Most short-term rental investors can write off 20–30% of their property's purchase price in year one through bonus depreciation and cost segregation. On a $600,000 STR, that's typically $120,000–$180,000 in deductions — enough to eliminate federal tax liability for many high-income investors.
Every investor who plugs numbers into a generic str loophole calculator ends up with a wide range and no real confidence in it. The reason is that the calculator can't see your property. It defaults to a 20% land ratio, a generic 22% bonus-eligible component, and a 27.5-year residential building — and spits out a one-size-fits-all answer that misses the real number by 40 to 60 percent on either side.
This article walks through what actually drives your year 1 write off short term rental — at $400k, $600k, and $900k purchase prices — and shows where generic estimates undershoot and where they overshoot. If you want a property-specific number, see how DepreciMax works: the platform analyzes the actual listing photos and outputs a line-item bonus depreciation report calibrated within 5% of a formal $5,000–$8,000 cost seg study. For a market-level view, our 2026 STR Bonus Depreciation Market Study ranks 197 US STR markets by median bonus-eligible share of purchase price.
What actually drives your year 1 write-off (5 factors)
The year 1 deduction on an STR is not a single percentage you can look up. It is the output of five property-level variables stacked together. Move any one of them and the dollar number swings substantially.
- Purchase price. The denominator on every percentage. A 22% bonus-eligible component on $400,000 is $88,000; the same percentage on $900,000 is $198,000.
- Land value ratio. Land is not depreciable. A property with a 15% land ratio puts $85 of every $100 into the depreciable basis; a property with 35% land ratio puts only $65 into the basis.
- Year built and interior finish quality. Newer construction generally has higher-grade FF&E, more recessed lighting, custom cabinetry, and stone surfaces — all of which are 5-year personal property and 100% bonus-eligible.
- Outdoor amenities. Pools, hot tubs, fire pits, outdoor kitchens, pergolas, and paved patios are 15-year land improvements. They are the single largest swing factor between an average STR and a top-decile STR.
- Whether furnishings convey. Roughly $40,000–$90,000 of FF&E (furniture, fixtures, equipment) is bonus-eligible if conveyed with the property. Missing this category drops the deduction by 6–10% of purchase price.
The math at three price points
Below is the full year 1 write off short term rental math at $400k, $600k, and $900k purchase prices, assuming a standard mountain or vacation market with a single outdoor amenity (hot tub or fire pit) and conveyed furnishings. These are realistic mid-range scenarios — not the floor and not the ceiling.
| Line | $400k STR | $600k STR | $900k STR |
|---|---|---|---|
| Purchase price | $400,000 | $600,000 | $900,000 |
| Land ratio (assumed 20%) | $80,000 | $120,000 | $180,000 |
| Depreciable basis | $320,000 | $480,000 | $720,000 |
| 5-year personal property (~13%) | $52,000 | $78,000 | $117,000 |
| 15-year land improvements (~9%) | $36,000 | $54,000 | $81,000 |
| Total bonus-eligible (22%) | $88,000 | $132,000 | $198,000 |
| Tax savings at 32% bracket | $28,160 | $42,240 | $63,360 |
| Tax savings at 37% bracket | $32,560 | $48,840 | $73,260 |
The $600,000 mid-case lines up almost exactly with our answer block: $132,000 in year 1 deductions, $48,840 in federal tax savings at the 37% bracket. That is enough to wipe out the entire federal tax bill on roughly $132,000 of W-2 income — which for many active investors in the 32%+ bracket means they recover one to three months of after-tax salary in the first April after closing.
Properties at the high end of the spectrum — pool, hot tub, outdoor kitchen, top-tier finishes — push to 28–30% bonus-eligible. Properties at the low end — minimal outdoor features, basic finishes, older construction — drop to 15–17%. The 22% in the table is intentionally typical.
Want the line-item number on a specific listing?
Run a Bonus Depreciation Report — $99Why a generic bonus depreciation calculator rental property undershoots by 40–60%
Most online bonus depreciation calculator rental property tools use a flat 20–22% multiplier and call it a day. That is fine as a back-of-envelope number, but it systematically undershoots in three specific scenarios where STR investors actually buy.
- Properties with pools or full outdoor amenities. Pools alone represent $50,000–$90,000 of 15-year land improvements. A generic calculator that assumes a base shell adds zero credit for these. On a $600k property with a pool and hot tub, the deduction is closer to $170,000 — not $130,000.
- Fully-furnished STRs where FF&E conveys. A turnkey listing with $60,000 of furniture and appliances included is roughly 10% of a $600k purchase price — most generic calculators ignore this entirely.
- Condos and townhomes with low land ratios. Condo owners do not own the underlying land directly; the assessor often books land at $0 or near-$0 for the unit. A 22% multiplier on a flat purchase price misses that you should be working with closer to 100% depreciable basis.
The flip side: generic calculators also overshoot. On urban properties with 40%+ land ratios, on properties without outdoor amenities, and on stripped-out shells where furnishings do not convey, the real number is well below 22%. Without a property-specific analysis you cannot tell which side of the average you are on.
Your write-off depends on these 4 inputs
If you remember nothing else, remember these four inputs. Get them right and the rest of the math is mechanical.
Input 1 — Purchase price. This is your contract price, less any seller credits applied to non-depreciable items. Closing costs are added to basis but are mostly 39-year property, so they barely move the year 1 number.
Input 2 — Land ratio. Pull the county assessor's land value, divide by the assessor's total value, and apply that ratio to your purchase price. Smarty Streets, FHFA zip-level data, and the county parcel database all work. For condos, land ratio is usually near zero.
Input 3 — Square footage and finish grade. Drives both the 5-year personal property allocation and the structural 39-year line. Higher finish grade = more 5-year property. New construction in resort markets routinely scores higher here than older properties.
Input 4 — Outdoor amenity inventory. Every pool, hot tub, fire pit, outdoor kitchen, pergola, paved patio, and significant landscaping feature. Each one is a 15-year land improvement at 100% bonus rate.
To see exactly how DepreciMax extracts these from listing photos, walk through our STR investor guide and the AI cost segregation vs. traditional study breakdown. The methodology is the same one used by engineering-based cost seg firms — we just front-load it to before you close.
How much can I deduct STR 2026 — putting it all together
The honest answer to "how much can I deduct STR 2026" is: your purchase price multiplied by a property-specific bonus-eligible percentage that ranges from 12% (urban high-land condo, no amenities) to 32% (mountain cabin with pool, hot tub, full FF&E). For most active STR investors buying typical vacation properties, the realistic range is 20–28%, and the median in our benchmark dataset is just over 22%.
If you want a defensible number for a specific property — the one you are about to make an offer on — the analysis takes 5 minutes and costs $99. For the same property, a formal post-close cost seg study runs $5,000–$8,000 and takes 4–6 weeks. The math at decision time is the same. The difference is when you get it. For the full breakdown of what a good DepreciMax score means in year 1 dollars, see the score canonical reference.
"Pre-purchase visibility into bonus depreciation isn't optional anymore — it's the difference between informed underwriting and post-close surprise." — DepreciMax benchmark commentary, 2025
Get your year 1 write-off number in 5 minutes
Upload 7–9 listing photos and we'll return a line-item Bonus Depreciation Report — calibrated to within 5% of a formal $5,000–$8,000 cost seg study. $99, one-time.
Run a Bonus Depreciation Report — $99 →Frequently Asked Questions
Can I write off the full purchase price of a short-term rental in year 1?
No. You can only depreciate the improvements, not the land, and even then only the components classified as 5-year personal property and 15-year land improvements are eligible for 100% bonus depreciation. On a typical short-term rental, that totals 20–30% of the purchase price in year 1. The structural shell of the building still depreciates over 27.5 or 39 years on the standard MACRS schedule.
What if I bought my STR in 2024 — can I still claim year 1 bonus depreciation?
Yes. The year a property is placed in service controls the bonus rate. For 2024 placements the rate was 60% and for early 2025 placements it was 40% under the original phase-down. IRS Notice 2026-11 restored 100% bonus depreciation for property placed in service on or after January 19, 2025. Investors with 2024 placements may still file or amend to capture the lower-rate bonus, and your CPA can also use Form 3115 to catch up missed depreciation from prior years.
Does land value matter for the STR loophole calculator?
Land value matters enormously. Land is not depreciable, so a property with a 35% land ratio has roughly half the depreciable basis of a similar property with a 15% land ratio. In high-land-value coastal and urban markets, the same purchase price can produce 30–50% less in year 1 deductions than the same dollars deployed in a cabin or mountain market. This is why two identical purchase prices in different markets can produce wildly different tax outcomes.
What is the difference between cost segregation and bonus depreciation?
Cost segregation is the engineering analysis that separates a property's purchase price into 5-year, 15-year, and 39-year asset classes. Bonus depreciation is the IRS rule (§168(k)) that lets you deduct 100% of the 5-year and 15-year classes in the first year. You need cost segregation to identify the bonus-eligible components, and you need bonus depreciation to actually accelerate the deduction into year 1. They are complementary — not alternatives.
Do I need a CPA to claim the STR year 1 write-off?
You should work with a CPA familiar with the short-term rental exception under IRC §469(c)(2). The math itself is straightforward, but the IRS Form 4562 filing, depreciation schedule maintenance, and recapture rules at sale benefit from a professional. DepreciMax produces the line-item asset classification your CPA needs to file the return — but a tax professional should review your full situation, particularly state conformity and material participation documentation.