Cost Segregation DIY Workbook – STR Bonus Depreciation Calculator (Excel)

Pull 5 years of depreciation into one. The IRS-acceptable DIY cost-segregation method for Airbnb and STR hosts. Reclassify components to 5/7/15-year MACRS. Bonus depreciation overlay. Editable Excel.

You bought a $450,000 cabin in Pigeon Forge in March. Default CPA depreciation:
$11,800/year for 27.5 years. With cost segregation, you reclassify approximately
20-30% of the basis (cabinets, lighting, appliances, landscaping, decking, fencing)
into 5/7/15-year recovery — and overlay current-year bonus depreciation on top.

Year-one deduction goes from ~$11,800 to ~$45,000–$80,000.

A professional cost-seg study costs $3,000-$10,000. This workbook is the IRS-acceptable
DIY method — using the IRS guidelines for self-performed studies on properties under
$1M. You walk the property, photograph and measure each component category, plug
percentages into the workbook, and produce the asset breakdown your CPA needs to file.

═══════════════════════════════════════════
WHAT'S INCLUDED
═══════════════════════════════════════════

📋 Component Inventory (the heart of it)
· 5-year property: appliances, carpet, decorative lighting, removable cabinetry
· 7-year property: furniture, equipment
· 15-year property: land improvements (driveways, fences, landscaping, exterior lighting)
· 27.5-year property: building shell (the residual)
· Per-component % of basis allocation

📋 Reclassification Calculator
· Total cost basis from purchase + closing costs (auto-pulled if you have TAX-002)
· Land value carve-out (NOT depreciable)
· Each component's $ allocation = basis × %

📋 Bonus Depreciation Overlay
· Current-year bonus % (verify before filing — phases down annually)
· 5/7/15-year property eligible for bonus
· Year-1 deduction = component cost × bonus %
· Remaining cost depreciates over normal MACRS schedule

📋 Year-1 Deduction Comparison
· Without cost seg: building depreciates at 27.5-year SL
· With cost seg + bonus: massive year-1 deduction
· Side-by-side dollar impact

📋 Form 3115 Catch-Up Path (informational)
· For properties owned >1 year
· Workbook produces the asset breakdown — CPA files Form 3115
· §481(a) catch-up math is OUT of scope (tell your CPA)

📋 Photo + Measurement Checklist
· Component-by-component documentation requirements
· Audit-defense substantiation (IRS Cost Segregation Audit Techniques Guide)

═══════════════════════════════════════════
WHY STR HOSTS NEED THIS
═══════════════════════════════════════════

Cost segregation is the highest-leverage tax move available to a residential
rental owner. The math:

• $450K cabin, no cost seg: $11,800/year deduction × 24% bracket = $2,832/yr saved
• $450K cabin, cost seg + bonus: ~$60K year-1 deduction × 24% = $14,400 year-1 saved
• Difference: $11,500+ in tax saved THIS YEAR

Combined with the STR Loophole (avg stay ≤ 7 days + material participation triggers
active treatment under §469), cost-seg-driven losses can offset W-2 income. For
high-W2 hosts in their first year of property ownership, this can save $40,000+
in federal tax in a single year.

A pro cost-seg study costs $3K-$10K and typically pays for itself many times over.
This DIY workbook is the budget alternative for properties under $1M where the
study cost would eat too much of the benefit.

═══════════════════════════════════════════
WHO THIS IS FOR
═══════════════════════════════════════════

· STR hosts who acquired a property in the current tax year ($250K-$750K range)
· Hosts on Schedule E with material participation OR Schedule C
· High-W2 hosts wanting to use the STR Loophole + cost seg combo
· Anyone whose CPA defaulted to 27.5-year SL without exploring acceleration

═══════════════════════════════════════════
WHO THIS IS NOT FOR
═══════════════════════════════════════════

· Properties over $1M (the IRS expects an engineering-based study at that scale)
· Hosts who lack the documentation (photos, measurements) to defend the allocations
· Properties owned >3 years where Form 3115 catch-up is involved (use a pro)
· Pure-passive Schedule E hosts who can't currently use the losses

═══════════════════════════════════════════
HOW IT WORKS
═══════════════════════════════════════════

1. Walk the property with your phone. Photograph every component category.
2. Measure rough sizes (square footage of carpet, deck, landscaping; counts of appliances).
3. Open the workbook. Enter your purchase basis + land value on the Settings tab.
4. Allocate each component category as a % of basis on the Inventory tab.
Pre-loaded benchmarks help you stay defensible (carpet ≈ 2-4%, landscaping ≈ 3-6%, etc.).
5. The Reclassification Calculator produces 5/7/15/27.5-year buckets.
6. Apply bonus depreciation % on the Bonus tab.
7. Print Year-1 Deduction. Hand to CPA. They drop it into Form 4562.

═══════════════════════════════════════════
FILE COMPATIBILITY
═══════════════════════════════════════════

✅ Microsoft Excel 2016+ (Windows and Mac)...