5 Year vs 15 Year Depreciation Components: What a Cost Seg Study Actually Reclassifies

When a cost segregation engineer walks your rental property, they are dividing every component into one of three buckets: 5 year personal property, 15 year land improvements, or 27.5 year building shell. This post walks through exactly what lives in each bucket, the typical percentage splits on a residential rental, and how the components flow onto Schedule E. For the wider playbook, start with the cost segregation pillar.

What qualifies as 5 year personal property

The 5 year bucket is for tangible personal property inside the building that is not structurally integral to the building itself. The IRS defines this through asset class 57.0 (distributive trades and services) and related classes. In practice, for a residential rental, 5 year items include:

Appliances. Refrigerator, stove, dishwasher, microwave, washer, dryer, garbage disposal, water heater if it is a standalone unit not integrated with HVAC.

Flooring. Carpet (always 5 year, always removable), vinyl planks, laminate (sometimes, depending on installation method), rugs. Tile and hardwood that is glued or nailed to the subfloor usually stays at 27.5 year structural classification.

Cabinets. Kitchen cabinets, bathroom vanities, closet systems, pantry built ins. If they are screwed to the wall and can be removed without structural damage, they are 5 year personal property.

Window treatments. Blinds, curtains, valances, shutters if non structural.

Light fixtures. Decorative and task lighting that is not part of the electrical system structure. Ceiling fans usually qualify.

Fixtures and finishes. Towel bars, bathroom accessories, mirrors, medicine cabinets that are surface mounted.

Plumbing fixtures serving personal property. Sometimes. This is a gray area. A bathroom sink is structural. A garbage disposal is 5 year. A kitchen faucet goes with the sink and depends on the engineer’s classification.

Typical percentage split on a residential rental: 20 to 30% of the building basis ends up in the 5 year bucket. A property with high end finishes and significant appliance value can push to 35%. A stripped down rental with minimal finishes might only hit 15 to 18%.

What qualifies as 15 year land improvements

The 15 year bucket is for improvements to the land outside the building envelope. Land itself is never depreciable, but improvements to the land are, and they depreciate over 15 years per MACRS class 00.3.

Site work. Parking lots, driveways, sidewalks, walkways, outdoor stairs, loading areas.

Landscaping. Mature trees, shrubs, mulch beds, decorative plants. Grass seed and sod are sometimes argued into this bucket but less cleanly.

Fencing. Perimeter fencing, privacy fencing, decorative fencing, gates.

Exterior lighting. Driveway lights, walkway lights, decorative site lighting, security lighting mounted on posts (not on the building itself).

Site utilities. Stormwater drainage systems, site irrigation, outdoor water lines that do not enter the building.

Decks and patios. If they are attached to the building, they can go either way depending on construction. Freestanding patios are typically 15 year.

Retaining walls, swimming pools, outdoor features. Pools in particular reclassify large amounts of basis into the 15 year bucket.

Typical percentage split on a residential rental: 5 to 15% of the building basis ends up in the 15 year bucket. Properties with swimming pools, extensive landscaping, or meaningful site work push higher. Condos and attached townhomes usually have almost nothing in the 15 year bucket because the site improvements belong to the HOA.

What stays at 27.5 years

The building shell itself, plus all the systems that are structurally or functionally integral to the building.

Structural. Foundation, framing, roof, exterior walls, interior load bearing walls, subfloor, roof deck.

Building systems. HVAC (all of it, including ductwork), plumbing rough in (pipes in the walls), electrical rough in (wiring in the walls, panels, service), building elevators.

Windows and doors. Fixed windows, exterior doors, interior doors, door frames.

Interior finishes that are structural. Drywall, paint, tile and hardwood floors that are integrated with the subfloor, ceilings.

Typical percentage split: 55 to 75% of the building basis stays at 27.5 years. The building shell always dominates the basis, which is why cost seg is a partial acceleration, not a wholesale reclassification.

Typical percentage splits summarized

For a vanilla single family rental with standard finishes and a modest yard.

• 27.5 year shell: 65 to 75%
• 5 year personal property: 18 to 25%
• 15 year land improvements: 7 to 12%

For a small multifamily with more appliances, more plumbing fixtures, more flooring area per dollar of basis.

• 27.5 year shell: 55 to 65%
• 5 year personal property: 25 to 32%
• 15 year land improvements: 10 to 15%

For an STR with high end furnishings and significant exterior amenities (pool, deck, outdoor kitchen).

• 27.5 year shell: 50 to 60%
• 5 year personal property: 28 to 35%
• 15 year land improvements: 12 to 18%

These are rough benchmarks. The actual splits on any given property depend on the engineer’s methodology and the specific components present.

How the components flow to Schedule E

Once the study is done, your CPA enters the depreciation on Form 4562 (Depreciation and Amortization) with separate lines for each asset class. The total from Form 4562 flows to Line 18 on Schedule E (Depreciation expense).

Each bucket has its own depreciation schedule going forward.

5 year components. Depreciate over 5 years on a 200% declining balance method (MACRS). Year 1 bonus depreciation applies first, then the remaining basis depreciates on the normal 5 year schedule. By year 6 the 5 year bucket is fully depreciated.

15 year components. Depreciate over 15 years on a 150% declining balance method. Year 1 bonus depreciation applies first, then the remaining basis depreciates on the normal 15 year schedule.

27.5 year shell. Straight line, unchanged from the baseline. Always $X per year (based on building shell basis divided by 27.5) for the entire hold period.

The Schedule E number in years 2 through 5 is higher than it would have been under straight line (because you are still depreciating the 5 year components faster than 27.5 year baseline would). By year 6 the 5 year bucket is exhausted and Schedule E depreciation drops below what straight line would have been for years 6 through 15. By year 16 the 15 year bucket is also exhausted and only the 27.5 year shell is depreciating. At year 28 the shell is exhausted too.

How DoorVault tracks components per property

Tracking multiple depreciation schedules per property across a growing portfolio is the bookkeeping burden nobody warns you about. DoorVault’s tax report stores the cost seg allocation per property with separate component buckets, runs each schedule forward automatically, and exports the right Schedule E number every year. More on the underlying ROI in is a cost segregation study worth it.

Related DoorVault resources

• Cost Segregation for Rental Property Owners: The 2026 Playbook — the full pillar guide covering math, recapture, and portfolio strategy.
• Cost Segregation Study (glossary) — plain-English definition with typical reclassification percentages.
• Cost Segregation Estimator — free first-year deduction calculator to model the 2026 bonus depreciation math.

FAQ

What percentage of a rental property can be reclassified to 5 year?
Typically 18 to 30% of the building basis on a residential rental, depending on finishes and component quality. STRs with high end furnishings can push above 30%.

Can I depreciate my roof over 5 years?
No. The roof is part of the building shell and stays at 27.5 years. Aggressive cost seg studies that classify roof components into short life buckets are the most common audit loss.

What happens to the 5 year components in year 6?
They are fully depreciated. Zero additional deduction from that bucket going forward. The 15 year and 27.5 year buckets continue on their schedules.

See how the buckets look on your property

Model component splits on your next purchase with the depreciation calculator. For the full playbook, go back to the cost segregation pillar. Track component basis across every property at https://doorvault.app.