Faster depreciation: Pecan Grove BTR phase 2 (40 homes)

Partnership · TX · tax year 2026 · Austin, TX · contact Ana Villarreal, Controller

Conservative Moderate Aggressive

Asset schedule CSV (moderate)

ESTIMATE, NOT A STUDY. Benchmark percentages for sfr rental. Order an engineered study before anything is filed.

Fit screen · is the study worth buying?

Worth it$160,257

Worth it: conservative net benefit $160,257 after the $3,950 fee and exit tax.

Moderate case: $176,199 NPV after the fee and the extra tax at a sale in 2036 (10-year hold).

real estate professional with material participation (real estate professional rules): rental losses nonpassive
property NOI not given: 0 assumed
the excess business loss limit threshold for 2027-2036 carried forward from an earlier year (UNVERIFIED)
exit tax at a 10-year sale is $308,087 higher with the study (recapture)
long-term capital gain rate 20% is a PLACEHOLDER: enter the builder's rate
based on benchmark percentages: estimate, not a study

building cost

$11.7M

Land (not depreciable)

$2.30M

Reclassified, moderate

$1.32M

Building class

27.5-yr

Year-1 deduction with study

$1.43M

Without study

$124k

Placed in service Sep 1, 2026 · IRS audit guide table: residential rental · state TX: cpa review

Reclassification summary

Moderate scenario

Asset class	Life	Basis	Share
5-year personal property (asset class 57.0)	5 yr	$891,396	7.6%
15-year land improvements	15 yr	$432,964	3.7%
27.5-year residential rental property	27.5 yr	$10,395,640	88.7%
Building cost		$11,720,000	100%

With vs without the study

deductions by tax year; difference after passive-loss limits where they apply

Tax year	With study	Without study	Usable difference	Cash tax saved
2026	$1,434,658	$124,349	$1,310,309	$484,814
2027	$377,985	$426,139	−$48,154	−$17,817
2028	$377,985	$426,139	−$48,154	−$17,817
2029	$377,985	$426,139	−$48,154	−$17,817
2030	$377,985	$426,139	−$48,154	−$17,817
2031	$377,985	$426,139	−$48,154	−$17,817
2032	$377,985	$426,139	−$48,154	−$17,817
2033	$377,985	$426,139	−$48,154	−$17,817
Lifetime	$11,720,000	$11,720,000	Same total over the life: the study moves deductions earlier.

Catching up on past years

Not a look-back: the property is placed in service in 2026, so the study goes on the original return. No catch-up filing is needed.

Recapture at exit

if sold in each year; 1031 exchange defers it

Sale year	Taxed as ordinary income	Taxed at up to 25%	Extra exit tax	Tax saved to date	Net after exit
2027 (1 yr)	$891,396	$0	$476,648	$476,648	$0
2028 (2 yrs)	$891,396	$719,255	$462,017	$458,831	−$3,186
2029 (3 yrs)	$891,396	$1,126,105	$446,515	$441,014	−$5,500
2030 (4 yrs)	$891,396	$1,532,955	$431,013	$423,197	−$7,815
2031 (5 yrs)	$891,396	$1,939,804	$415,510	$405,381	−$10,130
2032 (6 yrs)	$891,396	$2,346,654	$400,008	$387,564	−$12,445
2033 (7 yrs)	$891,396	$2,753,504	$384,506	$369,747	−$14,759
2034 (8 yrs)	$891,396	$3,160,353	$369,004	$351,930	−$17,074
2035 (9 yrs)	$891,396	$3,567,203	$353,502	$334,113	−$19,389
2036 (10 yrs)	$891,396	$3,974,101	$337,998	$316,294	−$21,704
2037 (11 yrs)	$891,396	$4,381,007	$322,494	$298,474	−$24,020
2038 (12 yrs)	$891,396	$4,787,904	$306,991	$280,655	−$26,335

· sale price not given: building cost + land used (gain = depreciation taken)
· sale month 6 (default); improvements price allocated pro rata by original cost (cs.sale_allocation)
· land gain is the same with or without the study and is excluded
· 1031 exchange: gain and recapture are deferred into the replacement property; personal property recapture can still arise if the replacement has less personal property property (personal property(b)(4)); CPA review
· corporate 291 and dealer property not modeled

Audit binder manifest

Job cost ledger / general ledger
total cost and reconciliation (IRS audit guide element 10)
missing
Contracts, subcontracts and change orders
direct cost support
missing
AIA G702/G703 pay applications
reconcile to contractor cost
missing
Invoices for owner-furnished equipment (appliances, FF&E)
separately acquired personal property property, no double counting
missing
Drawings and specifications (as-built)
take-offs (IRS audit guide element 8)
missing
Photographs / site visit record
site inspection (IRS audit guide ch.5 step 6)
missing
Land evidence (appraisal, closing statement, land ledger)
land allocation (IRS audit guide ch.5 step 12b)
provided
Purchase agreement and closing statement
basis and 1060 allocation check (Peco Foods)
not applicable
Cost guide citations for RCNLD
IRS audit guide ch.3.C.2 sources referenced by volume/page
not applicable
Placed-in-service evidence (certificate of occupancy, first lease)
placed-in-service date
missing
Construction start / binding contract evidence
bonus acquisition date (Notice 2026-11 sec. 3.03)
missing
Engagement letter and fee arrangement
fee arrangement (IRS audit guide ch.5 step 4)
missing
Study data: classification of every piece with IRS audit guide row and rule
schedule of assets
generated
Asset schedule CSV with sum check
fixed asset import
generated
Matrix crosswalk (component -> IRS audit guide row -> class)
examiners check consistency with the matrix
generated
Reconciliation workpaper
allocated total = building cost
generated
With / without study schedules
deduction timing
generated
Exit-year recapture table
recapture planning
generated
Fit screen
net benefit after fee and exit tax
generated
one-time catch-up adjustment workpaper and the tax form data sheet
look-back method change
not applicable
Partial asset disposition computations
PAD loss support
not applicable
Needs-review list (gray areas, AI suggestions labeled, resolutions)
open items before signing
generated

IRS audit guide quality checklist

1. Preparation by an individual with expertise and experience
preparer credentials not given
missing
2. Detailed description of the methodology
Rule-of-thumb benchmark (IRS audit guide ch.3.C.6): an estimate, not a study
missing
3. Use of appropriate documentation
0 documents listed; every piece has a source pointer
missing
4. Interviews conducted with appropriate parties
no interviews logged
missing
5. Use of a common nomenclature
components named by IRS audit guide matrix rows (atg_row column)
missing
6. Use of a standard numbering system
builder cost codes carried on every line
missing
7. Explanation of the legal analysis
each piece cites a rule id with its authority (IRS audit guide matrix row, Reg. 1.48-1(e), 168(e))
missing
8. Determination of unit costs and engineering take-off
no component inventory: actual line costs used without take-off
missing
9. Organization of assets into lists or groups
pieces grouped by recovery class and personal property/building property (classTotals)
met
10. Reconciliation of total allocated costs to total actual costs
reconciled: allocated total equals building cost
met
11. Explanation of the treatment of indirect costs
no indirect costs listed
missing
12. Identification and listing of personal property property
3 personal property pieces listed
met
13. Consideration of related aspects (inventory cost rules, method change, sampling)
inventory cost rules of indirects and interest must be confirmed by the CPA; no method change; 0 items need review
partial

Notes for the CPA

· ESTIMATE, NOT A STUDY: benchmark sfr_rental (best grade C, UNVERIFIED); an engineering study must replace it (reclass_benchmarks app_usage_rule)
· benchmark note: No B-grade SFR-specific range found. For builders, a rental SFR built from own cost records can use the RRP matrix directly.
· estimate bands calibrated to the engine's IRS audit guide-literal full study for sfr_rental: conservative 10.3% / moderate 11.3% (engine full-study distribution (IRS audit guide-literal), scripts/clientsim mass run 2026-10-26, docs/HARDEN_REPORT.md and docs/FINISH_REPORT.md); aggressive 25% = the sourced benchmark typical. Sourced vendor range 15-35% (typical 25%) relies on positions the IRS audit guide matrix treats as building property
· state rule: Effective with the 2026 franchise tax report Texas applies current IRC for depreciation calculations, allowing OBBBA first-year write-off
· state conformity: CPA review
· 80% dwelling-unit rent test assumed met (no rent split given)

Research tool for CPA review; not tax advice. AI suggestions are labeled and never change a number. estimate, not a study. CSV: 7 rows; cost column ties to basis: yes ($11.7M). The CSV uses the moderate scenario shown here.