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What's your short-term rental's true Year-1 return — with cost segregation and bonus depreciation factored in?

Enter a zip or city and we auto-fill land value and bonus-eligible % from actual DepreciMax market data — county-assessor land ratios and the bonus-eligible averages we've benchmarked across thousands of properties in that zip. See the side-by-side: cash flow alone vs. cash flow plus the Year-1 federal tax savings under §168(k) that most STR underwriting skips entirely.

Direct answer: A short-term rental cost segregation calculator estimates the Year-1 §168(k) bonus depreciation deduction a STR investor can claim by reclassifying 5-year personal property and 15-year land improvements out of 39-year straight-line. Across the DepreciMax Top 50 STR markets, the median cost-seg-eligible percentage runs 23–27% of purchase price. On a typical $400,000–$700,000 STR, that's roughly $92,000–$180,000 deducted in Year 1 — about $30,000–$57,000 in federal tax savings against W-2 income at a 32% bracket.

Your STR Inputs

Straight-Line Dep (no §168(k))
2.0%
After-tax Year-1 cash-on-cash return
Year-1 NOI$53,000
Year-1 debt service$52,186
Year-1 cash flow$814
Tax savings (straight-line dep) from 39-yr SL dep + mortgage interest deduction$3,484
Net Year-1 after-tax cash$4,298
Cash invested$212,500
With Bonus Dep ✓
29.5%
After-tax Year-1 cash-on-cash return
Year-1 NOI$53,000
Year-1 debt service$52,186
Year-1 cash flow$814
Tax savings (bonus depreciation) from $187,000 §168(k) + 39-yr SL on remainder + interest$61,790
Net Year-1 after-tax cash$62,604
Cash invested$212,500
What Bonus Depreciation Adds vs Straight-Line
+$58,306
incremental Year-1 after-tax cash from electing §168(k).
Calculate my actual Year-1 tax savings →

5-Year Outlook

The same property across a 5-year hold — bonus dep concentrated in Year 1, recurring cash flow after.

Year Cash Flow Straight-Line
Net After-Tax		 With Bonus
Net After-Tax		 Δ Bonus Adds
5-Year Δ Bonus Dep Adds
+$59,840
cumulative incremental cash from §168(k) over 5 years
5-Year ROI on Cash Invested (With Bonus)
37.8%
cumulative net after-tax ÷ $212,500 down payment
Year 2–5 cash flow assumes the rent and expense growth rates above. Depreciation recapture on sale, property appreciation, principal paydown, and state taxes are not modeled — this is a federal cash-benefit view only, not a full deal underwrite. For the property-specific line-item bonus dep estimate, run the $99 property report.
22%

National STR median bonus-eligible

Cabin and luxury markets often run 26–34%. See the DepreciMax Top 50 ranking to find your market's typical range.

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What a $99 property report adds

This calculator uses your bonus-elig. % as input. A property-specific AI line-item analysis is closely calibrated to a formal $5K–$8K cost seg study. See what's in a report.

§168(k)

Federal vs. state conformity

Most states conform to federal bonus dep. CA, NY, NJ, PA, IL, MA do not — federal benefit is unaffected; state-level varies. CA non-conformity guide.

Federal §168(k) bonus depreciation assumes the property qualifies for the STR exception under IRC §469(c)(2) and the taxpayer materially participates. Recapture caveat: the 5-yr and 15-yr bonus-eligible property is §1245 — on sale, that depreciation is recaptured as ordinary income at rates up to 37%, not the §1250 25% cap. Bonus dep is a Year-1 deferral, not a permanent tax savings, unless the investor 1031s, dies with stepped-up basis, or sells in a low-income year. State rates and §168(k) conformity reflect 2026 rules; OBBBA's permanent 100% bonus applies to property placed in service after 1/19/2025. This calculator is for educational/scenario use only — not tax advice. Verify with your CPA before relying on these numbers.

Cost segregation examples in five short-term rental markets

Year-1 §168(k) bonus depreciation examples using each market's Top 50 median inputs from the DepreciMax 2026 Short-Term Rental Bonus Depreciation Study (snapshot 2026-07-18). Federal tax savings assume a 32% bracket unless noted.

Scenarios pull directly from data/markets-snapshot.json (v1.1, snapshot 2026-07-18) — median price from Realtor.com, land ratio from FHFA WP 19-01 zip-level assessor data, bonus-eligible % from per-listing Path-A Airbnb-weighted scoring. Your property's specific deduction depends on finishes, amenities, and photos — see the $99 property report for a line-item breakdown closely calibrated to a formal cost seg study.

Common questions about short-term rental cost segregation

Can you do cost segregation on short-term rental?

Yes — short-term rentals are among the strongest cost segregation candidates because they can trigger the STR tax exception under §469(c)(2) when average guest stays are 7 days or less and the owner materially participates. A formal cost segregation study on the DepreciMax Top 50 median Broken Bow OK cabin ($525,000 median purchase price) identifies about 26% of purchase price as 5- and 15-year bonus-eligible property — roughly $138,600 that flows directly against Year-1 W-2 income under §168(k). This calculator estimates the same range in seconds; a $99 DepreciMax property report delivers a line-item breakdown closely calibrated to a formal $5,000–$8,000 cost seg study.

Is there a free calculator for cost segregation?

This is one, built specifically for short-term rentals. Enter your STR's purchase price, bonus-eligible percentage (default 22% national STR median; Gatlinburg TN cabins run ~19%, Palm Springs CA luxury runs 24–32%), and marginal federal tax bracket. The calculator returns your Year-1 §168(k) deduction, federal tax savings, and after-tax cash-on-cash return in real time — no signup required for the base estimate. For property-specific accuracy — the actual deduction the IRS will accept — see the $99 property report.

Is there a tax loophole for short-term rentals in 2026?

Yes, and it was made permanent by OBBBA (the One Big Beautiful Bill Act) for property placed in service after 1/19/2025. The STR loophole is §469(c)(2) — when average guest stays are 7 days or less and the owner materially participates (100+ hours managing, more than any single third party), STR losses become non-passive and offset W-2 income. Combined with §168(k) 100% bonus depreciation, an investor at a 32% federal marginal bracket on the DepreciMax Top 50 median Joshua Tree CA STR ($397,000 purchase, 25.9% bonus-eligible) can generate roughly $32,900 in Year-1 federal tax savings against their day-job income — larger deductions scale linearly for higher-price properties.

How is cost segregation calculated?

A cost segregation study reclassifies purchase-price components from 39-year real property into 5-year personal property (finishes, cabinetry, appliances, FF&E) and 15-year land improvements (pools, hot tubs, outdoor kitchens, landscaping). Only the 5- and 15-year classes are eligible for §168(k) 100% bonus depreciation. On a $780,000 Gatlinburg TN cabin with 19% bonus-eligible, that's $148,200 deducted in Year 1 — versus roughly $16,400 under 39-year straight-line. This calculator estimates the result using a bonus-eligible percentage input; a $99 DepreciMax property report analyzes 7–9 property photos with AI to produce a line-item breakdown.

STR loophole calculator: what "loophole" means and what this tool does

"STR loophole" is investor shorthand for §469(c)(2) — the tax-code carve-out that treats short-term rentals with average guest stays of 7 days or less as non-passive activities when the owner materially participates. That non-passive treatment is what lets STR losses (including bonus depreciation losses) offset W-2 income — the "loophole" that a passive long-term rental cannot access.

This tool combines two rules that stack: the STR loophole (§469(c)(2)) unlocks the deduction against your day-job income, and §168(k) 100% bonus depreciation determines the size of the deduction. Enter your STR's price and estimated bonus-eligible percentage; the calculator returns the Year-1 federal tax savings you can expect from stacking both provisions.

For Airbnb and vacation rental investors

The IRS doesn't care whether your short-term rental is listed on Airbnb, Vrbo, Booking.com, or your own website — what matters is average guest stay (7 days or less), material participation (100+ hours), and the property-class breakdown. Vacation rental investors in cabin markets (Gatlinburg TN, Broken Bow OK, Blue Ridge GA, Hocking Hills OH), desert markets (Joshua Tree CA, Palm Springs CA), family-resort markets (Wisconsin Dells WI, Branson MO), and Northeast mountain markets (Poconos PA, Asheville NC) all use the same underlying calculation.

Land ratios and bonus-eligible percentages vary by market — the calculator's market presets let you drop in typical values for the 10 highest-volume STR markets. For your specific property's line-item breakdown, run the $99 property report. Deeper cost-seg comparison: see DepreciMax vs. a formal cost segregation study.