What is bonus depreciation for short-term rentals?
Under IRS §168(k), short-term rental investors can take 100% first-year bonus depreciation on the personal property (5-year class) and land improvement (15-year class) portions of a qualifying property. For an STR — defined as a property where the average guest stay is 7 days or less and where the owner materially participates — this deduction can offset W-2 and other ordinary income, not just passive rental income. On a $1M STR with typical luxury finishes and a full outdoor amenity package, the bonus-eligible Year 1 deduction commonly lands between $200,000 and $300,000.
How does DepreciMax calculate the depreciation score?
Every active listing gets a 0–100 DepreciMax Score derived from four market signals: land value ratio (lower land share = more depreciable basis), property age, price per square foot, and outdoor amenity profile. For the $99 property report, Claude Opus AI analyzes 7–9 listing photos and classifies every visible finish, fixture, and improvement by IRS category — 5-year personal property, 15-year land improvements, or 39-year structural. The result is an engineered-quality estimate closely calibrated to a formal cost segregation study.
Do I need a cost segregation study to use DepreciMax?
No. DepreciMax is designed to precede — or in some cases replace — a formal cost segregation study. A traditional cost seg study from an engineering firm costs $5,000–$8,000 and happens after closing, which is too late to inform the offer price. DepreciMax produces a CPA-ready estimate before you close, for $99. Many investors use the DepreciMax report to filter properties pre-offer, then commission a formal engineering study post-close only when one is genuinely needed.
What is the STR loophole and do I qualify?
The "STR loophole" is the planning strategy where short-term rental income is treated as non-passive — meaning losses (including bonus depreciation) can offset W-2 and other ordinary income without requiring Real Estate Professional Status. To qualify, two conditions must hold: (1) the property's average guest stay is 7 days or less, and (2) you materially participate in the activity under one of the IRS material participation tests (most commonly the 100-hour or 500-hour tests). Qualification is fact-specific and depends on your full tax picture — confirm with your CPA before relying on the strategy.
Full qualification rules →
How is DepreciMax different from a traditional cost segregation study?
A formal cost segregation study is performed by an engineering firm post-closing, takes 4–8 weeks, and costs $5,000–$8,000. It produces a defensible line-item engineering report with documented methodology. DepreciMax produces an AI-driven estimate in minutes from listing photos for $99 — Closely calibrated to formal cost seg of an engineering study. DepreciMax is not a substitute for the legal defensibility of a formal study at filing time, but it is the right tool to decide which property to buy. Most investors use both: DepreciMax to pick the right deal, then a formal study at tax filing.
Is DepreciMax only for Airbnb properties?
No. DepreciMax works for any short-term rental property, regardless of booking platform — Airbnb, VRBO, Booking.com, direct-booked, or multi-platform. The IRS definition of an STR for bonus depreciation purposes is based on average guest stay (7 days or less), not the platform you list on. Single-family homes, condos, cabins, A-frames, and small multi-unit STRs are all supported.
What tax year does the bonus depreciation apply to?
Bonus depreciation is claimed in the tax year the property is "placed in service" — meaning ready and available for guest rental. For most STR investors, the placed-in-service date is either the closing date (assuming the property is ready) or the date the property is first listed for rental, whichever is later. Under the One Big Beautiful Bill Act, 100% bonus depreciation is permanent for property placed in service after January 19, 2025, with no scheduled phase-down.
How accurate are the DepreciMax reports?
DepreciMax property reports are closely calibrated to a formal cost segregation study on benchmark properties. We back-test against engineering studies from established firms (KBKG, Engineered Tax Services, Capstan) and intentionally calibrate slightly optimistic to provide an honest upper-bound estimate. If your DepreciMax estimate is materially off versus a formal study commissioned post-close, you can request a full refund of the $99 report fee.