For short-term rental owners

The STR loophole only pays if there's depreciation to unlock.

Short-term rentals averaging seven days or less per stay generally aren't treated as rental activities. If you materially participate, accelerated depreciation can offset income the passive rules would normally lock away.

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Your CPA confirms participation and classification. We supply the engineering.

Deal math

Short-term rental — 4BR lake house

Placed in service 2025 · material participation met

Purchase price: $875,000
Reclassified to short-life assets: $245,000
Year-one deduction: $245,000

Share of basis accelerated28%

5 / 7 / 15-year lives39 or 27.5-year remainder

Estimated tax savings

$90,650on $875K

Illustrative example. Actual results depend on your basis, placed-in-service date, and tax position.

Why STRs are different

Verify at www.cssiservices.com

Average stay at or below which STRs fall outside the rental rules: 7 daysAverage stay at or below which STRs fall outside the rental rules
Typical share of basis accelerated on furnished STRs: 25–35%Typical share of basis accelerated on furnished STRs
Purchase price where studies commonly start to pencil: $500K+Purchase price where studies commonly start to pencil
When the deduction lands, not year 27: Year 1When the deduction lands, not year 27

Before you go further

Three things that have to be true

Cost segregation is the second step. The first is confirming the property actually qualifies for the treatment you're counting on — your CPA makes that call.

Average guest stay of 7 days or less

This is what takes the property out of the default rental classification. Pull the average from your booking platform — it is the first thing your CPA will ask for.

You materially participate

Managing bookings, guest communication, turnovers, maintenance decisions. Contemporaneous time logs matter more than which participation test you rely on.

Placed in service, not just purchased

The property has to be available and advertised for rent. A house bought in November but not listed until March belongs to the following tax year.

Furnished properties carry more short-life basis

Appliances, furniture, window treatments, landscaping, dedicated circuits for hot tubs and outdoor kitchens — the things that make a rental bookable are also the things that belong on 5-, 7-, and 15-year lives.

That's why a $700K short-term rental often produces a larger first-year percentage than a commercial building several times its size.

Deal math

Two-property STR portfolio

Both placed in service 2025

Purchase price: $1,640,000
Reclassified to short-life assets: $442,800
Year-one deduction: $442,800

Share of basis accelerated27%

5 / 7 / 15-year lives39 or 27.5-year remainder

Estimated tax savings

$163,836on $1.64M

Illustrative example. Actual results depend on your basis, placed-in-service date, and tax position.

How it works

Three steps, and your CPA stays in control

Free benefit estimate
Send the property address, purchase price, and placed-in-service date. You get a no-cost projection of the deduction and fee — before anything is signed.
Engineering study
CSSI engineers analyze the property and its cost detail, then classify components into 5-, 7-, 15-, and long-life categories with documentation for each.
Report to your CPA
You and your CPA receive the full study, the depreciation schedules, and the §481(a) detail when a look-back applies. Your CPA files it.

What STR owners ask

Including the parts your CPA will want to pressure-test.

Do I need real estate professional status to use the losses?

Not necessarily. Short-term rentals with an average guest stay of seven days or less are generally not treated as rental activities under the passive loss rules. If you materially participate, the losses may offset non-passive income — this is the reason STR owners look at cost segregation at all. Confirm your facts with your CPA.

What counts as material participation?

There are several tests; the commonly used ones involve substantially all of the participation in the activity, or more than 100 hours with no one participating more. Contemporaneous time logs matter more than the test you pick. Your CPA determines which applies.

My property was only $600K. Is it big enough?

Often yes. The threshold is about whether the projected benefit clears the fee, not a hard purchase price. Furnished short-term rentals tend to carry a high share of five-year property, which is why smaller STRs still pencil.

What if I convert it to a long-term rental later?

The depreciation you already claimed stands. The passive treatment of future losses changes going forward, and recapture is evaluated at sale. Worth modeling with your CPA before you convert.

Free STR estimate

See what your rental would produce in year one

Send the address, purchase price, and the date it was first listed. You'll get a projected deduction and a flat fee — before anything is signed.