Short-Term Rental Cost Segregation

Engineering-based STR cost segregation for Airbnb, Vrbo, and vacation rentals. Review study scope, property records, and tax planning with AE Tax Advisors.

Cost segregation for Airbnb, Vrbo, and vacation rentals

Stratum analyzes the building and its components so your tax preparer can evaluate accelerated depreciation. Start with the acquisition basis, separate land, reconcile furnishings, and identify improvements completed in different years. A study should connect its classifications to records and explain the assumptions behind its conclusions.

What an STR study should deliver

• A reconciliation of the analyzed property basis
• Component costs and proposed recovery classifications
• Photographs, plans, or other supporting property records
• Clear treatment of existing furniture and later improvements
• A schedule and methodology your tax preparer can review

Assets are classified by their function and applicable authority. Furniture is not automatically seven-year property, and an STR building is not automatically residential rental property with a 27.5-year recovery period. The study and return preparer must assess the actual use and applicable definitions.

Bonus depreciation and usable deductions

Current federal law generally provides 100% bonus depreciation for qualifying property acquired and placed in service after January 19, 2025, subject to eligibility rules and elections. This applies to eligible components, not automatically the entire purchase. Earlier acquisition dates require separate analysis. Check the current IRS guidance with your preparer.

An average customer stay of seven days or less can take an activity outside the passive-activity rental definition. It does not automatically make a loss deductible against wages: material participation and other limitations still matter. Personal use, basis, at-risk rules, and other applicable restrictions must be evaluated separately.

Is a study worthwhile for your rental?

Compare the expected timing benefit with the study fee, available records, intended holding period, and whether deductions can be used currently. Review potential recapture on sale and state adjustments. The largest preliminary reclassification estimate is not necessarily the strongest financial outcome.

The Stratum and AE Tax Advisors process

1. Book discovery with AE Tax Advisors and outline your property and tax situation.
2. Confirm a study scope, records required, fee, and delivery expectations.
3. Stratum documents and classifies property components.
4. Your tax preparer reviews the report and determines the appropriate filing treatment.

Choose a provider and prepare your records

• Choose the best STR cost segregation company
• Explore STR cost segregation markets
• STR investor resource center
• Document checklist
• Educational cost segregation calculator

Technical references: IRS Publication 946, Publication 925, and Publication 527. Educational information; implementation depends on your facts and tax year.