Cost Segregation on a $750K Airbnb / Short-Term Rental: $180,000 in Accelerated Depreciation

Higher-end Airbnb properties often feature premium finishes and extensive outdoor amenities — both categories that cost segregation captures aggressively.

$180,000 Accelerated Depreciation

$66,600 Est. Year-1 Tax Savings

84x Return on Study Cost

Adjust Your Numbers

Property Type

Purchase Price

$66,600

Estimated Year-1 Tax Savings

$180,000

Accelerated Deductions

$795

Study Cost

84x

ROI on Study

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Estimates are for illustration only. Details

What This Means for a $750,000 Airbnb / Short-Term Rental

$750,000 Airbnb / Short-Term Rental property — cost segregation depreciation example

A $750K Airbnb typically falls into the premium vacation rental category — think beachfront condos, ski chalets, or renovated historic homes in high-demand markets. These properties are disproportionately well-suited for cost segregation because their high finish levels and extensive furnishing packages mean a larger share of the purchase price sits in shorter MACRS recovery classes.

At this price point, the accelerated depreciation typically reaches $180K. With 100% bonus depreciation, that entire amount can be claimed in the first year. The resulting tax savings of approximately $67K dwarfs the study cost of $795 — delivering an 84x return on investment.

Investors at the $750K level are often high-income professionals using the STR loophole: by materially participating in their Airbnb (managing bookings, coordinating cleaners, handling guest communication), they can treat the rental as a non-passive activity. This allows the accelerated depreciation to offset W-2 or business income — the most powerful tax strategy available to real estate investors.

MACRS Depreciation Breakdown

Accelerated Depreciation by MACRS Class

$180,000 total reclassified into shorter recovery periods

5-Year Property $126,000

70%

7-Year Property $14,400

15-Year Property $39,600

22%

Estimated Year-1 Tax Savings $66,600

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

Method

Year-1 Deduction

Difference

Standard (27.5yr straight-line)

$21,818

—

With Cost Segregation + Bonus

$180,000

+$158,182

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.

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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.

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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: $750,000 Across Property Types

Property Type	Accelerated	Tax Savings	Study Cost	ROI
Airbnb / Short-Term Rental	$180,000	$66,600	$795	84x
Rental Property	$120,000	$44,400	$795	56x
Fourplex	$132,000	$48,840	$995	49x

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.

Is bonus depreciation available in 2026? ▼

Yes. The One Big Beautiful Bill Act permanently restored 100% bonus depreciation for property placed in service in 2025 and beyond. This means you can deduct the full amount of accelerated depreciation identified in your cost segregation study in year one.