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Audit support includedFlat price for every study3 to 5 business days Used furniture, appliances, and fixtures inside a furnished rental qualify for 100% bonus depreciation in 2026, as long as the property was acquired and placed in service after January 19, 2025 and you didn't buy the assets from a related party. The IRS test isn't whether the item is new or secondhand in the marketplace, it's whether the item is new to you as the taxpayer under the acquisition rules in Section 168(k).
- Used assets in a furnished rental qualify for 100% bonus depreciation in 2026 under the OBBBA restoration rule.
- The disqualifier isn't age, it's related-party acquisition or carryover basis from a prior owner you're tied to.
- A $500,000 furnished rental with 25% reclassified generates roughly $46,250 in first-year tax savings at a 37% bracket.
- Assets placed in service before January 20, 2025 in that same year fall under the older 40% bonus rate.
- A cost segregation study is what documents which used assets qualify and at what recovery period.
Why this matters
Most furnished short-term rentals are stocked with a mix of new and used items: a sectional bought on Facebook Marketplace, appliances left by the previous owner, a hot tub inherited from the seller. Owners assume secondhand items get slower depreciation or none at all. That assumption costs real money in 2026, especially for W-2 earners using the short-term rental loophole to offset active income with paper losses.
The 2017 tax law change (TCJA) removed the old "original use" requirement that used to block bonus depreciation on used property. Since then, used assets qualify on the same terms as new ones, provided the acquisition meets a short list of tests. Getting this wrong means underclaiming deductions on furniture, appliances, and fixtures that a cost segregation study would otherwise pull into a 5, 7, or 15-year recovery bucket instead of the standard 27.5-year residential schedule.
Do used assets in a furnished rental property qualify for bonus depreciation?
Yes, in most acquisitions. The IRS doesn't care if the couch, refrigerator, or patio set was new in the box or bought used, it cares about four acquisition tests under Section 168(k):
| Test | Requirement | Typical outcome for furnished rentals |
|---|---|---|
| Prior use by taxpayer | You (or a predecessor with carryover basis) never used the asset before | Passes for almost all purchased furnishings |
| Related-party purchase | Asset wasn't bought from a sibling, parent, spouse, or entity you control | Fails if furniture came from a family member's estate sale |
| Carryover basis | Basis in your hands isn't determined by reference to the seller's basis | Fails on most gifted or like-kind exchanged assets |
| Placed-in-service timing | Asset is placed in service in the tax year claimed | Determines which bonus rate applies |
When an asset fails one of the middle two tests, usually because of a family transfer or an inherited property situation, it may still depreciate normally, it just won't get the bonus rate. That distinction matters more for inherited rental property than for a typical arm's-length furniture purchase.
Acquired and placed in service after January 19, 2025: 100% bonus depreciation
Under the One Big Beautiful Bill Act (OBBBA), bonus depreciation is restored to 100% for qualifying property acquired and placed in service after January 19, 2025. This applies to used assets that pass the four tests above just as much as it applies to brand-new appliances.
Here's the approachable math. Say a furnished short-term rental is purchased for $500,000 and a cost segregation study reclassifies 25% of that value, roughly $125,000, into 5, 7, and 15-year property. At 100% bonus depreciation, all $125,000 is deductible in the first year the property is placed in service. For a W-2 earner in the 37% tax bracket, that's about $46,250 in tax savings in 2026, assuming the loss offsets active income under material participation rules for short-term rentals.
This is the scenario most owners buying or furnishing a rental in 2026 fall into, and it's the reason bonus depreciation on used assets gets attention again this year after the phase-down years.
Placed in service before January 19, 2025: 40% bonus depreciation
Property placed in service earlier in 2025, before the OBBBA cutoff date, falls under the pre-OBBBA phase-down schedule, which set the bonus rate at 40% for that year. The same $125,000 in reclassified assets would generate a $50,000 first-year deduction instead of the full amount, cutting the immediate tax benefit roughly in half compared to the 100% rate.
Both the purchase date and the placed-in-service date control which rate applies. An owner who bought a property in December 2024 and furnished and listed it in February 2025 gets 40% on the property's components but 100% on furnishings bought after January 19, 2025.
Why bonus depreciation on used assets varies
A handful of factors decide the final deduction amount for used assets in a furnished rental:
- Placed-in-service date relative to January 19, 2025, which determines the 100% or 40% rate
- Source of the asset, since related-party or carryover-basis acquisitions can disqualify bonus treatment entirely
- Recovery period classification, since only assets in 5, 7, 15, or 20-year categories are bonus-eligible, not the building structure itself
- Documentation quality, since an engineering-based study substantiates which specific used items were reclassified and why
- State conformity, since some states decouple from federal bonus depreciation rules and tax the deduction differently
- Election choices, since a taxpayer can elect out of bonus depreciation for a given asset class if it doesn't fit their broader tax strategy
Does furniture in an Airbnb qualify for bonus depreciation?
Furniture in an Airbnb qualifies for bonus depreciation when it's classified as 5-year or 7-year personal property and meets the acquisition tests, regardless of whether it was purchased new or used. Sofas, beds, dressers, and similar furnishings are common line items in a cost segregation study for airbnb and short-term rentals, and their condition at purchase doesn't change the depreciation treatment.
Is secondhand furniture disqualified from bonus depreciation?
Secondhand furniture is not disqualified from bonus depreciation simply because it was previously owned by someone else. The disqualifiers are related-party acquisition and carryover basis, not the physical age or prior use of the item by an unrelated seller.
What's the recovery period for furniture and appliances in a short-term rental?
Furniture and appliances typically fall into 5-year or 7-year recovery periods rather than the 27.5-year period assigned to the building itself. Classification depends on the specific asset, its function, and the documentation supporting the study, and outcomes vary property to property.
Get your used assets classified correctly
An engineering-based study documents every reclassified item for your CPA.
FAQ
Do used assets qualify for bonus depreciation on a furnished rental?
Used assets qualify for bonus depreciation as long as they pass the related-party and carryover-basis tests under Section 168(k). Age or prior ownership by an unrelated seller does not disqualify the asset.
What bonus depreciation rate applies in 2026?
Property acquired and placed in service after January 19, 2025 gets 100% bonus depreciation under the OBBBA. This rate carries into 2026 for qualifying acquisitions.
Can I claim bonus depreciation on furniture bought from a family member?
Furniture bought from a related party generally does not qualify for bonus depreciation, since related-party acquisitions fail the eligibility test. It may still depreciate on the standard schedule instead.
How much can bonus depreciation save on a furnished rental?
On a $500,000 property with 25% of value reclassified, roughly $125,000 in first-year deductions at 100% bonus depreciation translates to about $46,250 in tax savings for a 37% bracket taxpayer. Actual results depend on the property and the taxpayer's facts.
Does an appliance need to be new to get bonus depreciation?
No, an appliance does not need to be new to get bonus depreciation. It needs to be new to the taxpayer's use and acquired outside the related-party and carryover-basis restrictions.
What happens if my property was placed in service before January 20, 2025?
Property placed in service earlier in 2025, before the OBBBA cutoff, falls under the prior phase-down schedule with a 40% bonus rate instead of 100%. The placed-in-service date controls, not the purchase date.
Does a cost segregation study identify which used assets qualify?
Yes, a cost segregation study documents which specific used assets qualify for bonus depreciation and assigns each one a recovery period. This documentation is what a CPA and, if needed, an IRS examiner rely on.
One last thing
The placed-in-service date trips up more owners than the used-versus-new question ever does. An owner who closes on a furnished rental in late 2025 but doesn't finish setting up the listing until January 2026 needs to track the actual date guests could first book the property, not the closing date, because that's the date that determines the bonus rate applied to every reclassified asset inside it.
