Cost Segregation Example: What a Real Study Looks Like

Most investors have never seen a cost segregation report before ordering one. Here's exactly what's inside — using a real $750K Airbnb as an example.

$180,000 Accelerated Depreciation

$66,600 Est. Year-1 Tax Savings

84x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

$66,600

Estimated Year-1 Tax Savings

$180,000

Accelerated Deductions

$795

Study Cost

84x

ROI on Study

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Estimates are for illustration only. Details

The Analysis

$750,000 Airbnb / Short-Term Rental property — cost segregation depreciation example

A cost segregation study is a 30-40 page engineering-based analysis that reclassifies your property's building components into their correct IRS depreciation categories. The report is prepared by our engineering team using property-specific data — assessor records, satellite imagery, construction cost databases, and market data — without requiring a physical site visit.

The core of the report is the component-level depreciation schedule. For our example $750K Airbnb, the study identified 47 distinct building components and classified each into the appropriate MACRS recovery period: $126,000 in 5-year property (furniture, appliances, carpet, decorative fixtures), $14,400 in 7-year property (certain equipment and fixtures), and $39,600 in 15-year property (landscaping, paving, fencing, outdoor improvements). The remaining $420,000 stays in the standard 27.5-year class.

Beyond the depreciation schedule, the report includes: an executive summary with total accelerated depreciation and estimated tax savings, property description and construction analysis, detailed methodology section explaining IRS compliance, a MACRS class allocation chart, and a professional certification letter your CPA can file with your tax return. The report is designed to be IRS-audit-ready — meaning if you're ever audited, the study provides the engineering documentation to support every reclassification.

From order to delivery, the process takes 3-5 business days. You provide your property address, purchase price, and closing date. We handle everything else — no site visit needed, no disruption to your tenants. The completed report is emailed as a PDF that you forward to your CPA for inclusion in your tax filing.

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$180,000 total reclassified into shorter recovery periods

5-Year Property $126,000

70%

7-Year Property $14,400

15-Year Property $39,600

22%

Estimated Year-1 Tax Savings $66,600

Illustrative estimate. Final allocations vary based on property facts and report findings.

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$21,818

—

With Cost Segregation + Bonus

$180,000

+$158,182

Estimated deduction based on typical cost segregation allocations for airbnb / short-term rental properties. Actual study results may vary based on property-specific analysis including age, condition, renovations, and local construction costs.

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Why Cost Segregation Works for Short-Term Rentals

Short-term rentals contain a higher concentration of depreciable personal property than almost any other residential property type. Furniture, appliances, linens, kitchenware, electronics, decorative fixtures, and specialty items like hot tubs or game room equipment all qualify as 5-year property under the IRS MACRS classification system. This furniture, fixtures, and equipment (FF&E) component typically represents 15-20% of the depreciable basis.

Beyond interior components, site improvements add additional reclassification value. Driveways, walkways, patios, outdoor lighting, fencing, landscaping, and irrigation systems fall into the 15-year MACRS class rather than the default 27.5-year residential schedule. For STR properties with pools, outdoor kitchens, or fire pits, these components can represent a meaningful share of the total reclassified amount.

With 100% bonus depreciation permanently restored under the One Big Beautiful Bill Act (signed July 2025), every dollar reclassified into 5-year, 7-year, or 15-year MACRS classes is deductible in full in the first year. For STR owners who materially participate in their rental operation, these accelerated deductions can offset W-2 and business income — not just passive rental income.

Who This Example Applies To

Airbnb, Vrbo, or short-term rental property owners
Investors who materially participate in their STR operation (100+ hours/year)
Taxpayers in the 32-37% federal bracket (where savings are most significant)
Properties with furniture, appliances, and guest-ready finishes

If your property is a passive investment managed entirely by a third party, the accelerated depreciation may only offset passive income. If your property has minimal furnishings or you plan to sell within 1-2 years, the benefit may be reduced. Actual results vary based on property age, condition, renovations, and local construction costs.

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Compare: Airbnb / Short-Term Rental at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$300K	$72,000	$26,640	$795	34x
$500K	$120,000	$44,400	$795	56x
$750K	$180,000	$66,600	$795	84x
$1M	$240,000	$88,800	$1,195	74x
$400K	$96,000	$35,520	$795	45x
$600K	$144,000	$53,280	$795	67x
$1.5M	$360,000	$133,200	$1,195	111x
$450K	$108,000	$39,960	$795	50x
$700K	$168,000	$62,160	$795	78x
$800K	$192,000	$71,040	$795	89x

Compare: $750,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$180,000	$66,600	$795	84x
Rental Property	$120,000	$44,400	$795	56x
Fourplex	$132,000	$48,840	$995	49x

Frequently Asked Questions

What is a cost segregation study? ▼

A cost segregation study is an engineering-based analysis that reclassifies components of your property into shorter IRS depreciation categories (5, 7, and 15 years) instead of the default 27.5 or 39 years. This accelerates your depreciation deductions, reducing your tax bill in the early years of ownership.

What's included in a cost segregation report? ▼

The 30-40 page report includes: an executive summary with total accelerated depreciation and tax savings, detailed component-level depreciation schedule with MACRS classifications, property description and construction analysis, IRS-compliant methodology documentation, MACRS allocation chart, and a professional certification letter for your CPA. The report is designed to withstand IRS audit scrutiny.

How long does a cost segregation study take? ▼

Our studies are delivered in 3-5 business days. You provide the property address, purchase price, and closing date — we handle everything else using assessor records, satellite imagery, and construction cost databases. No site visit or tenant disruption required.

Why do Airbnbs get higher cost segregation deductions? ▼

Short-term rentals are typically furnished with furniture, appliances, electronics, linens, kitchenware, and décor — all of which qualify as 5-year personal property under MACRS. This FF&E (furniture, fixtures, and equipment) often represents 15-20% of the property's depreciable basis, significantly increasing the accelerated depreciation amount compared to unfurnished long-term rentals.