Frequently asked questions

Normally, rental losses can't lower the tax on your paycheck. A short-term rental is the exception: if guests stay 7 days or less on average and you put in enough hours yourself (usually 100+ and more than anyone else), the IRS treats it like a business you run, so its losses can offset your W-2 income. (Treas. Reg. § 1.469-1T(e)(3)(ii)(A); Temp. Reg. § 1.469-5T.)

No, you do not need Real Estate Professional Status for a short-term rental. REPS (750+ hours and more than half of your working time in real estate) is a separate rule for long-term rentals; the short-term rental route only requires a 7-day-or-less average stay and material participation in your rental. (IRC § 469(c)(7); Treas. Reg. § 1.469-1T(e)(3)(ii)(A).)

Most owners qualify by logging either 500+ hours a year, or 100+ hours a year and at least as much time as any cleaner, co-host, or handyman. You and your spouse can combine your hours even if only one of you is on title. (Temp. Reg. § 1.469-5T(a)(1), (a)(3), (f)(3).)

A cost segregation study separates parts of your property—like appliances, cabinets, dedicated wiring, decks, hot tubs, and landscaping—into 5-, 7-, and 15-year buckets instead of the slow 27.5-year building schedule. Those shorter-life parts can then be written off much faster in year 1. (IRS Publication 5653; IRC § 168.)

Yes, federal bonus depreciation is 100% for qualifying property acquired and placed in service after January 19, 2025. Property acquired under a contract before that date follows the earlier phase-down schedule, and several states do not follow federal bonus depreciation. (IRC § 168(k); Pub. L. 119-21.)

Yes, taking bigger deductions now means part of that depreciation is taxed back when you sell, unless you defer it with a 1031 exchange or hold the property long-term. A study moves the tax savings to year 1 rather than erasing the tax forever. (IRC §§ 1245, 1250, 1031.)

No, your CPA still prepares and signs your tax return. We commission your cost segregation study from a professional cost segregation provider, check your stay average, and organize your time-stamped hours log so your CPA has clean workpapers. (Circular 230.)

For our first 10 customers, we include a professional cost segregation study at $0 study cost to you (about $2,500 elsewhere), verify your stay average and hours log, and review the package with an independent CPA firm. You pay 10% of your tax savings only if your tax goes down (either a smaller quarterly tax payment or less tax owed on your return).

No, and you should avoid anyone who promises a guaranteed deduction. Your actual savings depend on your closing statement, land share, state rules, personal-use days, time-stamped hours log, and your CPA’s final return positions. (IRC §§ 168, 280A, 461(l), 469.)

If your average guest stay for the year is over 7.0 days, the 7-day short-term rental exception does not apply for that year. You would either need enough short stays before December 31 to bring the annual average down to 7.0 or less, or qualify under a different rule with your CPA. (Treas. Reg. § 1.469-1T(e)(3)(ii)(A).)