Sample luxury short-term rental cost segregation report
A Cost Seg Smart luxury short-term rental property sample study — modeled by our engine on an illustrative property, not a client’s — shown so you can see exactly what the deliverable contains and how the component allocation works. The numbers below come from one illustrative Corpus Christi, TX example.
Luxury Short-Term Rental cost segregation reclassifies depreciable basis from the 27.5-year shell into 5-, 7-, and 15-year MACRS classes, which 100% bonus depreciation makes deductible in Year 1. There is no single expected percentage. In this one illustrative Corpus Christi, TX sample on $1,533,495 of basis, $405,704 (26.5% of basis) was reclassified into accelerated classes, for an illustrative Year-1 deduction of about $427,918. Your result depends on property age, finishes, equipment, and land value.
This Corpus Christi, TX study, by the numbers
One illustrative sample, not a benchmark26.5% is one illustrative result, not a target. It reflects a 2012-built waterfront Gulf Coast rental with a spa, a built-in outdoor grill, a wet bar and whole-home audio, on a parcel whose land share is 17.1%. A luxury rental with a larger land share, fewer furnishings or no outdoor amenities usually reclassifies less. Request the full sample PDF →
Illustrative component allocation
A luxury STR earns its reclassification twice over: the furnishings, appliances, wet bar and audio that let it charge a resort nightly rate, and the spa deck, outdoor kitchen and landscaped grounds that are the reason guests book it. Below is how this one sample report split its $1,533,495 depreciable basis across MACRS classes (Section 3 of the deliverable lists every component line by line).
| MACRS class | Allocated basis | % of basis |
|---|---|---|
| 5-Year Personal Property Appliances, flooring, cabinetry, fixtures, window treatments | $287,375 | 18.7% |
| 7-Year Personal Property Decorative furnishings and fixtures | $5,279 | 0.3% |
| 15-Year Land Improvements Spa surround, decking, patio and walkways, fencing, landscaping, irrigation, exterior lighting | $113,050 | 7.4% |
| 27.5-Year Residential Shell Structural building, envelope, base systems | $1,127,791 | 73.5% |
| Accelerated (5/7/15-year) | $405,704 | 26.5% |
Where the depreciation comes from
Illustrative result from one sample report. Actual reclassification varies substantially with property age, improvements, tenant finish, equipment, land value, and other facts. Not a benchmark or expected range. Tax-side figures assume the placed-in-service year's §168(k) bonus rate and an assumed entity rate; actual depends on entity structure, state conformity, passive-activity limits (§469), and at-risk basis (§465). Verify with your CPA before filing.
Why your result will differ from this example
No two luxury short-term rental properties reclassify the same. The 26.5% above came from one specific building. Yours depends on:
- → Property age — newer buildings carry more reclassifiable finishes and systems.
- → Renovations and tenant improvements — recent build-outs add 5- and 7-year assets.
- → Equipment intensity — equipment-heavy uses (kitchens, service bays, medical) reclassify more.
- → Site work — extensive paving, parking, and landscaping drive the 15-year bucket.
- → Land value — a higher land share leaves less depreciable basis to reclassify.
- → Local construction costs and finish level — these shift each component's allocated basis.
That is why we model your specific property before you commit, and never apply a rule-of-thumb percentage. The IRS Cost Segregation Audit Techniques Guide (Pub 5653) warns against template and rule-of-thumb studies for exactly this reason.
Why CPAs file straight from these reports
Every luxury short-term rental study delivers the same six-section structure, so your CPA can file without rework. Depth scales with property size and lookback complexity.
Executive summary
The one-page summary your CPA reads first: total reclassified, the Year-1 deduction, and the technical-review sign-off.
Engineering methodology
Shows why each asset was assigned its depreciation class, and documents the reasoning behind every allocation.
Component allocation tables
Every component (typically 40 to 80 line items) mapped to its asset class and MACRS life, with subtotals that reconcile to the depreciable basis.
Depreciation schedules
Year-by-year MACRS deduction tables, formatted to drop straight onto Form 4562, with bonus depreciation flagged for the placed-in-service year.
Section 481(a) lookback workpaper
For a Form 3115 catch-up: the cumulative Section 481(a) adjustment and a line-by-line reference for your tax preparer (when applicable).
Documentation and audit support
A cost-source citation for every component, the classification rationale, and the methodology narrative an examiner asks for. Support for the life of the study.
How the report addresses IRS examiner standards
The IRS Cost Segregation Audit Techniques Guide (Pub 5653) lists the elements an examiner reviews, and the report maps to each one: the engineering methodology and component allocation document every classification, each component carries a Rev. Proc. 87-56 asset-class citation with its rationale, and Appendix B walks all 13 elements of Pub 5653 Chapter 4 one at a time, naming the report section that satisfies each. Appendices C and D carry the Rev. Proc. 87-56 / IRC framework and the supporting case law and IRS rulings; Appendix E covers workpaper retention and the records to keep alongside the report.
Every study includes audit documentation, and written answers to your CPA's technical questions for the life of the study, at no additional charge. Full scope at /audit-defense/.
How this compares with traditional firms
Traditional-firm figures are typical industry ranges; confirm pricing and scope directly with any vendor. For the full firm-by-firm breakdown see best cost segregation companies.
Report questions
Is this a real luxury short-term rental cost segregation report?
What reclassification percentage should I expect for a luxury short-term rental?
Can I download the sample PDF?
Does the report include Form 3115 for a lookback?
How is this different from a benchmark or a percentage range?
See your luxury short-term rental's real numbers, not a sample's.
We model your specific property before you pay. Order an engineered study or request the full illustrative luxury short-term rental sample PDF first.
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