Cost segregation case study · Short-term rental
Timber Ridge at Sea Ranch
Purchase + remodel
$1.23M
Depreciable basis
$849K
Year-one deduction
$498K
Where the cash went
$1.23M in, split into land, building, and remodel
The property was bought for $837,500 and remodeled for $388,424, $1,225,924 in all. Land never depreciates, so it's carved out first; everything else becomes depreciable basis the study then accelerates.
Where the $1.23M went
Every dollar in, by where it landed. Land never depreciates; building plus remodel is what the study accelerates.
$1.23Mtotal spend
Land (never depreciates)$376,875 · 31%
Building basis (from purchase)$460,625 · 38%
Remodel (capitalized)$388,424 · 32%
Building $460,625 + remodel $388,424 = $849,049 depreciable basis.
The remodel · partial disposition
A remodel does two things at once
Placed in service Jun 15, 2024, this study applies a 60% 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 60% bonus.
Partial asset disposition
The torn-out components, written off now.
Disposition write-off
$317,831
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.
60% bonus on short-life
Bonus rate for property placed in service 2024.
Short-life reclassified
$264,529
5- and 15-year property pulled out of the building shell. 60% takes bonus in year one; the rest follows the normal MACRS schedule.
Inside the study
What the engine found
The deterministic engine separated the $849,049 depreciable basis into IRS recovery classes, then the engineered review confirmed every component against the source documents.
Component allocation
$849,049 depreciable basis across MACRS recovery classes.
$849Kbasis
5-year personal property$186,085 · 22%
15-year land improvements$78,443 · 9%
27.5-year building shell$266,689 · 31%
Written off this year (disposition)$317,831 · 37%
Residential rental building $129KProjected Deck & Landscape … $63KKitchen Cabinetry & All Cus… $30KTiling $19KGarage Work, Floor Install,… $19KPainting $12KDemo $10KPlumbing $10K
Year one, in dollars
Two deductions stack in the first year.
| Accelerated depreciation | $180,426 |
| Partial-asset disposition write-off | $317,831 |
| Total year-one deduction | $498,257 |
| Straight-line without a study | ~$30,875/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 | $498,257 |
| Year 2 | $36,498 |
| Year 3 | $26,672 |
| Year 4 | $20,689 |
| Year 5 | $20,447 |
Method. Allocations follow the IRS Cost Segregation Audit Techniques Guide, Rev. Proc. 87-56, and MACRS (Pub. 946), with the 60% bonus rate (placed in service 2024) 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-2024-FBAE