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STR Bonus Depreciation Calculator (2026)
Estimate the Year-1 tax deduction a short-term rental can generate under the One Big Beautiful Bill's permanent 100% bonus depreciation — cost segregation, the ≤7-day loophole, and what to watch for.
A cost-seg study typically reclassifies 20–35% of a furnished STR into short-life property. This portion is bonus-eligible.
Year-1 depreciation deduction
$176,509
Bonus (100% of short-life)
$168,000
Building (27.5-yr, yr 1)
$8,509
Estimated Year-1 tax savings
$56,483
The catch — recapture at sale
The accelerated depreciation is recaptured as ordinary income (IRC §1245) when you sell — roughly $53,760at your current rate. Bonus depreciation defers tax; it doesn't erase it. A 1031 exchange can defer the recapture.
Estimate for planning only — not tax or legal advice. Cost-segregation percentages require an engineering study; the material-participation and ≤7-day tests are fact-specific and must be documented. The IRC §461(l) cap, at-risk rules, and state conformity to bonus depreciation all affect the real number. Confirm with a CPA before filing.
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The tax break only helps if the rental stays legal
A six-figure depreciation deduction assumes you can keep operating the short-term rental. Permit caps, night limits, and occupancy-tax rules change fast in STR markets. STR Compliance Watch monitors your market and emails you the moment the rules move.
Watch my market — $49/yr →How the One Big Beautiful Bill changed short-term rental taxes
The One Big Beautiful Bill Act (signed July 2025) made 100% bonus depreciation permanent for qualified property placed in service after January 19, 2025 — reversing the phase-down that would have dropped 2025 bonus to 40%. For short-term rentals that changes the math dramatically: every dollar a cost-segregation study reclassifies into 5-, 7-, or 15-year property is now fully deductible in Year 1.
Paired with the short-term rental “loophole”— an average guest stay of 7 days or less takes the activity out of the passive rental rules under IRC §469, so a materially participating owner's losses are non-passive and can offset W-2 income without Real Estate Professional status — a $750K–$1M furnished STR can generate $150K–$300K of Year-1 deductions against active income.
Two things to keep honest: the loss is capped by the IRC §461(l) excess-business-loss limitation, and the accelerated depreciation is recaptured at ordinary rates when you sell (IRC §1245). Bonus depreciation is a powerful deferral, not a permanent erasure — and the strategy only pays off if the rental stays legal to operate.
Read the full breakdown in our One Big Beautiful Bill STR tax guide, or see how Tenby keeps your books Schedule-E ready year-round.