Short-term rental owners typically save $30K–$80K+ in Year 1 with a cost segregation study. STRs have the highest accelerated depreciation rates because of FF&E, appliances, and furnishings.
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Short-term rentals consistently produce the highest cost segregation deductions among residential property types. Here's why:
Furniture, fixtures, and equipment (FF&E) in vacation rentals — beds, sofas, TVs, kitchen appliances, linens, outdoor furniture — are classified as 5-year personal property. A fully furnished STR can have 25–35% of its basis in accelerated classes, compared to 15–18% for an unfurnished long-term rental.
If you materially participate in managing your STR (7+ days average stay, 100+ hours/year), cost segregation losses can offset your W-2 or 1099 income — not just passive rental income. This is the "STR loophole" that lets high-income earners use rental property to dramatically reduce their tax bill.
Under current federal tax law, 100% bonus depreciation applies to all property placed in service in 2025 and beyond. Every dollar reclassified through cost segregation into 5, 7, or 15-year classes is deductible in Year 1.
See detailed breakdowns for Airbnb and vacation rental properties at different price points.
A cost segregation study reclassifies components of your STR — appliances, flooring, cabinetry, landscaping, outdoor amenities — into shorter depreciation periods (5, 7, and 15 years) instead of the default 27.5 years. With 100% bonus depreciation, the entire reclassified amount is deductible in Year 1.
If your STR has an average guest stay of 7 days or less and you materially participate in management (100+ hours/year, more than anyone else), the IRS treats it as a non-passive activity. That means cost segregation losses can offset your W-2, 1099, or business income — not just other rental income. This is an enormous benefit for high-income earners.
Yes. The One Big Beautiful Bill Act permanently restored 100% bonus depreciation for property placed in service in 2025 and beyond. All property reclassified through cost segregation is eligible for full first-year deduction.
No — cost segregation applies to the building itself, not just furnishings. However, furnished STRs produce higher deductions because furniture, appliances, linens, and decor are all classified as 5-year property. A fully furnished STR typically gets 30–35% of basis reclassified, vs. 18–20% for unfurnished.
Our studies are delivered in under 1 hour. No site visit required — we use assessor records, satellite imagery, and construction cost databases to complete the analysis remotely.