Cost segregation case study · Short-term rental
The Salt House Marion
Purchase + remodel
$907K
Depreciable basis
$546K
Year-one deduction
$322K
Where the cash went
$907K in, split into land, building, and remodel
The property was bought for $565,000 and remodeled for $341,964, $906,964 in all. Land never depreciates, so it's carved out first; everything else becomes depreciable basis the study then accelerates.
Where the $907K went
Every dollar in, by where it landed. Land never depreciates; building plus remodel is what the study accelerates.
$907Ktotal spend
Land (never depreciates)$361,092 · 40%
Building basis (from purchase)$203,908 · 22%
Remodel (capitalized)$341,964 · 38%
Building $203,908 + remodel $341,964 = $545,873 depreciable basis.
The remodel · partial disposition
A remodel does two things at once
Placed in service May 15, 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
$122,345
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
$193,350
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 $545,873 depreciable basis into IRS recovery classes, then the engineered review confirmed every component against the source documents.
Component allocation
$545,873 depreciable basis across MACRS recovery classes.
$546Kbasis
5-year personal property$173,806 · 32%
15-year land improvements$19,543 · 4%
27.5-year building shell$230,178 · 42%
Written off this year (disposition)$122,345 · 22%
Residential rental building $55KDemolition (capitalized int… $35KHVAC system: furnace, AC, d… $28KKitchen appliances $26KLiving room furniture $18KCarpentry: framing & struct… $17KKitchen operations: cookwar… $15KProject management (§263A a… $14K
Year one, in dollars
Two deductions stack in the first year.
| Accelerated depreciation | $199,976 |
| Partial-asset disposition write-off | $122,345 |
| Total year-one deduction | $322,321 |
| Straight-line without a study | ~$19,850/yr |
About 16× more deduction pulled into year one than straight-line.
Depreciation by year
Year-one spike from bonus depreciation, then the building shell.
| Year 1 | $322,321 |
| Year 2 | $8,370 |
| Year 3 | $8,370 |
| Year 4 | $8,370 |
| Year 5 | $8,370 |
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-C397