# Mallowfen House financial assumptions

The fictional purchase is $400,000, including $80,000 of nondepreciable land and $320,000 of depreciable basis.
The single-story house has about 1,600 square feet of conditioned space plus an attached two-car garage, three bedrooms and two bathrooms.
The house is ready and available for full-time long-term residential rental on March 15, 2026, with no personal use.
Eligible assets are assumed acquired after January 19, 2025, eligible for 100 percent bonus, and not subject to ADS or a disqualifying related-party acquisition.
The comparison without bonus uses 20 percent for five-year assets, 5 percent for fifteen-year assets and 9.5 months of straight-line mid-month building depreciation over 27.5 years.
Tenant beds, sofas, dining furniture, rugs and decorative objects are visual staging only and have no owner depreciation basis.
Permanent plank floors, bathroom fixtures, cabinets, attached garage, attached shed and general building systems remain building property.
The garden shed is a small permanently attached lean-to on the garage, not a detached storage building or a movable equipment cabinet. It stays with the 27.5-year residence conservatively rather than assigning fifteen years solely because it is outdoors.
The depreciable planting basis covers installed replacement beds with a determinable useful life; natural trees, ordinary lawn and general land preparation remain land context.
The allocations represent installed components and proportionate soft costs, not a market appraisal or completed engineering study.

## Allocation

| Asset | Recovery | Basis |
|---|---|---:|
| Concrete driveway | 15-year | $10,500 |
| Front walk | 15-year | $2,500 |
| Foundation and slab | 27.5-year building | $26,000 |
| House walls and windows | 27.5-year building | $126,000 |
| Attached two-car garage | 27.5-year building | $35,000 |
| Permanent plank flooring | 27.5-year building | $12,500 |
| Primary bathroom | 27.5-year building | $11,000 |
| Hall bathroom | 27.5-year building | $8,500 |
| Primary bedroom carpet | 5-year | $2,300 |
| Two bedroom carpets | 5-year | $2,700 |
| Bedroom blinds | 5-year | $1,800 |
| Kitchen cabinets | 27.5-year building | $13,500 |
| Kitchen appliances | 5-year | $7,000 |
| Washer and dryer | 5-year | $2,200 |
| Living-room blinds | 5-year | $1,200 |
| Heating and cooling | 27.5-year building | $13,000 |
| Attached garden shed | 27.5-year building | $4,500 |
| Backyard patio | 15-year | $4,500 |
| Wood privacy fence | 15-year | $6,500 |
| Entry planting beds | 15-year | $5,600 |
| Garden path lighting | 15-year | $1,700 |
| Shingle roofs | 27.5-year building | $21,500 |

The five-year basis is $17,200, fifteen-year basis is $31,300 and building basis is $271,500. Short-life basis is 15.16% of the $320,000 depreciable total. Year-one depreciation is $56,315.91 at 100% bonus and $12,820.91 without bonus. These amounts are deductions.

## Conservative shed ruling

The property card suggested fifteen years for a garden shed. The modeled structure instead is permanently attached to the garage and serves the residence, so the $4,500 allocation stays with the 27.5-year building. Being outdoors does not automatically make a structure a land improvement. The ATG distinguishes storage buildings from exterior storage areas. A detached enclosed shed could require a separate 39-year analysis, which the single-building-period player schema cannot represent directly. The chosen attached design avoids hiding that distinction. If facts supported fifteen years instead, full-bonus first-year depreciation would increase by $4,370.45 and no-bonus depreciation would increase by $95.45.

## 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, interim additional first-year depreciation guidance](https://www.irs.gov/irb/2026-06_IRB#NOT-2026-11)
- [IRS Cost Segregation Audit Techniques Guide, Publication 5653, February 2025, residential-rental chapter](https://www.irs.gov/pub/irs-pdf/p5653.pdf)

The ATG is an examination framework rather than a determination for this fictional property. Review activity, permanence, useful life and acquisition facts before relying on a real allocation.