Short-Term Rental Tax & Depreciation Calculator

Residential short-term rental properties are generally depreciated over 27.5 years using MACRS (Modified Accelerated Cost Recovery System). The land portion of the purchase price is not depreciable — typically 15–30% of the purchase price. Only the structure and improvements can be depreciated. If your property is classified as non-residential (e.g., commercial space), the depreciation schedule extends to 39 years.

Cost segregation is an IRS-allowed tax strategy that reclassifies components of a real property into shorter depreciation categories: 5-year (personal property like appliances, furniture), 7-year, and 15-year (land improvements like parking lots, landscaping) categories. This enables accelerated depreciation deductions, front-loading the tax benefit. A cost segregation study typically costs $5,000–$15,000 for residential properties but can generate $50,000–$200,000+ in accelerated deductions. It is generally worth it for properties valued at $500,000+.

Bonus depreciation allows you to immediately deduct a percentage of the cost of qualifying assets rather than depreciating them over their normal useful life. In 2026, the bonus depreciation rate is 40% (it was 100% through 2022 and has been phasing down 20% per year). Assets in the 5-year and 15-year classes from a cost segregation study qualify for bonus depreciation. Always verify the current rate with your CPA, as tax law can change.

The Augusta Rule (IRC Section 280A(g)) allows homeowners to rent their primary residence for up to 14 days per year completely tax-free. The rental income does not need to be reported on your tax return. Many STR investors who own other vacation rentals also use this rule for their primary home by renting it for events, corporate meetings, or other short-term stays. The property must be your primary or secondary residence, and the rule applies only if rented for 14 days or fewer.

If your STR generates a net loss (after depreciation and expenses), you may be able to deduct that loss against other income — but the rules are complex. If you materially participate in the STR (generally 500+ hours/year or 100+ hours and more than anyone else), it may qualify as a non-passive activity, allowing unlimited loss deductions. This is a key tax advantage unique to STRs compared to long-term rentals. Consult a CPA familiar with STR tax rules.

Personal use days reduce your business use percentage, which directly reduces your deductible depreciation and expenses. Under IRS rules, if personal use exceeds the greater of 14 days or 10% of rental days, the property is considered a "personal residence" for tax purposes, which limits loss deductions. Careful tracking of personal use days is critical for maximizing your STR tax benefits.

You can generally deduct the business-use portion of: mortgage interest, property taxes, insurance, HOA fees, repairs and maintenance, utilities, cleaning and management fees, Airbnb platform fees, supplies, furniture and equipment (via depreciation or Section 179), advertising costs, professional services (accounting, legal), and depreciation of the structure itself. Keep meticulous records and receipts for all expenses.

Strongly recommended, yes. STR tax rules are uniquely complex — the material participation tests, passive vs. non-passive loss rules, self-employment tax implications, state and local tax requirements, and strategies like cost segregation all require professional guidance. An STR-experienced CPA can often save investors far more than their fee through proper depreciation strategies and loss deduction optimization. Look for a CPA with specific experience in short-term rental properties.