What This Means for You
A $500K condo generates approximately $62K in accelerated depreciation through cost segregation. While condos have a slightly lower accelerated share than single-family homes (because you own less of the building structure), the interior components you own outright — flooring, cabinetry, fixtures, appliances, built-ins — all qualify for shorter MACRS classes.
Many condo investors overlook cost segregation because they assume the HOA covers building depreciation. It doesn't work that way. Your condo's depreciable basis includes your allocated share of the building's structural and mechanical systems, plus 100% of your unit's interior buildout. Cabinets, countertops, bathroom fixtures, closet systems, lighting, flooring, and appliances are all 5-year personal property. In-unit HVAC equipment, water heaters, and dedicated electrical circuits qualify as 7-year property.
For condo STR investors in markets like Miami, San Diego, or Honolulu, the benefit is even higher because furnished condos carry substantial FF&E. The furniture package alone — beds, sofas, dining sets, linens, kitchenware, electronics — can represent 10-15% of the purchase price, all reclassifiable to the 5-year class.
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Methodology aligned with IRS Audit Techniques Guide
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