Quick answer
What should you look for when buying a short-term rental?
Five categories drive most of your investment return:
- Land value ratio — lower ratio = more of the purchase depreciates
- Outdoor amenities — pool, hot tub, fire pit, outdoor kitchen (all 15-year property, 100% bonus-eligible)
- Interior finishes + conveyed FF&E — 5-year personal property, 100% bonus-eligible
- Major system age with receipts — HVAC, roof, water heater
- Permit transferability + HOA rules — deal-killers if missed
Use the checklist below on your tour. Fill in the 5 diligence questions before writing an offer. For city-specific data on Diamond density, median bonus %, and land ratio in your target market, open the city-specific field guide.
What to spot inside — 5-year personal property
Under IRS §168(k), 5-year personal property is 100% bonus-eligible in Year 1. On tour, actively look for:
- Custom cabinetry — inset, painted, or beadboard cabinets vs. builder-grade
- Stone or quartz countertops — as opposed to laminate or tile
- High-end appliances — Sub-Zero, Wolf, wine cooler, built-in espresso, commercial range
- Frameless glass shower enclosures — vs. framed/tiled walls
- Decorative lighting fixtures — chandeliers, sconces, pendants (not standard cans)
- Built-in shelving and cabinetry — theater rooms, offices, mudrooms
- Fireplace inserts — gas or wood inserts with mantels
- Smart home systems — Lutron, Sonos, Nest, Ring, home theater
- Mini-split HVAC — the personal-property component of an HVAC install
- Furniture, FF&E if conveyed — beds, sofas, art, kitchenware, electronics
What to spot outside — 15-year land improvements
These are the single biggest STR depreciation differentiators. All 100% bonus-eligible in Year 1:
- Pool — in-ground, plus deck/coping
- Hot tub — plumbed or portable, plus the pad it sits on
- Fire pit — permitted gas or wood-burning
- Outdoor kitchen — countertop, sink, gas line, grill
- Pergola / gazebo / covered outdoor area
- Landscaping + irrigation systems — plants + hardscape + drip/spray
- Retaining walls — segmental block or poured concrete
- Fencing — perimeter, dog fencing, privacy screens
- Deck / patio surfacing — composite, stone paver, stamped concrete
- Outdoor lighting — path, uplights, string lights (permanent)
- Exterior paved surfaces — driveway, walkways
What to skip — 39-year structural (NOT bonus-eligible)
Don't spend time cataloging these — they depreciate straight-line over 39 years and offer no Year-1 benefit:
- Foundation, framing, and roof
- Windows and exterior doors
- Central HVAC ductwork (the ductwork itself — not the mini-split component)
- Plumbing rough-in
- Electrical rough-in
- Drywall and paint
- Embedded / grouted tile (in-wall or floor tile grouted into the substrate)
- Structural fireplace surrounds (masonry chimneys)
Take clear photos of everything on the two prior lists. Skip photos of these. When you run a property report (via DepreciMax or a formal cost segregation study), the amount of 5-year and 15-year property you can substantiate is the entire game.
What 5 questions should you ask the listing agent?
Each maps directly to a number that drives your Year-1 bonus depreciation. Ask on the tour, note the answer, verify in due diligence.
1
What's the land value on the most recent tax assessment?
Total assessment splits into land + improvements. Lower land = higher depreciable basis. Median US residential land ratio is 25-35%; STR-optimized markets run 11-20%. If the agent doesn't know, pull the county assessor record.
2
Is the property being sold furnished, and what FF&E is included?
Conveyed furniture, art, kitchenware, and electronics get added as 5-year personal property — often 4-8% of purchase price in additional bonus depreciation. Get a written FF&E list in the offer; verbal "included" doesn't survive closing.
3
How old are the HVAC, roof, and water heater — and are there receipts for recent replacements?
Recently replaced major systems can be partially classified as 5-year or 15-year property if you have documentation. No receipts = no segregation. Receipts also help defend a cost seg study if questioned.
4
Were the outdoor amenities permitted, and when were they built?
Permitted improvements with a clear cost basis are easier to depreciate as 15-year property. Unpermitted work creates risk for both cost seg AND STR licensing. Pull the parcel's permit history before closing.
5
If this has been an active STR, what's trailing 12-month gross revenue and is the STR permit transferable?
Permit caps and waitlists exist in many jurisdictions. A transferable permit is real value; a non-transferable one means going on the waitlist. Verify with the local STR office, not just the agent.
What red flags should you check?
Five common deal-breakers that are difficult or impossible to fix after closing:
- HOA covenants that ban STRs — Read the CC&Rs (not just the summary) before closing. Search for "rental," "leasing," "short-term," "transient," and "minimum stay." An HOA STR ban is not fixable after closing.
- Non-transferable STR permit or permit moratorium — In some markets a permit dies with the seller and the buyer goes on a multi-year waitlist. Verify permit transferability with the local STR office directly, not the listing agent.
- Primary-residence-only STR permits — Some cities restrict STRs to owner-occupied properties (host lives there ≥6 months/year), disqualifying most investor buyers. Verify the property qualifies for the investor category before closing.
- Unpermitted outdoor amenities — Unpermitted pools, hot tubs, or structural work can disqualify your STR license application AND expose you to cost seg risk. Pull the permit history from the county before closing.
- Minimum stay length requirements — 30-day minimum stays functionally kill STR use. 7-day minimums coincidentally still work with the federal STR loophole (average guest stay ≤7 days for material-participation treatment).
How much bonus depreciation can you actually get?
In 2026, under the One Big Beautiful Bill Act (OBBBA), 100% bonus depreciation was permanently restored for property placed in service after Jan 19, 2025. Typical STR bonus-eligible share is 18-27% of purchase price depending on land ratio and amenity mix.
Rough Year-1 math on a $500K STR at 25% bonus-eligible:
- Year-1 deduction: ~$125K
- Federal tax savings @ 37% bracket: ~$46K
- State savings: $0 to ~$12K depending on state §168(k) conformity
To use this deduction against W-2 income (not just rental income), the buyer must meet the STR loophole requirements: (a) average guest stay ≤7 days, (b) material participation under IRC §469. Both must be satisfied.
Market-specific data
The general checklist above applies to any STR market. But bonus-eligible % varies significantly by market — from 27% in cabin-heavy markets like Lake Cumberland KY, Poconos PA, and Branson MO, down to 18-22% in coastal luxury markets like Nantucket or Aspen.
For city-specific data on median bonus-eligible %, Diamond density (% of listings hitting ≥24% bonus-eligible), land ratio ranges, and amenity mix — plus a printable field guide for that specific market — open the appropriate DepreciMax house-hunting guide:
- Lake Cumberland, KY — Study #1 (27% bonus, $329K median)
- Poconos, PA — 27% bonus, $669K median
- Broken Bow, OK — 26% bonus, $525K median
- Smoky Mountains, TN — 25% bonus, $374K median
- Joshua Tree, CA — 26% bonus, $397K median
- See all 51 market guides →
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Data source: DepreciMax STR Bonus Depreciation Study — 2026