What reclassifies, by property type

The component buckets (5 / 7 / 15-year)

A cost segregation study works by separating a building’s depreciable basis into the components the tax code lets you depreciate faster. The land never depreciates, so it is set aside first. The remaining basis — the building and its improvements — is then sorted into class lives. Most of it stays in the long lives (27.5 years for residential rental, 39 years for commercial), but a meaningful slice can move into much shorter ones:

• 5-year: carpet, appliances, decorative lighting, cabinetry, window treatments, and other personal property tied to the building’s use.
• 7-year: certain fixtures and equipment that meet a longer personal-property class life.
• 15-year: land improvements — paving, fencing, landscaping, site utilities, and pools.

The IRS Cost Segregation Audit Techniques Guide (Pub 5653) and Pub 946 describe how components are identified and assigned to these lives. The “reclassification range” below is the typical share of depreciable basis (basis after land) that an engineering study moves into 5-, 7-, and 15-year lives. The percentages are engineering estimates for a typical property of each type; the figure for any specific building depends on its actual components and a real study. They are not a tax outcome — how much depreciation that reclassified basis produces in a given year is a separate, modeled question that turns on the bonus rate for the placed-in-service year, §481(a) catch-up, state conformity, §469 passive-loss limits, and your entity structure.

One point that holds across every type below: the percentage is a share, not a dollar amount. A larger building or a higher cost basis produces more reclassified dollars even at the same percent. Square footage and basis size drive the absolute numbers; property type drives the percent.

Short-term rentals (typ. 22–32%)

Short-term rentals sit at the top of the range, typically 22% to 32% of depreciable basis. The reason is straightforward: a furnished STR carries a heavy load of personal property. Beds, sofas, dining sets, televisions, kitchenware, decorative lighting, area rugs, and window treatments are all short-life assets, and a fully outfitted rental concentrates them densely per square foot. Amenity-driven properties add more — pools, hot tubs, outdoor kitchens, decking, and landscaping push the 15-year land-improvement bucket higher as well.

A nuance worth noting: furniture and FF&E do not scale linearly with size. A larger STR does not need proportionally more furnishings, so the personal-property share tends to flatten as square footage grows. That is one reason a smaller, amenity-rich cabin can land near the top of the range while a large lodge sits closer to the middle.

Long-term rentals / SFR (typ. 18–28%)

Long-term rentals and single-family rentals are the bread-and-butter case, typically 18% to 28%. The range sits a step below short-term rentals because these properties are usually unfurnished — the tenant supplies the furniture, so the dense FF&E pool that lifts STRs is mostly absent. What still reclassifies is built into the property: flooring, cabinetry, specialty plumbing and electrical tied to appliances, decorative fixtures, and the site improvements around the structure.

The spread within this range is driven mostly by finishes and site work. A recently renovated rental with upgraded flooring, custom cabinetry, and a finished outdoor area lands toward the high end. A plain, older home on a small lot with minimal landscaping lands toward the low end. Lot size and the extent of paving, fencing, and landscaping move the 15-year bucket meaningfully, which is often the difference between an 18% and a 28% result on otherwise similar homes.

Small multifamily (typ. 20–30%)

Small multifamily — duplexes, triplexes, fourplexes, and small apartment buildings — typically reclassifies 20% to 30%. It runs a little richer than single-family rentals for two reasons. First, repeated unit finishes multiply the short-life pool: every unit brings its own flooring, cabinetry, appliances, and fixtures, so the per-square-foot density of 5-year property is higher than in a single home. Second, these properties carry common areas and shared site work — parking lots, walkways, exterior lighting, landscaping, and shared utilities — that feed the 15-year land-improvement bucket.

Unit count is the main lever within the range. More units generally means more repeated finishes and more parking and site infrastructure, which pushes the percentage up. A spartan building with surface parking and little landscaping sits lower; a property with structured parking, amenity space, and extensive grounds sits higher.

Commercial (typ. 15–25%)

Commercial property is the widest and lowest band, typically 15% to 25%, and the spread reflects how much the use varies. A plain office or warehouse shell is mostly long-life structure — concrete, steel, roof, and envelope — with a long lease-up period and relatively little short-life content, so it lands near the bottom of the range. A restaurant or a medical or dental office is the opposite: dense specialty plumbing, dedicated electrical, decorative finishes, built-in equipment, and process-specific buildout concentrate short-life property and push toward the top.

Tenant improvements add another dimension. Where the owner has paid for significant buildout, more of that basis is short-life and the percentage rises. A bare shell leased to a tenant who funds their own improvements keeps more basis in the structure. Because commercial use cases range from cold storage to surgical suites, this is the type where the published range is the least predictive and a real study matters most — the actual components decide where a specific building lands. (Property types outside these four are modeled at the same conservative 15% to 25% band until a study refines them.)

Reading the range honestly

These bands are typical engineering estimates, nothing more. The calculator on this site uses exactly the same ranges shown above, so the guide and the tool agree, but neither produces a filing number — only a real engineering study fixes the reclassification for a specific property. And the percentage is only half the picture: what that reclassified basis is worth to you in year one is a modeled tax estimate that depends on the bonus rate for your placed-in-service year, §481(a) catch-up on a look-back, state conformity, the §469 passive-loss rules, and how your entity is structured.

If you want a fast, property-specific read using these same ranges, the 30-second qualifier on the homepage takes your property type, basis, land allocation, and placed-in-service year and returns an estimated range and an honest verdict. From there you can read whether a study is likely worth it, how the passive-loss rules affect whether the deductions are usable, whether you can still qualify after owning for years, and what a study actually requires.