The STR Tax Strategy, Explained with Real Numbers
A $1M short-term rental can generate $200K–$300K of first-year depreciation. Here's exactly how.
The four steps
1. Buy a qualifying short-term rental
Average guest stay under 7 days. We source cash-flowing STRs in proven Pacific Northwest and mountain-west markets.
2. Materially participate
100+ hours and more than anyone else, or 500+ hours. We structure your involvement so participation is documented and defensible.
3. Run a cost segregation study
An engineering study reclassifies 20–30% of the purchase price into 5, 7, and 15-year property eligible for bonus depreciation.
4. Review the tax impact
A CPA can confirm how a property may affect your tax return and whether the strategy fits your situation.
Frequently Asked Questions
What does a cost segregation study cost?
Typically $3,000–$6,000 for a single-family STR — against a six-figure first-year deduction, it's the highest-ROI spend in the deal.
Does this survive an audit?
The STR rules are statutory (Reg. 1.469-1T(e)(3)). What matters is documentation: participation logs, guest-stay data, and a defensible cost-seg report. We set all three up.
Run these numbers on your income
Tell us about your goals and target property. We will help you understand the next step.