A rough estimate of the first-year deduction a cost-seg study could pull forward. It's a timing benefit โ front-loading depreciation you'd take anyway, not new money.
How this works
When you buy a building, the IRS normally makes you deduct its cost slowly โ over 27.5 years (residential rental) or 39 years (commercial, including Airbnbs). A cost segregation study identifies parts of the building that legally qualify for much faster depreciation โ 5, 7, or 15 years โ such as flooring, fixtures, appliances, cabinetry, landscaping, parking, and sidewalks. Those parts qualify for bonus depreciation and can be written off in year one.
It's a timing benefit, not free money. A study doesn't create new deductions โ you'd depreciate the whole building eventually anyway. It simply pulls a large chunk into the first year. The benefit is the time-value of that money.
Short-term rentals involve two separate rules โ don't conflate them. For depreciation: if the average guest stay is about 30 days or less (transient use), the IRS usually treats the property as commercial (39-year), not residential โ even though it's a house. Separately, if the average stay is about 7 days or less and you materially participate, the losses can be treated as non-passive (the "STR loophole") โ a different rule with different consequences. Both are judgment calls โ confirm your classification with your CPA.
2026 bonus depreciation is 100%, so the reclassified amount is the first-year deduction. Remember this front-loads deductions you'd otherwise take over 27.5 or 39 years โ a timing benefit. Your residential-vs-commercial classification is a judgment call.
Educational only โ not tax, legal, or financial advice. ScanMyTaxes is a software tool, not a tax preparer or advisor, and does not prepare or file returns. Every figure here is an estimate based on the information you enter; results are not guaranteed and depend on your specific situation. Confirm all strategies, eligibility, and numbers with your own qualified tax professional before acting. Using this tool does not create a client relationship. An actual cost segregation study is performed by a qualified engineering firm.