All short-term rental properties default to 39-year depreciation. A fully engineered cost segregation study reclassifies 25–45% of that basis to 5-year, 7-year, and 15-year recovery — fully deductible in Year 1.
Free proposal — 24-hour response · All 50 states · Unlimited audit defense — no additional fee, ever
All short-term rental properties are 39-year commercial real estate by default — the same depreciation schedule as a commercial office building. Most STR owners do not know this, and most CPAs never mention it.
What changes with the 7-day average rental rule is not the depreciation schedule — it is how the losses can be used. When your average rental period is 7 days or less, your STR activity is not subject to the passive activity loss rules that trap most real estate investors. That means the depreciation your cost segregation study generates can offset your W-2, your business income, your capital gains — not just your rental income.
For a high-earning professional who owns an Airbnb or a vacation property, this is not a small distinction. A $600,000 STR with a fully engineered cost segregation study can produce $150,000–$240,000 in Year 1 deductions. At 37%, that is $55,000–$89,000 in federal income tax savings in a single year.
STR properties are also furnished — which means more 5-year and 7-year personal property relative to purchase price than almost any other asset class.
These are the IRS-verified asset classes under Rev. Proc. 87-56 and supporting case law — confirmed across 16,000+ studies. Every component is documented to its correct recovery period with engineering justification, defensible under IRS examination.
Cost Seg America has engineered cost segregation studies on short-term rental properties in every major STR market in the United States. The 5-year personal property density in a furnished STR — every appliance, every fixture, every piece of furniture — is among the highest of any residential asset class. Our engineering team counts every item. Industry average models estimate from a category percentage and move on.
The IRS publishes a 347-page Audit Technique Guide on cost segregation. It identifies Approaches 1 and 2 as the preferred methodologies. Studies priced under $2,900 recover $60,000–$150,000 less per $1 million of depreciable basis than a fully engineered study. Cost Seg America has used IRS Approaches 1 and 2 on every study for 24 years. 125+ IRS audits. Zero losses. $0 ever returned. The methodology is why.
Cost segregation is an IRS-approved engineering analysis that reclassifies components of your short-term rental property from the default 39 yr straight-line depreciation schedule to three shorter recovery periods: 5-year personal property, 7-year personal property, and 15-year land improvements. Every component that qualifies for an accelerated schedule is individually identified, measured, and documented.
With 100% bonus depreciation active under OBBBA for property placed in service after January 19, 2025, every qualifying 5-year, 7-year, and 15-year component can be fully deducted in Year 1. Cost Seg America consistently recovers $60,000–$150,000 more in deductions per $1 million of depreciable basis than studies priced under $2,900.
The typical reclassification rate for short-term rental is 25–45% of the depreciable basis — driven by furniture, appliances, decorative lighting, and smart home systems classified as 5-year personal property. On a $800K property, this translates to approximately $91,000 in Year 1 federal income tax savings at a 37% rate.
The One Big Beautiful Budget Act (OBBBA) restored 100% bonus depreciation for qualified property placed in service after January 19, 2025. With 100% bonus depreciation, every qualifying 5-year, 7-year, and 15-year component identified in your study is fully deductible in the year you place the property in service. Your CPA determines your eligibility based on your individual tax situation, passive activity rules, and other factors.
Yes. The IRS allows you to go back and claim deductions you never took on prior-year properties using a Form 3115 change in accounting method — without amending previous returns. The catch-up deductions are taken entirely in the current tax year. Cost Seg America applies lookback analysis as standard practice. We partner with a trusted CPA specialist who handles the Form 3115 filing.
Cost Seg America's minimum qualifying property value is $200,000. Below this threshold, the engineering cost typically exceeds the tax benefit. Above $200,000, the fee-to-benefit ratio is consistently favorable and grows substantially with property value.
Unlimited audit defense means if the IRS examines your cost segregation study — this year, five years from now, or ten years from now — Cost Seg America responds. Written responses and phone representation. No time limit. No hour cap. No additional fee. Ever.
In 24+ years and 125+ IRS audits, Cost Seg America has never lost an audit and has never returned a dollar to the IRS.
Cost Seg America doesn't just find the deductions — we document them to survive the most demanding IRS examination.