By Virtual Cost Segregation
The best cost segregation study provider for Airbnb hosts
Built to IRS standards
Audit support includedFlat price for every study3 to 5 business days 100% bonus depreciation for Airbnb properties applies when the short-term rental is acquired and placed in service after January 19, 2025, under the One Big Beautiful Bill Act (OBBBA), reversing what had been a scheduled phase-down to 40% for 2025 and 20% for 2026. Property acquired before that date keeps the older rate for its placed-in-service year, 60% for 2024 and 40% for 2025, and the 100% rate does not retroactively apply to assets already in service.
- 100% bonus depreciation for Airbnb properties applies to short-term rentals acquired and placed in service after January 19, 2025 under the OBBBA.
- A cost segregation study typically reclassifies 20-45% of a rental property's basis into 5, 7, and 15-year assets eligible for the full deduction.
- Properties placed in service in 2024 are capped at 60% bonus depreciation, and those acquired before January 20, 2025 but placed in service in 2025 get 40%.
- A $500,000 short-term rental with 25% reclassified can generate roughly $46,250 in first-year tax savings for an investor in the 37% bracket.
- Virtual Cost Segregation builds engineering-based reports designed to support these bonus depreciation deductions on residential rental property.
Why This Matters for Airbnb Owners in 2026
Bonus depreciation only helps if the asset it applies to has already been separated from the building's 27.5-year residential recovery period. A cost segregation study is what pulls appliances, flooring, decks, and site improvements out of that long recovery period and puts them into 5, 7, or 15-year buckets that qualify for bonus treatment.
Without that reclassification, an Airbnb owner in 2026 is depreciating the entire property on the standard 27.5-year schedule and getting none of the acceleration the OBBBA restored. The OBBBA bonus depreciation rules are the trigger; the cost segregation study is the mechanism that makes them apply to more than a handful of line items.
Does 100% Bonus Depreciation Apply to Your Airbnb Right Now?
The rate you get depends on when you acquired the property and when it was placed in service, not when you order a cost segregation study. Here's how the schedule has moved:
| Placed-in-service window | Bonus depreciation rate |
|---|---|
| Jan 1, 2023 - Dec 31, 2023 | 80% |
| 2024 | 60% |
| 2025, acquired before Jan 20, 2025 | 40% |
| 2026, acquired before Jan 20, 2025 | 20% |
| Acquired and placed in service after Jan 19, 2025 (OBBBA) | 100% |
The placed-in-service date is the date the property was ready and available for its intended use as a short-term rental, not the closing date on the settlement statement. A property that closed in December 2024 but wasn't listed and rent-ready until February 2025 gets 40%, not 100%, because it was acquired before January 20, 2025.
Placed in Service in 2024: 60% Bonus Depreciation
Any short-term rental placed in service in 2024 is locked into the 60% rate for the assets a cost segregation study reclassifies. This isn't a rate you can amend your way out of by ordering a study in 2026 and hoping for the higher percentage; the rate attaches to the placed-in-service date, not the study date.
On a $500,000 property with 25% of the basis reclassified ($125,000), the 60% rate produces a $75,000 first-year bonus deduction instead of the full $125,000. That's a $50,000 gap in deductible basis in year one, pushed instead into regular MACRS schedules over the following years.
After January 19, 2025: 100% Bonus Depreciation
Property acquired and placed in service after January 19, 2025 qualifies for the full 100% rate on any asset with a recovery period of 20 years or less, with no phase-down scheduled under current law. On that same $500,000 property with $125,000 reclassified, 100% bonus depreciation means the full $125,000 is deductible in year one.
For an owner in the 37% tax bracket, that's roughly $46,250 in first-year tax savings on a single property. The 100% vs 60% bonus depreciation example walks through the side-by-side math on identical properties that fall on either side of the January 19, 2025 line.
Why the Reclassified Percentage Varies
The 100% rate is fixed by law for qualifying assets, but the dollar amount it applies to depends on how much of the property a study can reclassify. That share typically runs 20-45% of the property's basis, and it moves based on:
- Property type - a furnished short-term rental with a pool or hot tub reclassifies more than a bare single-family long-term rental.
- Age and construction - older properties often carry more site improvements (driveways, landscaping, fencing) that qualify for 15-year treatment.
- Furnishing level - fully furnished Airbnb units carry appliances, furniture, and window treatments that sit in 5-year property.
- Renovation scope - a recent remodel adds flooring, cabinetry, and fixtures that are easier to document and classify.
- Land value ratio - a higher land-to-building ratio in the purchase price shrinks the depreciable basis available to reclassify at all.
Does the STR Loophole Change the Bonus Depreciation Rate?
No, the short-term rental loophole doesn't change the 100% rate itself; it changes whether the resulting loss can offset W-2 income. The loophole depends on material participation, generally averaging 7 days or fewer per guest stay and meeting one of the material participation tests, and it's a separate qualification from the placed-in-service date that sets the bonus depreciation rate.
Can a Property Placed in Service in 2024 Still Get 100% Bonus Depreciation?
No, a property placed in service in 2024 is capped at the 60% rate that applied before the OBBBA's January 19, 2025 restoration date. The 100% rate can still apply to new improvements on an existing 2024 property, such as a renovation begun after January 19, 2025, but not to the original purchase.
What If My Airbnb Doesn't Average 7 Days or Less Per Stay?
Bonus depreciation still applies at 100% regardless of average stay length, since that rate is tied to the placed-in-service date, not to short-term rental status. What changes without the 7-day average is whether losses can offset W-2 income under the STR loophole; the property is instead treated under standard passive activity rules unless real estate professional status applies.
A cost segregation study from Virtual Cost Segregation is built specifically for residential rental property, including Airbnb, VRBO, and long-term rentals, and each report documents the reclassified assets in a way designed to hold up if a return is reviewed. The cost segregation and bonus depreciation for short-term rentals breakdown covers how the study and the OBBBA rate interact on a typical STR.
Check your bonus depreciation timing
See how much of your Airbnb basis could reclassify at the 100% rate.
FAQ
What is 100% bonus depreciation for Airbnb properties in 2026?
100% bonus depreciation lets an Airbnb owner deduct the full cost of qualifying assets, those with a recovery period of 20 years or less, in the year the property is placed in service, provided that date is after January 19, 2025. Assets placed in service earlier fall under lower rates from the prior phase-down schedule.
Does bonus depreciation apply to the whole Airbnb property?
No, bonus depreciation only applies to the portion of a property reclassified into 5, 7, or 15-year property by a cost segregation study, typically 20-45% of the total basis. The building structure itself still depreciates over 27.5 years.
Is 100% bonus depreciation permanent under the OBBBA?
Under current law, the One Big Beautiful Bill Act restored 100% bonus depreciation for property acquired and placed in service after January 19, 2025, with no phase-down currently scheduled. Future legislation could still change the rate, so the rule applies to today's law, not a lifetime guarantee.
Can I get 100% bonus depreciation on a property I've owned for years?
A cost segregation study on an older property can still identify assets eligible for bonus depreciation through a Form 3115 accounting method change, catching up prior missed depreciation. The rate that applies is tied to when those assets were originally placed in service, so older placed-in-service dates use the rate in effect at that time.
How much does a cost segregation study cost for an Airbnb?
Pricing varies by provider and property, and current figures are best confirmed directly on a provider's site rather than assumed. Flat-fee models exist as an alternative to percentage-of-savings pricing common among larger firms.
Does the STR loophole require 100% bonus depreciation?
No, the short-term rental loophole works independently of the bonus depreciation rate; it depends on average guest stays of 7 days or fewer and material participation. The bonus rate determines how much of the reclassified basis is deductible immediately, while the loophole determines whether that deduction can offset W-2 income.
What happens if I place my Airbnb in service in early 2025 versus late 2025?
A property placed in service in 2024 is capped at 60% bonus depreciation, while one both acquired and placed in service after January 19, 2025 qualifies for 100%. The gap between those two dates in 2025 is the dividing line for the entire OBBBA restoration.
Do renovations qualify for 100% bonus depreciation separately from the original purchase?
Yes, a substantial renovation placed in service after January 19, 2025 can qualify newly identified assets for the 100% rate, even if the original property was placed in service earlier. The renovation creates its own placed-in-service event for the assets it adds.
One Last Thing
The January 19, 2025 date trips up more owners than the 100% rate itself. A property that closed on paper in December 2024 but wasn't actually rent-ready and listed until February 2025 is placed in service in 2025, not 2024, but because it was acquired before January 20, 2025, that moves it from the 60% bracket to 40%, not up to 100%.
