Commercial Renovation Sample Study
A commercial renovation carried from the expense or capitalize decision through the retired roof covering.
Illustrative sample
Dollar figures shown are illustrative and come from the sample's own data. Estimates, never guarantees; results depend on your specific tax situation.
The Project and the Spend
Use
Commercial Renovation
Renovation began
January 2026
Renovation finished
June 2026
Total spend
$1,850,000
Expensed by the study
$64,900
Capitalized by the study
$1,785,100
4 lines are expensed in the year paid, each under a treatment the study names; the PDF gives the authority, and your CPA confirms.
24 lines are capitalized and classified below.
How the Capitalized Cost Was Classified
| Class | Lines | Amount | Share of basis |
|---|---|---|---|
| 5 year property | 2 | $100,000 | 6% |
| 15 year land improvements | 5 | $247,300 | 14% |
| 15 year qualified improvement property | 11 | $638,600 | 36% |
| Building on its 39 year life | 6 | $799,200 | 45% |
Every dollar of the $1,785,100 basis is allocated.
The Retired Component
Retired in the project: original roof covering.
Disposition loss in the study: $134,014
First Year Figures
First year depreciation in the study: $997,017
Estimated first year tax savings at 37%: $368,896
| Position | Conservative | Middle of the Road | Aggressive |
|---|---|---|---|
| First year depreciation | $997,017 | $997,017 | $997,017 |
| Estimated tax savings | $368,896 | $368,896 | $368,896 |
All three positions give the same first year figures here.
These savings assume the full deduction can be used this year. Whether it can depends on your tax situation, including the passive activity rules, and your CPA decides.
What Is in the PDF
This PDF has the same parts as the three family renovation sample study.
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