Cost Segregation Built for
Short-Term Rentals

Yes. Our asset classification methodology aligns with the IRS Cost Segregation Audit Techniques Guide (Publication 5653), which is the reference IRS examiners use when auditing cost segregation studies. Asset categories follow the Residential Rental Property matrix in ATG Chapter 7H and Asset Class 57.0 under Rev. Proc. 87-56. Studies are prepared as planning studies — the standard for pre-closing cost seg work. Your CPA should review and finalize upon closing.

The IRS Cost Segregation Audit Techniques Guide (Pub. 5653, updated February 2025) is the definitive IRS reference for cost segregation. It classifies assets such as appliances, furniture, electronics, strippable floor coverings, and accent lighting as 5-year personal property (§1245, Asset Class 57.0); pools, freestanding structures, driveways, fences, and landscaping as 15-year land improvements (Asset Class 00.3); and building components like HVAC, cabinetry, permanently affixed flooring, and the structure itself as 27.5-year residential property. Our methodology follows these classifications. For short-term rentals with average stays of 7 days or fewer, additional personal property classifications may apply based on non-residential treatment under §168(e).

No. We specialize in planning studies prepared before or at closing. You provide the expected purchase price and anticipated closing date, and we generate the full analysis. When you close, simply update the figures with your CPA using the actual settlement statement numbers.

A planning study uses your contract/anticipated purchase price and estimated close date to project accelerated depreciation deductions. It is identical in methodology to a filed cost seg — it just requires updating with final numbers before filing your tax return. This is the standard approach for pre-closing tax planning.

Yes, and STRs often get the biggest benefit. If your average guest stay is 7 days or fewer, the rental activity is treated as an active trade or business under IRC §469 — meaning the full depreciation loss can offset any income (wages, business income, etc.) with no passive activity limitation.

It depends on the state. Most states conform to federal depreciation rules, so the benefit applies at both levels. However, a few states (Virginia, North Carolina, California, others) have decoupled from OBBBA bonus depreciation. Your study includes a state conformity analysis for your specific state.

No — you can order the study yourself. However, you should work with a CPA when you file your tax return to ensure the depreciation is properly reported on Form 4562 and any state addback schedules are prepared correctly.

Your study includes a post-closing checklist that your CPA can use to update the figures. For most properties, only the purchase price, closing costs, and placed-in-service date need updating — the asset classification methodology stays the same.