# Canyon Club — illustrative financial scenario

These are authored demonstration amounts, not a valuation, owner-provided costs, or results of a completed cost-segregation study. The reference Airbnb was used for design inspiration only.

Default: **$3,250,000 total investment**, including **$650,000 land** and **$2,600,000 modeled depreciable costs**.

## Assumptions

- A fictional $3.25 million investment, including $650,000 nondepreciable land. These are demonstration amounts, not market research or a study of the reference listing.
- 100% income-producing use; acquired February 1, 2026 and placed in service June 15, 2026; calendar tax year.
- 39-year treatment is an explicit transient-use building assumption. Selecting 27.5 years illustrates a different residential-rental scenario; the Airbnb label alone does not decide it.
- All rows marked bonus-eligible are assumed to qualify for the 100% allowance. No ADS requirement, Section 179 election, related-party exclusion, or other disqualifying facts are assumed.
- With bonus switched off, five-year assets use 200% declining balance and fifteen-year assets use 150% declining balance, with the half-year convention. All short-life assets enter service in June, so this example does not trigger the mid-quarter convention.
- Permanent fire-lounge and outdoor kitchen masonry use conservative building treatment. The pool and spa are separate exterior installations built on land. Real construction facts and classification require a study.
- Changing investment and land values scales the remaining example allocations proportionally; this does not perform a cost-segregation study.
- Shown amounts are federal depreciation deductions, not tax savings. Income, passive-activity, at-risk and other limitations can affect the use of deductions.

## Default example result

| Allocation | Basis | First-year depreciation |
|---|---:|---:|
| 5-year | $275,000 | $275,000 |
| 15-year | $565,000 | $565,000 |
| 39-year building | $1,760,000 | $24,444 |
| Nondepreciable land | $650,000 | $0 |
| Total investment / Y1 deduction | $3,250,000 | $864,444 |

Building amount uses 6.5 months / (39 × 12). With bonus off, this specific half-year scenario produces about $107,694 of Y1 depreciation. These are **deductions**, not cash tax savings or guaranteed usable losses.

## Source basis and limits

The assumed 100% allowance follows the acquisition and service timing described in [IRS Notice 2026-11](https://www.irs.gov/pub/irs-drop/n-26-11.pdf). Every eligible row still requires its own eligibility facts.

The building choice is scenario-specific: the residential-rental definition contains a transient-use exception. See [IRS Publication 527](https://www.irs.gov/publications/p527). MACRS methods and conventions are described in [IRS Publication 946](https://www.irs.gov/publications/p946).

The [IRS Cost Segregation Audit Techniques Guide](https://www.irs.gov/pub/irs-pdf/p5653.pdf) discusses guest furniture and distinguishes exterior pools, spas and courts built on land from building-attached or interior installations. It is an audit guide, not authoritative law or a classification of this fictional villa. Fire-lounge and outdoor kitchen masonry use conservative building treatment here. No seven-year asset has been forced into this example.

## Component allocation

| Component | Demonstration basis | Assumed recovery |
|---|---:|---|
| Structure and building systems | $1,180,000 | 39 years in the default scenario |
| Permanent partitions and doors | $100,000 | 39 years in the default scenario |
| Windows and sliding doors | $120,000 | 39 years in the default scenario |
| Guest-room furniture | $60,000 | 5 years |
| Permanent bathroom fixtures | $90,000 | 39 years in the default scenario |
| Permanent kitchen cabinetry | $75,000 | 39 years in the default scenario |
| Kitchen appliances | $45,000 | 5 years |
| Loose living and dining furniture | $55,000 | 5 years |
| Removable rugs | $10,000 | 5 years |
| Guest recreation furnishings and equipment | $40,000 | 5 years |
| Exterior paving on land | $130,000 | 15 years |
| Outdoor pool built on land | $185,000 | 15 years |
| Permanent outdoor pool slide | $25,000 | 15 years |
| Separate installed outdoor spa | $25,000 | 15 years |
| Building-attached shade structure | $45,000 | 39 years in the default scenario |
| Separate site shade structure | $20,000 | 15 years |
| Movable outdoor furniture | $45,000 | 5 years |
| Outdoor kitchen equipment | $20,000 | 5 years |
| Permanent outdoor kitchen masonry; conservative building treatment | $25,000 | 39 years in the default scenario |
| Permanent fire-lounge masonry and services; conservative building treatment | $25,000 | 39 years in the default scenario |
| Outdoor pickleball court built on land | $80,000 | 15 years |
| Depreciable planting and irrigation; excludes initial land preparation | $100,000 | 15 years |
| Roof and structural covering | $100,000 | 39 years in the default scenario |

The JSON scenario is separate from the Blender geometry and the camera path. Real study data can replace it without rebuilding the property.