On Nantucket, the tax assessor’s “land” number is not your non-depreciable basis, and treating it that way can cost you a mid-six-figure deduction. Dirt is the scarce asset here, so the assessor often puts the majority of value on the land line, and owners conclude that cost segregation barely helps. Two facts break that assumption: the assessor’s land line frequently bundles depreciable site improvements (the crushed-shell drives, bluestone terraces, seawalls, irrigation, landscaping, and pools), and a defensible improvement allocation is an engineering question, not the assessor’s ratio. Those site improvements are 15-year depreciable property, legally distinct from raw land.
Want a number for a specific Nantucket property? Use the calculator. It is pre-set with property-type defaults you can adjust to match your basis and tax bracket.
Cost Segregation in Nantucket, MA
A worked example (modeled)
Consider a luxury Nantucket summer rental, a primary house plus guest cottage, acquired for $4,500,000. Every figure here is a modeled illustration, not a measured result or a promise; your study and CPA determine the actual amounts.
Island land is a very high share of value, so land comes out first (the exact percentage is property-specific, set from an appraisal or §1060 allocation, never assumed). That leaves a depreciable building basis of roughly $2,025,000. An engineering-based study commonly reclassifies 20–28% of building basis into shorter recovery periods on residential work. Modeled at about 25%, that is roughly $506,000 reclassified: on the order of $240,000 of 5-year personal property (furnishings, appliances, specialty items) and $260,000 of 15-year land improvements (drives, terraces, landscaping, irrigation, seawall, and pool where present), plus a small 7-year slice.
Under 100% bonus, that reclassified amount is deductible in year one on the federal return. At a 37% bracket the modeled first-year federal deduction value is about $187,000, roughly 47 times a typical study fee. Treat it as a timing benefit, not a permanent elimination of tax.
The assessor’s land line is hiding depreciable improvements
This is where island owners and even some advisors get it backwards. Raw land never depreciates, but an estate’s grounds are not raw land. The crushed-shell and cobblestone drives, bluestone terraces and walkways, seawalls and coastal-erosion structures, mature landscaping, privet hedges, irrigation, and pools are all 15-year land improvements, legally distinct from the land they sit on. On Nantucket, where the Historic District Commission steers construction toward these expensive traditional materials and where hardscape spend is unusually large, that carve-out is unusually large too. A generic study buries it inside “land” or the 27.5-year shell; a grounds-aware engineering study separates it out.
Massachusetts does not allow bonus depreciation
Get this exactly right, because national competitor pages imply a federal-style 100% first-year write-off that Massachusetts does not grant. Massachusetts decouples from federal §168(k) bonus depreciation, for both the personal income tax and the corporate excise. You add the federal bonus back for Massachusetts, then depreciate the same reclassified 5- and 15-year components over their regular MACRS lives. That is still dramatically faster than 27.5 years, so the study still helps the Massachusetts return, just as acceleration spread over the components’ lives rather than a first-year bonus.
Two Massachusetts specifics matter for the exit. The state rate is 5%, with a 4% surtax on income over an indexed threshold (about $1.08M in 2025). Because that surtax applies to one-time events including a sale and depreciation recapture, a Nantucket sale can land in the 9% surtax zone. So the strategy is a timing tool, not a permanent write-off: the study models the deductions, and your CPA models the exit. See bonus depreciation by state for how conformity affects timing.
Short-term rentals are legal again, but you do not need them
Nantucket spent five years deadlocked over whether short-term rentals were even a permitted use. On November 4, 2025, Town Meeting passed Article 1 legalizing them by-right island-wide, and the Attorney General upheld it. That resolved a real question for operators, but it does not change the depreciation math: cost segregation applies to any income-producing property, including a 31-day-plus seasonal or long-term rental. Short-term-rental eligibility affects whether losses are passive or non-passive under §469, a CPA determination, not whether the building can be cost-segregated.
What an island estate is made of
Historic District Commission rules apply across the whole island, which forces high-cost, cost-seg-relevant materials and concentrates value in components a national template flattens into “the building”:
- Cedar-shingle cladding, traditional roofing, and elevated coastal foundations raise total improvement cost, which raises the dollar value of every reclassified component.
- Crushed-shell and cobblestone drives, bluestone terraces, seawalls, retaining walls, irrigation, and site lighting are 15-year land improvements. Pools require review and are restricted in the Old Historic core zones, so a study captures them only where they actually exist.
- “Nantucket compounds” pair a main house with guest cottages, a pool house, or a carriage house, each carrying its own furnishings and specialty systems, multiplying the 5-year content a single-dwelling template misses.
Aggressive 5-year treatment of decorative lighting and cabinetry is contested (AmeriSouth) and CPA-gated, so we classify to the evidence and keep those items conservative. The high-dollar, defensible story here is the 15-year grounds.
Done remotely, no site visit
The study is engineering-based but conducted remotely from plans, permits, closing and appraisal documents, invoices, and photos. There is no on-site visit. We use industry-standard, nationally recognized construction cost data to support the component allocation. See how remote cost segregation works and what a cost segregation study is.
Nantucket submarkets
- Town and the Old Historic District: the tightest review and highest shell cost; capture drives, terraces, and landscaping rather than pools, which are restricted in the core.
- ‘Sconset, Cliff, Monomoy, and Wauwinet: prestige estates and waterfront enclaves with extensive grounds, guest structures, and, where allowed, pools, so strong 15-year and 5-year content.
- Madaket, Surfside, and Tom Nevers: newer builds on larger lots mean a cleaner invoice trail and outsized site improvements (drives, irrigation, landscaping).
Learn more about cost segregation
- Remote cost segregation: how an engineering-based study is delivered without a site visit
- What is cost segregation?: the full explanation of how the study works and what you receive
- Bonus depreciation by state: how Massachusetts non-conformity affects timing
- Material participation for STR owners: the 7-day rule and passive vs. non-passive losses
- By property type: short-term rentals, multifamily, single-family rentals, warehouse & industrial
Ready to see your actual Nantucket numbers?
Want a number for a specific Nantucket property? Use the calculator, or start a preliminary analysis. Figures on this page are modeled illustrations; your study and CPA determine the actual amounts.
CPA use note: These figures estimate the size of the depreciation deduction. Whether the loss is usable in the current year depends on passive-activity rules, STR material participation, REPS status, entity structure, depreciable basis, and state conformity. Your CPA decides how and when it is applied. Specialty and site components (equipment, casework, docks, pools, arenas, tenant improvements, and similar) are only classified when you own them and they are included in the depreciable basis being studied.
How should Nantucket, MA investors choose a cost segregation provider?
For a Nantucket, MA investor buying a property in the $4,500,000 range, the choice of study provider is the single biggest controllable variable in the ROI. The methodology is fixed by IRS Audit Techniques Guide rules (industry-standard construction cost data, MACRS classification, engineering-based component reclassification) — what varies is delivery cost and turnaround time.
Traditional engineering studies often run several thousand dollars and can take several weeks, because they include on-site inspections, sales discovery calls, and scheduling overhead. The IRS Cost Segregation Audit Techniques Guide does not require a physical site visit; it requires engineering-based classification with industry-calibrated cost derivation and component-level documentation.
Modern automated providers (such as Cost Seg Smart) deliver the same IRS ATG–aligned study for $495–$1,595 in under one hour, using satellite imagery, county assessor data, and the same industry-standard construction cost databases. For a Nantucket, MA investor at the metro's combined bracket, that cost delta typically exceeds the study cost itself by several times over. The CPA-Ready Guarantee (full refund if the report can't be used by your CPA) plus the 60-day money-back policy makes the decision essentially risk-free on the report itself.
The automated path is best-fit for Nantucket, MA investors who: own residential STR property valued under $2M, are comfortable uploading closing docs + property photos online (no in-person visit required), and want the report in time to file the current year's return rather than the next one.
All Cost Seg Smart studies include the CPA-Ready Guarantee (full refund if your CPA can't use the report) plus a 60-day money-back policy. Reports are delivered in under one hour with no on-site visit required.