# Orchavell Gardens financial assumptions

This fictional $5,700,000 acquisition includes $1,200,000 land and $4,500,000 depreciable basis. It has 24 unfurnished two-bedroom apartments in three two-storey walk-up wings, with an integrated resident clubhouse, pool and 48 parking stalls. All assets are acquired February 18 and placed in service May 15, 2026. Full business use is assumed. The price and amounts are educational estimates, not an appraisal, construction bids or an engineering report.

Long-term dwelling rentals support the 27.5-year GDS building scenario. All rental income in the example comes from dwelling units. The attached clubhouse shares the apartment wing and serves residents incidentally; it is not a detached commercial facility. If its $144,000 basis instead required 39 years, both year-one totals decrease $965.03. A different recovery period cannot be expressed by silently changing the global buildingYears field; that alternative needs separate modeling.

The permanent plank and tile finishes, structure, ordinary utilities, bathrooms, cabinets, attached access galleries and stairs remain building property. Only removable bedroom carpet and pad, removable blinds and separate appliances enter the 5-year apartment rows. The combined upper carpet-and-blind row genuinely combines two 5-year finishes and preserves the table budget. Tenant furniture appears as context only and contributes no basis.

Resident-use lounge furniture, its television and removable pool seating are owner-owned residential rental equipment. Administrative leasing furniture uses its specific 7-year office class. If the $35,000 resident equipment were 7-year property, bonus year one is unchanged and no-bonus year one decreases $2,000.00. Rounded 14.29 percent depreciation on the $14,000 office row adds $0.60 versus the unrounded half-year fraction used by the player.

The outdoor pool, its dedicated equipment and paved court are physically independent land improvements. If the $150,000 group were building property, bonus year one decreases $146,590.91 and no-bonus year one decreases $4,090.91. Stormwater is independent from ordinary sanitary building plumbing. Natural land, existing woodland and ordinary permanent grading are not accelerated; installed planted beds have a determinable useful life.

No loan costs, goodwill, tenant deposits, contracts, section 179, QIP, tax rates, tax-payment savings, loss-usage conclusion or state result is included. Eligibility and deduction usability depend on the actual facts.

## Allocation

| Component | Basis | Recovery period |
|---|---:|---|
| Parking and entry drive | $260,000 | 15 years |
| Courtyard walks | $75,000 | 15 years |
| Stormwater drainage | $55,000 | 15 years |
| Foundations and entry stoops | $320,000 | 27.5-year building |
| First-floor fixed flooring | $125,000 | 27.5-year building |
| First-floor walls & windows | $890,000 | 27.5-year building |
| First-floor bathrooms | $175,000 | 27.5-year building |
| First-floor kitchen cabinets | $160,000 | 27.5-year building |
| First-floor appliances | $48,000 | 5 years |
| First-floor window blinds | $18,000 | 5 years |
| First-floor bedroom carpets | $25,000 | 5 years |
| Building power and lighting | $135,000 | 27.5-year building |
| Upper floors and access | $235,000 | 27.5-year building |
| Second-floor walls | $805,000 | 27.5-year building |
| Second-floor bathrooms | $175,000 | 27.5-year building |
| Second-floor cabinets | $160,000 | 27.5-year building |
| Second-floor appliances | $48,000 | 5 years |
| Upper carpets and blinds | $43,000 | 5 years |
| Building heating and cooling | $130,000 | 27.5-year building |
| Attached resident clubhouse | $144,000 | 27.5-year building |
| Resident lounge equipment | $35,000 | 5 years |
| Leasing office furniture | $14,000 | 7 years |
| Pool and paved court | $150,000 | 15 years |
| Courtyard site lighting | $35,000 | 15 years |
| Pool fence and gate | $45,000 | 15 years |
| Landscape beds and planting | $65,000 | 15 years |
| Entry monument sign | $20,000 | 15 years |
| Apartment & clubhouse roofs | $110,000 | 27.5-year building |
| **Total depreciable basis** | **$4,500,000** | |

Class basis: 5 years $217,000; 7 years $14,000; 15 years $705,000; building $3,564,000.
Year-one depreciation is **$1,017,000.00 with 100 percent bonus** and **$161,650.00 without bonus**. These are deductions. Half-year short-life rates are 20 percent, unrounded 1/7 and 5 percent; May mid-month building depreciation is 7.5/330. Short-life basis is $936,000, or 20.80 percent of depreciable basis.

## IRS sources

- Publication 527: https://www.irs.gov/publications/p527. Residential recovery periods, land exclusion and the distinction between removable rental equipment and buildings inform the scenario.
- Publication 946: https://www.irs.gov/pub/irs-pdf/p946.pdf. Tables B-1 and B-2 provide office furniture and land-improvement classes; the class hierarchy and conventions are applied.
- Cost Segregation Audit Techniques Guide: https://www.irs.gov/pub/irs-pdf/p5653.pdf. The functional analysis retains ordinary structural, plumbing and building systems with the apartments; removable personal property and independent site work are identified separately.
- Notice 2026-11: https://www.irs.gov/pub/irs-drop/n-26-11.pdf. The 100 percent bonus assumption applies to qualifying property acquired and placed in service after January 19, 2025.