What Qualifies for Bonus Depreciation in a Rental? (2026)

• 5-year property: furniture, appliances, finish flooring, cabinetry, decorative lighting, portable hot tubs, FF&E — 100% bonus-eligible.
• 15-year property: patios, pools, hot tub pads, fencing, landscaping, outdoor lighting, detached decks, driveways — 100% bonus-eligible.
• 27.5-year / 39-year property: roof, central HVAC, framing, windows, drywall — never bonus-eligible.
• Land: never depreciable under any method.
• Formal engineer-prepared cost segregation study: $3,000–$8,000 as of October 2026, depending on property size and complexity.

Qualified property is the whole ballgame. Every dollar of a short-term rental purchase that reclassifies out of the 27.5- or 39-year building shell into 5-year personal property or 15-year land improvements becomes bonus-depreciation-eligible under IRC §168(k) — restored to a permanent 100% rate for property acquired and placed in service after January 19, 2025 by the One Big Beautiful Bill Act (OBBBA). Every dollar that stays in the shell depreciates on a straight-line schedule over decades.

This article walks the full qualification map for a short-term rental: what the §168(k) statute actually says about qualified property, what counts and what doesn't, where the fact-specific edge cases hide (attached decks, in-ground spas, used-property rules), and how a real Smokies-region cabin's basis splits across the recovery periods. It is written for investors and advisors who already know bonus depreciation exists and want the clean checklist of what IRS will — and won't — let you accelerate.

What is "qualified property" for bonus depreciation?

Qualified property for bonus depreciation (§168(k)) is tangible property with a MACRS recovery period of 20 years or less, acquired and placed in service after a statutory start date. In the short-term rental context that reduces to two buckets: 5-year personal property (furniture, appliances, finish flooring, cabinetry, decorative lighting, FF&E) and 15-year land improvements (patios, pools, fencing, landscaping, driveways, detached decks, outdoor lighting).

The statute lives at IRC §168(k) and its regulatory implementation lives at Treas. Reg. §1.168(k)-2. Three gating criteria sit inside the definition. First, the property must have a MACRS recovery period of 20 years or less — this is the hard mechanical test and the reason the building shell is permanently excluded (residential rental is 27.5 years, nonresidential is 39, both are longer than 20). Second, the property must be depreciable under MACRS at all — which excludes land, inventory, and intangible property. Third, the property must be placed in service during the taxable year the deduction is being claimed, meaning the asset must be ready and available for its intended use.

What "qualified property" is not: a tax-concept wrapper that elevates ineligible property. Painting a brick-and-mortar label on a piece of the building shell does not change its recovery period. A roof is a roof even if the owner calls it a "capital improvement" — the MACRS table assigns it a 27.5- or 39-year life and §168(k) excludes it from day one. The question is always whether the component properly reclassifies under cost segregation principles into a shorter recovery period, not whether the owner can argue it should.

Cost segregation is the mechanism that drives the reclassification. For a short-term rental, a short term cost segregation study engineers the purchase basis into its component parts, assigns each component the correct MACRS recovery period, and documents the carve-out in a form that stands up to IRS review. A formal engineer-prepared study runs $3,000–$8,000 as of October 2026, depending on property size, complexity, and provider. The output: a line-item schedule that moves 20–35% of a typical furnished short-term rental purchase price out of the 39-year bucket and into the bonus-eligible 5- and 15-year buckets.

Do furniture and appliances qualify?

Yes — furniture, appliances, and all other FF&E in a short-term rental are 5-year personal property and qualify for 100% bonus depreciation. This is the single cleanest answer in the entire §168(k) framework. Every bed, sofa, dining table, TV, dishwasher, washer/dryer, refrigerator, coffee maker, bath towel set, and framed print in the house is 5-year personal property under MACRS, and 5 years is well under the 20-year ceiling for qualified property.

The reason FF&E qualifies cleanly is that it is tangible, movable, and not permanently affixed to the building structure. The IRS asset class tables assign it a 5-year recovery period across the board — a treatment confirmed in IRS Publication 946, "How to Depreciate Property," which contains the full recovery-period tables. For a short-term rental investor furnishing a new cabin or a newly acquired turnkey property, FF&E is often the single largest bonus-eligible line item on the file.

In practice, a well-furnished Smokies cabin — one of the categories we see in the best short-term rental property types for bonus depreciation analysis — carries $60,000 to $90,000 of FF&E as a 5-year line item on a mid-market purchase. All of it bonus-eligible, assuming the property is placed in service after January 19, 2025 under the OBBBA-restored permanent 100% regime. Keep the itemized invoices: audit substantiation sits at the asset level, not the aggregate.

Appliances get the same treatment. A commercial-grade range, a Sub-Zero refrigerator, a wine cooler, a built-in espresso machine, dishwashers, washer/dryer stacks, and smart-home gear (Lutron, Sonos, security cameras, keyless entry) are all 5-year personal property. The dedicated electrical circuits that serve those appliances — low-voltage wiring, gas piping for a gas range, 240V service for an EV charger — are typically carved out as 5-year personal property as well, provided the cost segregation study documents the allocation. A rough-order-of-magnitude estimate for the combined circuit and low-voltage package on a well-equipped STR cabin is $10,000–$16,000.

Do hot tubs, decks and landscaping qualify?

Generally yes — pools, hot tubs, patios, fencing, landscaping, and detached decks are 15-year land improvements and qualify for 100% bonus depreciation. This is the category that drives most of the outsized Year-1 write-off on amenity-heavy short-term rentals. Short-term rental guests pay a premium for outdoor experiences, which means short-term rental investors spend disproportionately on 15-year property compared to a long-term rental owner.

The 15-year land improvement bucket covers everything outside the building shell that is a structural addition to the land. Walking the list on a representative Smokies cabin: the hot tub platform or deck, the fire pit and its stone surround, the pergola, the outdoor kitchen (including grill, counters, and outdoor-rated appliances), the gazebo, the paved patio, the paved driveway, exterior path lighting, landscape plantings, irrigation lines, retaining walls, perimeter fencing, and the pool itself if there is one. Each of these components has a 15-year MACRS recovery period, and 15 is under the 20-year bonus-eligibility ceiling.

Two fact-specific nuances deserve attention. The first is attached decks. A deck physically attached to the building shell can be treated as a 15-year land improvement, but it can also be treated as part of the 27.5- or 39-year building — depending on construction method, permanency of attachment, and the facts documented in the cost segregation study. A deck floating on its own posts away from the house is almost always a 15-year land improvement. A deck framed into the house header and sharing structural attachment with the building is where the fact pattern matters, and where the engineer's documentation drives the outcome.

The second nuance is in-ground spas. A portable hot tub — one that plugs into a 240V outlet and could in principle be lifted off and moved — is 5-year personal property. An in-ground spa, by contrast, is typically treated as a 15-year land improvement if detached from the building shell, and the facts around its plumbing, electrical, and physical integration matter. Both results (5-year or 15-year) are bonus-eligible, so the primary consequence of the classification is the straight-line schedule that runs after bonus — not the Year-1 deduction size.

Does a roof or HVAC qualify?

No — a standard roof replacement and a central HVAC system are both 27.5-year (residential) or 39-year (nonresidential) property under MACRS, and neither qualifies for §168(k) bonus depreciation. Both components depreciate as part of the building shell on a straight-line schedule, not under the accelerated bonus regime.

This is a common point of investor confusion because the general-contractor invoice for a new roof or a new HVAC system looks like a discrete, identifiable improvement — the kind of invoice an investor instinctively wants to carve out and accelerate. The MACRS recovery-period tables (reproduced in IRS Pub 946) treat them differently. A roof covers the building and shares the building's recovery period. A central HVAC system — ducted, integrated with the shell, serving the whole structure — is treated the same way. The thermal envelope is part of the building.

Two exceptions exist, but neither is bonus depreciation. First, §179 expensing allows a nonresidential property owner (not a residential short-term rental) to elect to expense qualifying improvements including roofs, HVAC, fire protection, alarm systems, and security systems, subject to dollar caps and taxable-income limitations. This is a separate statute from §168(k), has different rules, and is not available to the typical residential short-term rental. Second, components of an HVAC system that properly classify as personal property — for example, mini-split units that are not integrated into central ductwork and that serve a specific amenity area — can sometimes carve out as 5-year personal property in a cost segregation study. The engineer's documentation drives the result.

The practical implication for a short-term rental buyer: when a seller advertises a "new roof" or a "new HVAC" as a value-add on a cabin, that is a real asset value, but it is not a bonus-depreciation value. It depreciates with the building shell. The bonus-eligible value in a short-term rental purchase sits in the FF&E, the finish flooring and cabinetry, and the outdoor amenity package — not in the thermal envelope.

Does used property qualify?

Yes — the Tax Cuts and Jobs Act extended §168(k) to used property acquired by the taxpayer, and that treatment carries into the OBBBA-restored permanent 100% bonus regime. A used short-term rental purchased from an unrelated seller qualifies for bonus depreciation on the purchased basis, with two gating conditions: the taxpayer must not have previously used the property, and the property must not be acquired from a related party (as defined in IRC §267 or §707(b)).

Before TCJA, bonus depreciation was limited to original-use property — essentially new construction or newly manufactured FF&E. The TCJA amendment opened the door for used-property qualification, which is why cost segregation on a resale short-term rental is one of the strongest tax plays in the entire real estate space. An investor who buys a furnished turnkey Smokies cabin from a previous short-term rental operator can run a cost segregation study, carve out the 5-year and 15-year property, and claim 100% bonus depreciation on that carved-out basis in Year 1.

The related-party rule matters. A property acquired from a spouse, parent, child, sibling, or controlled entity does not qualify as "used property" for bonus depreciation purposes — even if the transfer is at fair market value and documented at arm's length. The §267 and §707(b) definitions are strict. If a short-term rental is being transferred within a family, the planner should model the §168(k) outcome before structuring the deal; a sale to an unrelated third-party intermediary who then sells to the ultimate buyer is sometimes modeled but requires careful substance-over-form analysis and is beyond the scope of this article.

The practical rule of thumb: if the seller is unrelated and the buyer has never used the property before, bonus depreciation applies to the full purchased basis after allocating out non-depreciable land. The cost segregation study then carves the depreciable basis across the 5-, 15-, 27.5-, or 39-year recovery periods, and the 5- and 15-year carve-outs become the Year-1 bonus depreciation deduction.

The full qualified-property table

The reference table below maps the typical short-term rental component list to its MACRS recovery period and §168(k) treatment. "Fact-specific" items depend on construction method and the documentation in the cost segregation study.

Note the pattern: everything inside the thermal envelope that is bolted, welded, or structurally integral to the building shell depreciates with the building. Everything outside the envelope that is a structural addition to the land is a 15-year land improvement. Everything movable and not permanently affixed is 5-year personal property. The attached-deck row is the one place where this clean mental model collapses, and that is where engineer judgment and cost segregation documentation earn their keep.

Worked example: 1337 Lake Haven Way, Sevierville, TN

Anchor the abstract rules in a real property. A DepreciMax report on 1337 Lake Haven Way, Sevierville, TN — a representative Smokies-region cabin — produces the following qualified-property breakdown. All numbers are a DepreciMax pre-purchase estimate; the exact allocation on a filed return would come from an engineer-prepared cost segregation study.

• Purchase price: $799,000.
• Land value: $143,820 (18% of purchase price, pulled from assessor data).
• Depreciable basis: $655,180.
• Bonus-eligible share: 32.8% of purchase price.
• Total bonus-eligible Year-1 write-off: ~$262,072 (the sum of the 5-year and 15-year carve-outs).

How does the ~$262,072 bonus-eligible pool split between 5-year personal property and 15-year land improvements? For a Sevierville-region cabin, the split is estimated based on market-typical ratios for heavily furnished Smokies inventory — a filed study would allocate the exact amounts, and the ranges below are the modeling framing a buyer would show their CPA before closing.

• 5-year personal property: ~65–75% of the bonus-eligible pool — roughly $170,000–$196,000. Smokies cabins at this price point are heavily furnished with FF&E (bedding, seating, dining, kitchenware, TVs, decor), carry stone counters and custom cabinetry, use premium finish flooring, and often include smart-home and AV packages. Appliance packages at this price band are typically well above entry-level. Add a portable hot tub and the 5-year share pushes toward the top of the range.
• 15-year land improvements: ~25–35% of the bonus-eligible pool — roughly $66,000–$92,000. The outdoor package on a Smokies cabin at this price band typically includes a hot tub pad or deck, a fire pit area, landscaping, driveway and perimeter paving, path and accent lighting, and often a game-room deck or wrap-around porch. If an in-ground pool or outdoor kitchen is on the property the 15-year share pushes toward the top of the range.

Expressed as percentages of purchase price rather than of the bonus-eligible pool: the 5-year carve-out sits around 21–24% of purchase price and the 15-year carve-out around 8–12% of purchase price, for a combined bonus-eligible share of 32.8%. The remainder — approximately $393,100, or 49% of purchase price — stays in the 27.5-year building shell and depreciates on a straight-line schedule over the holding period.

Placed in service by December 31, 2026, and with short-term rental loophole eligibility preserved (average stay ≤ 7 days plus material participation), the buyer claims approximately $262,072 as a Year-1 deduction against ordinary income. Tennessee has no personal income tax, so no state-level haircut applies to the federal number. A specific CPA-level filing position would use the exact allocations from a filed cost segregation study — the DepreciMax estimate is a pre-purchase bridge from "I'm thinking about this cabin" to "I'm offering with the Year-1 number in hand."

Why the split matters: 5-year vs. 15-year

Under the current 100% bonus regime, both 5-year and 15-year property deduct 100% in Year 1, so from a Year-1 deduction perspective the split between the two buckets is immaterial. The split matters for two downstream reasons.

First, if §168(k) is ever curtailed below 100% again (the pre-OBBBA phase-down was heading toward 40% in 2025 before being reversed), the 5-year and 15-year schedules revert to different straight-line profiles for the non-bonus portion. 5-year property under MACRS uses a 200% declining balance method, producing a front-loaded schedule even without bonus. 15-year property uses 150% declining balance, with a slower back-end. In a non-100% world, correct classification of each component becomes a material tax number.

Second, recapture mechanics differ. Section 1245 recapture on 5-year personal property generally recaptures at ordinary income rates on sale, while 15-year land improvements are typically §1250 property with the §1250 recapture rules. A sophisticated holder modeling a 5-year exit or a 1031 exchange runs both the acceleration math and the eventual recapture math — and the split between 5-year and 15-year property matters to both sides of that ledger.

For most short-term rental investors modeling a single-property deal with a 7–10 year hold, the two drivers above are secondary to the Year-1 cash tax number. The Year-1 math is what moves the offer-and-finance decision; recapture is a modeling-later concern. But a CPA preparing the filing wants the correct allocation on paper from day one, which is why formal cost segregation studies document each component's recovery period individually rather than lumping bonus-eligible property into a single aggregate line.

Frequently asked questions

What does "qualified property" mean for bonus depreciation under §168(k)?

Qualified property under IRC §168(k) is tangible property with a MACRS recovery period of 20 years or less. In a short-term rental context, that's primarily 5-year personal property (furniture, appliances, finish flooring, cabinetry, decorative lighting, FF&E) and 15-year land improvements (patios, pools, hot tub pads, fencing, landscaping, outdoor lighting, detached decks). The 27.5-year or 39-year building structure and non-depreciable land are both excluded. Treas. Reg. §1.168(k)-2 contains the current regulatory definition.

Does new furniture I bought for my Airbnb qualify for bonus depreciation?

Yes. Furniture, fixtures and equipment (FF&E) purchased for a short-term rental are 5-year personal property under MACRS and qualify for 100% first-year bonus depreciation under §168(k), provided the asset is placed in service after January 19, 2025 under the OBBBA-restored permanent 100% regime. That includes beds, sofas, dining tables, TVs, kitchenware, decor, and portable items like a stand-alone hot tub. Keep the invoices — audit substantiation is at the asset level.

If I built a pool or deck last year, can I take bonus depreciation on it?

Generally yes. An in-ground pool, a detached deck, a hot tub pad, and the surrounding patio, fencing and landscaping are typically treated as 15-year land improvements and qualify for 100% bonus depreciation under §168(k) when placed in service. A deck physically attached to the building shell can be fact-specific — sometimes 15-year land improvement, sometimes part of the 27.5/39-year building — and a cost segregation study is the usual way to document the split. An engineer-prepared study runs $3,000–$8,000 as of October 2026.

Does bonus depreciation apply to a new roof or HVAC system?

No. A standard roof replacement and a central HVAC system installed in the building are both 27.5-year (residential) or 39-year (nonresidential) property under MACRS. Neither has a recovery period of 20 years or less, so neither is bonus-eligible under §168(k). Specific exceptions exist for commercial-building §179 expensing on certain roof and HVAC improvements in nonresidential property, but those are §179 — not §168(k) bonus depreciation — and come with dollar caps and taxable-income limits. See IRS Pub 946 for the recovery-period tables.

Can I take bonus depreciation on a used short-term rental I bought?

Yes. The Tax Cuts and Jobs Act extended §168(k) to used property acquired by the taxpayer, provided the taxpayer did not previously use the property and did not acquire it from a related party. A used short-term rental purchased from an unrelated seller qualifies, and a cost segregation study can be performed on the purchased basis to carve out the 5-year and 15-year property. The building shell at 27.5 or 39 years still does not qualify.

Does the building itself ever qualify for bonus depreciation?

No. Residential rental buildings depreciate over 27.5 years, nonresidential over 39 years, and neither recovery period is 20 years or less. The building shell — foundation, framing, roof, exterior windows and doors, plumbing rough-in, electrical rough-in, drywall, paint — is permanently excluded from §168(k) bonus depreciation. Only components that properly reclassify to 5-year or 15-year property via a cost segregation study become bonus-eligible. Land is never depreciable under any method.