For short-term rental owners
Turn your rental into one of the best tax shelters you own.
Short-term rentals get a tax treatment long-term rentals don’t. Paired with a cost segregation study, it can turn a big chunk of your property into a first-year deduction — often against your active income. Here’s how it works, with real numbers.
Get a free analysisWhat is cost segregation?
Depreciate faster, not slower.
Normally a rental building depreciates over 27.5 or 39 years — a slow trickle. A cost segregation study has engineers break the property into its parts — flooring, cabinetry, appliances, lighting, landscaping, pool equipment — and reclassify them into 5, 7, and 15-year lives. Those shorter-life assets qualify for accelerated and first-year bonus depreciation, so instead of a trickle you get a flood of deductions in year one.
The short-term rental advantage
Why STRs beat long-term rentals at tax time.
This is the part most owners don’t know about.
- It can offset active income. When the average guest stay is 7 days or fewer and you materially participate, the IRS doesn’t treat it as a passive rental. The accelerated depreciation can offset active income — including W-2 and business income — not just rental profit.
- No “real estate professional” status required. Long-term rental owners usually need REP status to unlock these losses. STR owners generally don’t — the shorter-stay rule does the heavy lifting.
- Material participation is very doable. Meeting one of the IRS tests — for example, being the person most involved in the rental, or 100+ hours with no one involved more — is realistic for an engaged owner, and Cardo’s reporting helps you document it.
What it can be worth
Real numbers, first year.
Illustrative only. Figures assume a cost-seg study reclassifies roughly 17–18% of the purchase price into short-life assets eligible for bonus depreciation, and a 37% marginal tax rate. Your actual results depend on the property, your tax situation, and current law.
Already own the property?
You didn’t miss the window.
Bought your rental last year — or five years ago — and never did a study? You can still run a look-back cost segregation study and claim all the depreciation you should have taken, all at once, on this year’s return. There’s no need to amend past returns; your CPA files a single change-of-accounting form (Form 3115). For many owners it’s the biggest single deduction they’ll take this year.
How it works
From analysis to savings.
- 1
Free analysis
Tell us about the property. A cost-seg specialist estimates your potential first-year deduction at no cost.
- 2
The study
Engineers itemize and reclassify assets — finishes, fixtures, appliances, land improvements — into 5, 7, and 15-year lives.
- 3
File
Your CPA applies the accelerated depreciation on this year’s return — or a look-back study catches up prior years with no amended returns.
- 4
Keep more
The deductions lower your taxable income, freeing up cash to reinvest in the property or your next one.
Free cost-seg analysis
See what your property could save.
Share a few details and we’ll connect you with a cost segregation specialist for a no-cost estimate of your first-year deduction. Fields marked * are required.
This page is general information, not tax, legal, or accounting advice. Cost segregation results and short-term rental tax treatment depend on your specific circumstances and current tax law. Please consult your CPA or tax advisor. Cardo can connect you with a qualified cost segregation specialist.
Since 2013
Own a rental? Let’s see what it can save you.
A quick, no-cost analysis is the easiest way to find out what cost segregation is worth for your property.
Get a free analysis