| Geotechnical investigation + soils report (§263A allocated → 39-yr) | §1250 | $4,184 | Contractor invoice · Terrafirm Geotechnical |
| Fire-sprinkler trim-out at door heads + escutcheons, both cabins | §1250 | $4,000 | Contractor invoice · Meridian Ridge Builders |
| Tankless water heaters ×2, propane | §1250 | $2,598 | Contractor invoice · Ferguson |
Furnishing the property to operate as a rental is a separate investment from the building. Where receipts weren't kept, Unlevered values each item and depreciates it as 5-year §1245 personal property, a stand-in for the original invoices. It's a separate pool from the building reclassification above, and it's already included in your year-one deduction. Each row shows any written-off basis of a replaced item next to the new property placed in service; expand for the itemized detail.
With the $484,960of short-life property reclassified from the building basis above, that's $540,720 of accelerated 5- and 15-year property placed in service. They are carried as separate pools by asset class (the reclassified building components and the §1245 furnishings each depreciate on their own schedule), all placed in service together with the property.
What each state does with this deduction
Each state this study touches, classified by how it treats the federal year-one deduction.
Lifetime difference: $0. Timing only, recovered in later years.
CA defers $426,559 of the deduction in year one, then returns it over the following years, reaching $0 by year 16. The lifetime deduction is the same; only the timing differs.
You still get the federal deduction now. California taxable income is $426,559 higher than federal in year one, but that amount is deducted in later years.
Use the federal schedule for the federal return and a California recomputation schedule for the CA return.
Schedule: CA FTB 3885A
Verified sources
Every figure traces to a primary source. This is the provenance behind the engineered review: what we relied on, what it established, and how we confirmed it.
| Source | What it verified | How | Status |
|---|---|---|---|
| Contractor invoices | Component costs & quantities | Client-uploaded receipts, reconciled to scope | Verified |
| Client photographs (29) | Existence & condition of reclassified assets | Engineer review | Verified |
| IRS authorities | Classification & recovery periods | Cross-referenced per component | Verified |
| CPA-provided facts | original structure destroyed by casualty, bonus acquisition date | Entered by your CPA on your behalf and logged to the audit trail | Verified |
Client photos cross-referenced against component allocations. Each asset is tied to its MACRS classification and the permit or invoice that supports it.
- Kitchen range and oven5-YR PERSONAL
- Exterior windows with frames39-YR SHELL
- Exterior window/patio door39-YR SHELL
- Shower wall tile39-YR SHELL
- Toilet fixture39-YR SHELL
- Vanity with integrated sink39-YR SHELL
- Bathroom flooring (dark tile)39-YR SHELL
- Composite deck flooring15-YR LAND IMP.
- Deck framing and decking15-YR LAND IMP.
Photo verification components
| Asset | Class | Identified by |
|---|---|---|
| Kitchen range and oven | 5-YR PERSONAL | AI vision · engineering-reviewed |
| Composite deck flooring | 15-YR LAND IMP. | AI vision · engineering-reviewed |
| Deck framing and decking | 15-YR LAND IMP. | AI vision · engineering-reviewed |
| Bathroom flooring (dark tile) | 39-YR SHELL | AI vision · engineering-reviewed |
| Exterior window/patio door | 39-YR SHELL | AI vision · engineering-reviewed |
| Exterior windows with frames | 39-YR SHELL | AI vision · engineering-reviewed |
| Shower wall tile | 39-YR SHELL | AI vision · engineering-reviewed |
| Toilet fixture | 39-YR SHELL | AI vision · engineering-reviewed |
| Vanity with integrated sink | 39-YR SHELL | AI vision · engineering-reviewed |
Methodology calibrated to IRS standards
Component allocations follow the IRS Cost Segregation Audit Techniques Guide and MACRS recovery periods. Every assumption traces to a publicly cited authority.
The residual structural shell is depreciated as 39-year nonresidential real property. Operated as transient lodging (average guest stay ≤30 days), not residential rental property under IRC §168(e)(2)(A)(ii)(I). The tax use of the property controls the recovery period, not its physical form.
Statutory authority: IRC §168(e)(2)(A)(ii)(I) · IRC §168(e)(2)(B) · IRC §168(c).
$274,498 of indirect soft costs (architectural and engineering design, permits, and construction oversight) are capitalized into basis under §263A and allocated pro-rata across the depreciable asset classes in proportion to direct basis, rather than capitalized entirely to the building shell. $89,854 of that pool rides to 5- and 15-year property, where it is recovered on the same accelerated schedule as the components it supports.
| 5-year property | $42,186 |
|---|---|
| 15-year property | $47,667 |
| 39-year property | $184,644 |
The figures above are fixed by these study-specific inputs: the bonus rate is set by the placed-in-service and §168(k) acquisition dates, and any disposition is a taxpayer election. They carry through the entire study.
| Tax year of filing | 2026 MACRS recovery periods, conventions, and the bonus rate are applied as in effect for this filing year. |
|---|---|
| First-year bonus rate | 100% IRC §168(k) first-year bonus depreciation. 100% bonus per OBBBA restoration (PIS on/after 2025-01-20; depreciable property acquired/self-constructed on/after 2025-01-20 under §168(k), incl. component election). |
| Original acquisition price | $810,000 Purchase price of the lot and the original structure that stood on it. |
| Land allocation | $453,681 Land is non-depreciable. Split per the county assessor's land-to-improvement ratio. |
| Original structure basis | $356,319 Basis of the structure lost to the casualty. Treated as a casualty loss, not capitalized to land and not carried into the rebuilt structure (IRS Notice 90-21). |
| New depreciable reconstruction basis | $1,481,525 The rebuilt structure placed in service: a new depreciable asset, and the basis this study reclassifies and depreciates. |
| MACRS conventions | Mid-month / half-year The 39-year shell uses the mid-month convention; 5- and 15-year property uses the half-year (or mid-quarter) convention per IRS Pub. 946. |
| Authority | How it applies to this study |
|---|---|
| STATUTE IRC §167 | IRC §167 |
| STATUTE IRC §168 | IRC §168 |
| REV_PROC Rev. Proc. 87-56 | Rev. Proc. 87-56, 1987-2 C.B. 674 |
| ATG Cost Seg ATG | IRS Cost Segregation Audit Technique Guide (revised 2017) |
| REV_RUL Rev. Rul. 2003-81 | Rev. Rul. 2003-81, 2003-2 C.B. 126 |
| REG Treas. Reg. §1.167(a)-1 | Treas. Reg. §1.167(a)-1 |
| CASE AmeriSouth | AmeriSouth XXXII Ltd. v. Commissioner, T.C. Memo 2012-67 |
| CASE Whiteco | Whiteco Industries Inc. v. Commissioner, 65 T.C. 664 (1975) |
Engineered review pass
Every study runs through the same four-stage engineered review before release: produced by the cost segregation engine, independently re-computed, and cross-checked against IRS authorities and public records.
Source ingestion
Source facts and citations verified at intake.
Component classification
Components mapped to MACRS class lives per Rev. Proc. 87-56 + IRS ATG.
Reconciliation
Allocation sum reconciled to depreciable basis within tolerance.
Compliance check
Bonus eligibility, anti-churning, and completeness validated.
AI engineering review
The study is reviewed through an engineered QA workflow designed around IRS ATG review criteria, with human review of component classifications and cost reconciliations.
Independent re-computation
Allocations re-run by a second model and reconciled.
IRS-authority cross-check
Each component mapped to the IRS ATG, Rev. Proc. 87-56, and MACRS class lives.
Audit trail retained
Every source document and the full run log are retained for the audit-defense window.