STR Loophole Tax Savings Calculator
See how much the STR loophole could save you in taxes this year. Enter your property details below for an instant estimate.
Enter your total purchase price. We'll automatically exclude an estimated 15% for land value, since land is not depreciable.
Not sure? Most high-income W-2 earners are in the 32-37% bracket.
How This Calculator Works
This calculator estimates your potential tax savings from the STR loophole based on:
Purchase Price
The total cost of your short-term rental property. We automatically exclude an estimated 15% for land value, since land is not depreciable under IRS rules.
Tax Bracket
Your marginal federal tax rate determines how much each dollar of deduction saves you. Higher brackets = bigger savings.
Cost Segregation
A cost seg study identifies components that can be depreciated faster than the standard 27.5-year MACRS schedule—often over 5, 7, or 15 years. With bonus depreciation, much of this can be taken in Year 1.
Bonus Depreciation Rate
Under the 2025 tax bill, qualifying property acquired and placed in service after January 19, 2025 generally uses 100% bonus depreciation. Use lower rates only when modeling older or legacy scenarios.
Important Assumptions
- Land value: estimated at 15% of purchase price (not depreciable)
- Cost segregation allocation: 20-30% of building value reclassified to shorter lives
- Bonus depreciation: defaults to 100% under current law for qualifying post-Jan 19, 2025 property; lower rates are for legacy scenarios
- State taxes: not included (vary by state)
Requirements to Claim These Savings
The STR loophole isn't automatic. To use rental losses against your W-2 income, you must:
1. Average Rental Period ≤ 7 Days
Your property must be a genuine short-term rental with an average stay of 7 days or less. Most Airbnb and VRBO properties qualify.
Learn more about the 7-day rule2. Material Participation
You must actively work on the rental—not just collect rent. The IRS offers two main tests:
- 100 hours AND more time than anyone else (including property managers)
- 500 hours (safe harbor—no comparison needed)
3. Proper Documentation
Keep contemporaneous records of your hours: date, activity description, time spent, and which property. This is your protection in an audit.
STR Loophole makes this effortless with voice logging and automatic exports.
Why Cost Segregation Matters
Without cost segregation, your depreciation is spread evenly over 27.5 years. With it, you can often take 25-35% of your building's value as a deduction in Year 1.
| Example: $500,000 property | Without Cost Seg | With Cost Seg |
|---|---|---|
| Year 1 Depreciation | ~$15,500 | ~$110,000 |
| Year 1 Tax Savings (37%) | ~$5,700 | ~$40,700 |
| 5-Year Total | ~$28,500 | ~$95,000 |
Cost seg studies typically cost $3,000-$8,000 depending on property size and complexity—often paying for themselves 10-20x in first-year savings alone.
Frequently Asked Questions
Ready to Qualify?
The STR loophole can save you thousands—but only if you meet the requirements and document everything properly.