Overview
A 240-unit podium-style multifamily development in Austin. Six-story building over structured parking podium, full amenity package. 2018 construction. Acquired for $58,000,000 in 2024.
The Cost Seg Smart engineered analysis identifies $7,427,416 in accelerated bucket components (18.3% of the $40,536,200 depreciable basis after a 30.1% land valuation).
What the analysis identifies
The 240,000 SF property carries the component density typical for a large podium-style multifamily. The component inventory pulls the following share into accelerated buckets:
- in-unit components — carpet, vinyl plank flooring, cabinetry (when removable), appliances owned by the landlord
- window treatments, decorative lighting, specialty plumbing fixtures
- common-area amenities — clubhouse buildout, fitness equipment, pool equipment (the pool deck is 15-year, the shell is structural)
- site improvements — parking lots, carports, site lighting, landscaping, ADA paths, perimeter fencing
Item-level engineering documentation supports each classification — photographs of mounting details, mechanical schematics for HVAC and plumbing classifications, electrical schedules for dedicated-circuit identification.
Reclass breakdown
| Bucket | Amount | % of basis | MACRS section |
|---|---|---|---|
| 5-year personal property | $4,313,806 | 10.6% | Section 168(e)(3)(B); Section 1245 |
| 7-year specialty | $14,535 | 0.0% | Section 168(e)(3)(C); Section 1245 |
| 15-year land improvements | $3,099,076 | 7.6% | Section 168(e)(3)(E); Section 1250 |
| 27.5-year residential rental | $33,108,784 | 81.7% | Section 168(c); Section 1250 |
| Total depreciable basis | $40,536,200 | 100% |
Land value (excluded from depreciable basis): $17,463,800 (30.1% land allocation, Austin TX market).
Year-1 federal tax savings
Assuming 100% bonus depreciation per the One Big Beautiful Bill Act (OBBBA, 2025), the full accelerated bucket components are deductible in year 1:
- Accelerated bucket total: $7,427,416
- Federal tax savings at 37% top bracket: $2,748,144
For a passive investor, the deduction creates a passive loss offsetting passive income. For a taxpayer qualifying as a real estate professional under Section 469(c)(7), the deduction offsets active income — including business operating income from non-real-estate sources.
Methodology applied
The engine applied the following parameters:
- Era profile: 2018 build, finish density and component weights calibrated to construction-era patterns
- Geo factor: 0.95 (Austin MSA, metro calibrated)
- Component count: 61 distinct line items in the inventory
- Indirect cost multiplier: 1.25 (standard 25% indirect uplift covering soft costs, contingency)
- PPI multiplier: 1.04 (BLS construction cost index applied from build year to acquisition year)
- QC status: PASS (engineered analysis cleared all 16 quality-control checks)
The land valuation used the statistical source. Properties where the county assessor record is within reliability tolerances may produce a different land allocation; the engineered methodology applies the most defensible source available.
Audit considerations specific to this property
-
Residential vs commercial classification: The 80% gross-rents-from-dwelling-units test under Section 168(e)(2)(A) determines whether the structural depreciates at 27.5 or 39 years. The audit examines rent rolls to verify.
-
Appliance ownership: Appliances owned by the landlord are part of the depreciable basis and depreciate at 5 years. Tenant-owned appliances are not in the basis. Lease documents and capex records establish ownership.
-
Pool and amenity classification: The pool shell and tile are structural (27.5-year). Pool equipment (pumps, filters, heaters) is 5-year. Pool deck is 15-year. The component schedule distinguishes.
Return profile
| Metric | Value |
|---|---|
| Study cost (typical) | $10000–18000 |
| Year-1 federal tax savings (37% bracket, 100% bonus) | $2,748,144 |
| Year-1 ROI on study fee | 153×–275× |
| Total accelerated depreciation pulled forward | $7,427,416 |
The ROI calculation reflects gross year-1 tax savings against the typical study cost range. Net present value of the strategy depends on hold period (longer holds capture more time value) and recapture treatment at sale.
Want analysis like this for your multifamily (5+ units) property?
Schedule a 15-minute scoping call to walk through a property-specific engineered analysis. Cost Seg Smart produces a 30+ page IRS-defensible report typically in 2–4 weeks from scoping.
Schedule a scoping call → — or see the multifamily (5+ units) property page for the broader methodology.
Related analyses: