A furnished short-term rental is the only residential property type where the furnishings routinely rival the building systems as a source of accelerated depreciation. Cost Seg Smart models short-term rentals as a first-class type with a dedicated component library covering guest-facing FF&E, outdoor living and amenity build-out, and the guest-turnover infrastructure that a long-term rental never carries. Most of it is 5-year personal property sitting inside a 27.5-year residential shell.
That shell is the structural difference from every commercial type on this site. A short-term rental is residential rental property under MACRS regardless of the average stay, so the unreclassified remainder depreciates over 27.5 years rather than 39. The reclassification mechanics are otherwise identical, and the accelerated ratio runs materially higher than an unfurnished rental of the same size and vintage: 25–35% versus roughly 15–22%.
Reclass benchmark for short-term rentals
Engine-modeled accelerated reclass across standardized STR configurations:
| STR configuration | Typical accelerated reclass |
|---|---|
| Urban condo / apartment unit, lightly furnished | 22–27% |
| Standard 2–4 bedroom house, fully furnished | 26–32% |
| Vacation home with outdoor amenity package (deck, hot tub, fire pit) | 30–36% |
| Luxury cabin or resort-area property (pool, spa, outbuildings) | 33–40% |
Typical bucket composition for a fully furnished 3-bedroom short-term rental:
| Bucket | Median % of basis |
|---|---|
| 5-year (Section 1245 personal property) | 20–26% |
| 7-year (Section 1245 specialty) | 1–2% |
| 15-year (Section 1250 land improvements) | 4–8% |
| 27.5-year (Section 1250 structural) | 66–74% |
The 5-year bucket is where a short-term rental separates from a long-term one. In an unfurnished rental the furnishings simply do not exist, so the same building produces a materially smaller accelerated total.
What gets reclassified in a short-term rental
5-year personal property (Section 1245):
- Bedroom furniture (beds, frames, dressers, nightstands, casegoods)
- Living and dining furniture (sofas, sectionals, chairs, tables, bar stools)
- Outdoor furniture, patio sets, loungers, umbrellas and shade structures
- Appliances (refrigerator, range, dishwasher, washer, dryer, microwave)
- Electronics (televisions, streaming hardware, sound systems, routers, smart hubs)
- Small appliances and kitchen inventory (coffee equipment, cookware, dishware, glassware)
- Linens, mattresses, mattress protectors, pillows, towels
- Decorative lighting (lamps, pendants, sconces, string and accent lighting)
- Window treatments (blinds, drapes, blackout shades)
- Area rugs and decorative flooring not affixed to the structure
- Hot tubs and spas, portable saunas, pool equipment (pumps, filters, heaters, covers)
- Grills, outdoor kitchens, fire pits and patio heaters
- Recreation equipment (game tables, bicycles, kayaks, beach and ski gear)
- Guest-facing technology (smart locks, keypads, noise monitors, cameras at entries, thermostats)
- Cribs, high chairs, and other family-stay inventory
7-year specialty (Section 1245):
- Built-in casework and millwork specific to the rental operation (bunk build-outs, banquettes, mudroom lockers)
- Owner-storage and turnover build-out (locked supply closets, laundry staging)
15-year land improvements (Section 1250):
- Driveways, parking pads, guest parking expansion
- Walkways, stairs, retaining walls, decking and railings not part of the structure
- Landscaping, irrigation, exterior hardscape
- Site lighting, fencing and privacy screening
- Septic and well components serving the site
27.5-year structural (Section 1250):
- Building shell, roof, framing, windows and exterior doors
- Base plumbing, electrical and HVAC distribution serving the whole property
- Permanently affixed cabinetry, countertops and hard flooring
Why the short-term rental case is different
The 5-year bucket is bought, not estimated. Most of what makes an STR an STR was purchased on a dated invoice after closing. Furnishings, appliances and outdoor equipment acquired to place the property in service as a rental are their own depreciable assets with their own placed-in-service dates, separate from the purchase price allocation. A study that only splits the acquisition basis and ignores the furnishing spend understates the year-one deduction, often substantially.
Material participation is what makes the deduction usable. Under IRC §469(c)(7) and Reg. §1.469-1T(e)(3)(ii), a rental with an average guest stay of seven days or less is not automatically a passive rental activity. Where the owner materially participates, the loss can offset non-passive income. Cost segregation does not create that treatment and does not substitute for it; it front-loads the depreciation into the year the treatment applies. Whether you meet a material participation test is a question for your CPA, and it turns on a contemporaneous record of hours, not on the study.
Timing is structural, not a convenience. The benefit lands in a specific tax year, so a study delivered after the return is filed is worth nothing that year. Cost Seg Smart delivers a completed residential study typically in under an hour, which removes the extension-or-forfeit choice that a multi-week engagement forces on a Q4 acquisition.
Portfolios get one classification standard. An owner with six listings across three states gets the same component library and the same classification logic applied to all six, rather than a different engineer’s judgment on each property. There is no portfolio surcharge; each property is priced at its own published flat rate.
How Cost Seg Smart produces a short-term rental study
Cost Seg Smart replaces the traditional consulting process with engineering automation. Rather than scheduling an engineer to visit every property, the platform combines public records, permits, assessor data, property photos, aerial imagery and engineering cost estimation to identify and value components, then applies the furnished-rental FF&E weighting that distinguishes a short-term rental from an identical unfurnished one.
Every study is a 40+ page report with component-level depreciation schedules, detailed asset classifications and audit-support documentation prepared for direct CPA implementation. Form 3115 support is included for eligible catch-up depreciation. Pricing is published as a flat rate and ordering is fully online.
The honest limit: the platform works from records, permits, imagery and the property details you provide rather than a walkthrough of every property. A short-term rental with unusual specialized systems that those sources cannot resolve is a case where an on-site engineering firm may still catch something the platform does not.
Frequently asked questions
Does my furniture really count?
Yes. Furniture, appliances, electronics, linens, kitchen inventory and outdoor equipment in a furnished short-term rental are 5-year personal property under MACRS. With 100% bonus depreciation made permanent by the One Big Beautiful Bill Act (July 2025), eligible components are deductible in year one.
Is a short-term rental depreciated over 27.5 or 39 years?
The unreclassified structural remainder is 27.5-year residential rental property. A short average stay changes the passive activity analysis under §469; it does not convert the building to 39-year nonresidential property. The two questions get conflated constantly and they are unrelated.
I converted a long-term rental to an Airbnb. Can I still do a study?
Yes, and the conversion usually improves the result. The building’s original basis and placed-in-service date carry over, while the furnishings and any pre-listing renovation you bought for the conversion are new assets with their own placed-in-service dates. A study can capture both.
I bought the property three years ago and never did a study. Is it too late?
No. Your CPA files Form 3115 as a change of accounting method and the missed accelerated depreciation is taken in the current year as a §481(a) adjustment, without amending prior returns. Form 3115 support is included.
What about renovations I did before listing?
Renovation costs are depreciable separately from the purchase price and are frequently the most reclassifiable dollars in the file. Kitchen and bath work, flooring, decks, lighting and appliances concentrate in the 5-, 7- and 15-year buckets. You will need invoices or a reasonable documented estimate.
Does this work for a single condo unit?
Yes. A furnished condo reclassifies in the 22–27% range; the FF&E is present even though the land improvements largely are not, since the exterior and grounds usually belong to the association. Where a condo association allocates common elements to the unit, that allocation is handled separately.
Do I need a site visit?
Not for a standard short-term rental. Where a property warrants one, Cost Seg Smart arranges it; below that threshold the study is produced from records, imagery and owner-provided property photos.
Get an engineered analysis of your short-term rental
Cost Seg Smart produces short-term rental studies from single condos through multi-property portfolios, at published flat-rate pricing with fully online ordering.