# Alderwake Landing financial assumptions

A fictional four-bedroom, three-bath lakefront short-term rental with a walkout lower level.

The fictional acquisition is $900,000, including $225,000 of nondepreciable land and $675,000 of depreciable basis.
The property is ready for full business rental use on May 15, 2026, with no personal use assumed.
The scenario stipulates a transient establishment supporting 39-year treatment; a seven-day average stay alone does not establish the building recovery period.
All eligible equipment and land improvements are assumed acquired after January 19, 2025 and eligible for 100 percent bonus depreciation, with no ADS requirement or disqualifying acquisition.
The no-bonus comparison uses exact 200-percent declining-balance half-year calculations for 5- and 7-year property, 150-percent declining balance for 15-year property, and 7.5 months of straight-line mid-month building depreciation.
Fixed structure, plumbing fixtures, kitchen and bar cabinetry, the fireplace, attached porch and deck remain building property.
The freestanding dock and fixed slip cover are treated together as a 15-year land improvement; the separately removable active lift mechanism is not assigned the dock recovery period merely because it is attached.
No directly applicable boat-lift class was established from the available facts. A conservative provisional 7-year no-class-life assumption is used for the mechanical lift, pending a study of its activity and specific asset category.
A different supported activity classification could change the lift recovery period.
The permanently moored swim platform is assumed to be a permanent waterfront improvement; a portable seasonal float would need its classification reconsidered.
The fire-pit component genuinely splits between a fixed 15-year ring and paved area and separate 5-year portable chairs.
The water and natural woods are unclassified context with no allocated basis.
The costs are illustrative installed allocations including proportionate soft costs, not an appraisal, valuation or completed engineering study.

## Allocation

| Asset | Recovery | Basis |
|---|---|---:|
| Paved driveway | 15-year | $18,000 |
| Garden retaining walls | 15-year | $12,000 |
| Lower floor and foundation | 39-year building | $24,000 |
| Walkout walls and windows | 39-year building | $96,000 |
| Lower bathroom | 39-year building | $12,000 |
| Lower bedroom furniture | 5-year | $16,000 |
| Game room equipment | 5-year | $17,000 |
| Built-in game-room bar | 39-year building | $8,000 |
| Stairs and landings | 39-year building | $12,000 |
| Main-level flooring | 39-year building | $23,000 |
| Main-level walls | 39-year building | $160,000 |
| Two main-floor bathrooms | 39-year building | $23,000 |
| Primary bedroom furniture | 5-year | $12,000 |
| Guest bedroom furniture | 5-year | $9,000 |
| Kitchen cabinets | 39-year building | $23,000 |
| Kitchen appliances | 5-year | $12,000 |
| Living and dining furniture | 5-year | $17,000 |
| Stone fireplace | 39-year building | $10,000 |
| Screened porch | 39-year building | $14,000 |
| Attached lake-view deck | 39-year building | $16,000 |
| Porch and deck furniture | 5-year | $4,000 |
| Seawall and shore steps | 15-year | $14,000 |
| Covered private dock | 15-year | $46,000 |
| Mechanical boat lift | 7-year | $12,000 |
| Swim platform | 15-year | $6,000 |
| Fire pit and paving | 15-year | $5,000 |
| Fire-pit chairs | 5-year | $3,000 |
| Planting and path lighting | 15-year | $16,000 |
| Metal roofs | 39-year building | $35,000 |

Basis by schedule: 5-year $90,000; 7-year $12,000; 15-year $117,000; 39-year building $456,000. Total $675,000. The combined 5- and 15-year share is 30.67%.
Year-one depreciation at 100% bonus is $226,307.69. At no bonus it is $32,871.98. Ordinary first-year building depreciation is $7,307.69. These are deductions, not cash benefits.

## Mechanical boat-lift ruling

The removable powered lift and cradle are distinct machinery from the permanent dock and slip cover. No universal boat-lift recovery period is asserted. Publication 946 directs classification through the applicable asset category and primary activity; its no-class-life default is seven years only when no other classification applies. With that activity-specific conclusion not established by this fictional brief, seven years is used provisionally and conservatively. An engineering study must resolve the specific facts before relying on the example. A supported five-year determination would increase the no-bonus first-year lift deduction by $685.71; a fifteen-year determination would reduce it by $1,114.29. At 100% bonus the lift deduction would be unchanged if otherwise eligible. The player needs seven-year display support before publication.

## Sources

- [IRS Publication 946, How To Depreciate Property](https://www.irs.gov/publications/p946)
- [IRS Publication 527, Residential Rental Property](https://www.irs.gov/publications/p527)
- [IRS Notice 2026-11](https://www.irs.gov/irb/2026-06_IRB#NOT-2026-11)
- [IRS Cost Segregation Audit Techniques Guide, Publication 5653](https://www.irs.gov/pub/irs-pdf/p5653.pdf)
- [IRS asset-category discussion including wharves and docks, IRB 2003-30](https://www.irs.gov/irb/2003-30_IRB)

The Cost Segregation ATG supplies the structure, personal-property and site-improvement framework; it does not certify these allocations. Notice 2026-11 supports the stated bonus scenario. Publication 527 supplies residential-rental context, requiring the transient building treatment to be justified independently.