In a recent guide published by AirDNA, the company outlines the mechanics and strategic implications of rental property depreciation for both long- and short-term rental owners.¹ While depreciation has long been considered a routine tax deduction, its role in today’s short-term rental environment is increasingly strategic.
At its core, depreciation allows property owners to recover the cost of a building over time—typically 39 years for short-term rentals and 27.5 years for residential long-term rentals—by deducting a portion of that cost annually. Though the property itself may appreciate, the IRS permits owners to account for wear, aging systems, and improvements as declining value on paper.
AirDNA’s analysis highlights several key considerations:
- Depreciation is not optional. The IRS treats it as claimed, even if an owner fails to take the deduction.
- Bonus depreciation and cost segregation can accelerate deductions on qualifying components such as appliances, furniture, HVAC systems, and interior improvements.
- Depreciation recapture applies at sale, with previously claimed deductions taxed at up to 25 percent under federal rules.
- Short-term rentals that are actively managed may unlock additional advantages, including eligibility for bonus depreciation and business-level treatment.
The most notable legislative update involves the reinstatement of 100 percent bonus depreciation for qualifying assets placed in service after January 19, 2025. For operators furnishing or renovating STR inventory, this change may materially impact early-year cash flow.
Depreciation, in practice, functions less as a passive accounting exercise and more as a timing strategy—deferring tax liability while strengthening near-term liquidity. For professional managers advising owners, understanding this distinction is increasingly essential.
AirDNA provides a detailed breakdown of calculation methods, depreciation schedules, cost basis adjustments, and recapture implications in its full article.
For the complete analysis, including formula examples and updated legislative context, read the original piece at AirDNA.¹
Notes
- AirDNA, “Rental Property Depreciation,” AirDNA Blog, accessed February 2026, https://www.airdna.co/blog/rental-property-depreciation.
