Hospitality cost segregation

Hotels are FF&E factories.

No other property type packs as much short-life property into a single building as a hotel: beds, casegoods, decorative lighting, lobby finishes, kitchen equipment, pools, gyms, and guest amenities. TDA studies routinely push 30–40% of hotel basis into 5- and 15-year MACRS property — and 100% bonus depreciation under OBBBA cashes the entire amount in year one.

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Hotels, motels & hospitality

Furniture, fixtures & equipment (FF&E) make hospitality the highest-reclassification asset class.

Hotels combine extensive FF&E (carpet, lighting, furniture, casework, decorative finishes) with specialty MEP (kitchen ventilation, pool equipment, laundry infrastructure) and 15-year land improvements — typically reclassifying 25–45% of basis into accelerated buckets.

Branded hotel renovations also create QIP opportunities for tenant-improvement work, particularly after major flag refreshes or PIP renovations.

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FF&E + specialty MEPHospitality is the single highest-reclassification property type.

What we reclassify in a hotel

5-year personal property (often 20%+ of basis)

Beds, casegoods, soft goods, in-room furniture
Decorative lighting throughout guest rooms and public space
Lobby and dining-room furniture and decor
Kitchen equipment (commercial)
Decorative finishes — wall coverings, decorative ceiling features
Window treatments and removable wall coverings

15-year land improvements

Pool and pool deck
Site lighting, parking, signage
Landscaping, irrigation, hardscape

Reclassification benchmark

Hotels typically reclassify 30–40% of basis. Limited-service properties trend lower; full-service and resort properties with extensive amenities often exceed 40%.

Hotel pool	Typical %
39-year real property	55–65%
15-year land improvements / QIP	8–15%
5-year personal property	25–35%

Sample — $12M limited-service hotel

~$3.6M

First-year deduction with 35% reclassification on $10.4M depreciable basis under 100% bonus.

FAQ

Hotel cost segregation, answered

Why are hotels among the best property types for cost segregation?

Hotels are FF&E-rich and finish-heavy. Beds, casegoods, decorative lighting, kitchen equipment, pools, and guest-facing systems are all 5- or 7-year property. A typical hotel reclassifies 30–40% of basis — among the highest of any property type.

What about a PIP renovation?

PIP renovations are typically rich in QIP and 5-year personal property. Studying a hotel after a PIP is one of the most lucrative cost-seg moments — replaced casegoods, decorative upgrades, and TI work concentrate in shorter-life pools.

How does this work for a flag (franchised) hotel?

Flag hotels qualify identically to independent properties — depreciation is a federal tax matter independent of the franchise relationship. The brand standards manual often dictates the FF&E specifications, which actually helps the cost segregation work because items are easily identifiable.

Hotels are FF&E factories.

Furniture, fixtures & equipment (FF&E) make hospitality the highest-reclassification asset class.

What we reclassify in a hotel

5-year personal property (often 20%+ of basis)

15-year land improvements

Reclassification benchmark

Hotel cost segregation, answered

Free feasibility on your hotel