Cost Segregation on a $1M Airbnb / Short-Term Rental: $240,000 in Accelerated Depreciation

Million-dollar STR investments generate six-figure tax deductions through cost segregation — enough to meaningfully reshape your tax position for years.

$240,000 Accelerated Depreciation

$88,800 Est. Year-1 Tax Savings

74x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

$88,800

Estimated Year-1 Tax Savings

$240,000

Accelerated Deductions

$1,195

Study Cost

74x

ROI on Study

Get My Full Study →

Estimates are for illustration only. Details

What This Means for a $1,000,000 Airbnb / Short-Term Rental

$1,000,000 Airbnb / Short-Term Rental property — cost segregation depreciation example

Investing $1M in a short-term rental property unlocks the full power of cost segregation. At this price point, the accelerated depreciation reaches $240K — enough to generate approximately $89K in first-year tax savings. For high-income investors in the 37% bracket, this single deduction can eliminate a substantial portion of their federal tax liability.

Properties at the million-dollar level tend to be luxury STRs with extensive buildouts: custom kitchens, high-end appliances, designer furnishings, smart home automation, premium landscaping, pools, and outdoor entertainment areas. Every one of these elements qualifies for accelerated MACRS classification — most in the 5-year class, with site improvements in the 15-year class.

The study cost at $1M is $1,195 — still remarkably affordable relative to the deduction. Many investors at this level work with CPAs who specifically recommend cost segregation as part of a broader tax strategy that includes bonus depreciation, material participation qualification, and strategic timing of property purchases around tax year-end.

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$240,000 total reclassified into shorter recovery periods

5-Year Property $168,000

70%

7-Year Property $19,200

15-Year Property $52,800

22%

Estimated Year-1 Tax Savings $88,800

Illustrative estimate. Final allocations vary based on property facts and report findings.

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$29,091

—

With Cost Segregation + Bonus

$240,000

+$210,909

Estimated deduction based on typical cost segregation allocations for airbnb / short-term rental properties. Actual study results may vary based on property-specific analysis including age, condition, renovations, and local construction costs.

Get $100 off your study

Enter your email — we'll send your savings breakdown + a $100 discount code.

Why Cost Segregation Works for Short-Term Rentals

Short-term rentals contain a higher concentration of depreciable personal property than almost any other residential property type. Furniture, appliances, linens, kitchenware, electronics, decorative fixtures, and specialty items like hot tubs or game room equipment all qualify as 5-year property under the IRS MACRS classification system. This furniture, fixtures, and equipment (FF&E) component typically represents 15-20% of the depreciable basis.

Beyond interior components, site improvements add additional reclassification value. Driveways, walkways, patios, outdoor lighting, fencing, landscaping, and irrigation systems fall into the 15-year MACRS class rather than the default 27.5-year residential schedule. For STR properties with pools, outdoor kitchens, or fire pits, these components can represent a meaningful share of the total reclassified amount.

With 100% bonus depreciation permanently restored under the One Big Beautiful Bill Act (signed July 2025), every dollar reclassified into 5-year, 7-year, or 15-year MACRS classes is deductible in full in the first year. For STR owners who materially participate in their rental operation, these accelerated deductions can offset W-2 and business income — not just passive rental income.

Who This Example Applies To

Airbnb, Vrbo, or short-term rental property owners
Investors who materially participate in their STR operation (100+ hours/year)
Taxpayers in the 32-37% federal bracket (where savings are most significant)
Properties with furniture, appliances, and guest-ready finishes

If your property is a passive investment managed entirely by a third party, the accelerated depreciation may only offset passive income. If your property has minimal furnishings or you plan to sell within 1-2 years, the benefit may be reduced. Actual results vary based on property age, condition, renovations, and local construction costs.

See what this looks like for your property

Get a professional cost segregation study with your exact depreciation breakdown. Starting at $495.

Get My Full Study →

Money-Back Guarantee Full refund if the study doesn't save you money

See a Sample Download sample report

Compare: Airbnb / Short-Term Rental at Different Price Points

Price	Accelerated	Tax Savings	Study Cost	ROI
$300K	$72,000	$26,640	$795	34x
$500K	$120,000	$44,400	$795	56x
$750K	$180,000	$66,600	$795	84x
$1M	$240,000	$88,800	$1,195	74x
$400K	$96,000	$35,520	$795	45x
$600K	$144,000	$53,280	$795	67x
$1.5M	$360,000	$133,200	$1,195	111x
$450K	$108,000	$39,960	$795	50x
$700K	$168,000	$62,160	$795	78x
$800K	$192,000	$71,040	$795	89x

Compare: $1,000,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$240,000	$88,800	$1,195	74x
Multifamily	$176,000	$65,120	$1,495	44x
Rental Property	$160,000	$59,200	$1,195	50x
Office	$142,500	$52,725	$1,495	35x

Frequently Asked Questions

What is a cost segregation study? ▼

A cost segregation study is an engineering-based analysis that reclassifies components of your property into shorter IRS depreciation categories (5, 7, and 15 years) instead of the default 27.5 or 39 years. This accelerates your depreciation deductions, reducing your tax bill in the early years of ownership.

Why do Airbnbs get higher cost segregation deductions? ▼

Short-term rentals are typically furnished with furniture, appliances, electronics, linens, kitchenware, and décor — all of which qualify as 5-year personal property under MACRS. This FF&E (furniture, fixtures, and equipment) often represents 15-20% of the property's depreciable basis, significantly increasing the accelerated depreciation amount compared to unfurnished long-term rentals.

What about depreciation recapture when I sell? ▼

When you sell a property, the IRS recaptures accelerated depreciation at a maximum rate of 25%. However, the time value of money strongly favors taking the deduction now: $50K in tax savings today is worth far more than paying $12,500 in recapture tax years later. Additionally, a 1031 exchange can defer recapture indefinitely.