Short-term rentals
A furnished rental carries more short-life property than an ordinary one.
An Airbnb, VRBO, or vacation home is furnished top to bottom, often with a pool or hot tub added to book more nights. A cost segregation study finds the parts of that setup that qualify for a faster schedule.
The baseline
A rental depreciates like a rental. Furniture does not.
A short-term rental still depreciates the building on its normal schedule, the same as any residential rental property. What is different is everything you added to make it bookable: the furniture, the linens closet, the smart lock, the game room, the hot tub. A study separates that layer of personal property and site work from the shell, so it is not stuck waiting decades to be deducted.
What reclassifies
Where the short-life parts hide in a vacation rental.
Inside the rental
Furniture, appliances, decor, and electronics. A furnished vacation rental carries more of this than an ordinary long-term rental, and it is the classic short-life bucket.
The amenities that book more nights
A hot tub, an outdoor kitchen, or a fire pit exists to book more nights, not to hold up the building. A pool is its own case: the equipment can be short-life, while the pool structure itself is a land improvement.
The grounds
Landscaping, fencing, and the driveway or parking area around the property are qualifying land improvements, a 15-year life instead of the building's normal schedule.
What does not change
A fully furnished property is not fully short-life. The structure itself, and anything built in rather than dropped in, stays on its normal schedule.
Whether something built into the property is truly permanent, or really behaves like equipment, is judged bythe Whiteco factors, six questions the IRS's own audit guide uses for exactly this call. Being attached to the property does not, by itself, make a part permanent.
The honest part
The furniture and the hot tub still need a paper trail.
The leading case here isAmeriSouth XXXII v. Commissioner, and it applies to any residential rental property, short-term or long-term. The owner of a 366-unit complex split the property into more than 1,000 parts, and the Tax Court denied about $1.08 million of those reclassifications. That loss was not about whether cost segregation is allowed. It was about proof. The parts that survived, like dryer vents and dryer gas lines, survived because the paper trail was there.
A short-term rental has more to prove than a long-term one: furniture, electronics, a hot tub, an outdoor kitchen. We classify every item to the evidence, with photos and records behind each line, not to a wish list of what a bigger deduction would look like.See what makes a study audit-defensible.
- What a short-term rental study documents:
- Every asset classified to a cited authority
- Photos and source records behind each line
- Built to the IRS's own quality guide (Pub 5653)
- Contested items flagged, not buried
One more thing
Can you use the loss this year?
A study can create a large paper loss, and for most rentals that loss is passive underSection 469, so it usually offsets other passive income, not your paycheck. Short-term rentals can work differently. If the average guest stay is seven days or less and you are the one actively running the property, the rules may treat the loss as non-passive, without requiring real estate professional status.
That path has real conditions attached, and whether it applies to your situation depends on your facts.See how the short-term rental exception works, and talk to your tax advisor before you count on it.
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