Short term rentals- Tax write off

[Rich Thomas]

I recently purchased a property for which I will be utilizing as a short term rental year round. I am buying a substantial amount of furniture for the unit and I am wondering if all of these things (beds, sofas, TV, nightstands etc) will be a tax write off? Maybe under the “supplies” section?

I know this is a question for my tax proffesional but would love to hear some feedback before I call him..

[Eamonn McElroy]

@Rich Thomas

Not a really heavy need to do a cost seg just for furniture if you're buying separately after the real property asset.

The invoices will break out the individual units of property and help your CPA determine treatment -- defeats the purpose of a cost seg since you already have the furniture broken out.  Usually it will be bonus depreciation or S179 to expense the furniture and other personal property (STRs commonly throw off high taxable income compared to tax loss thus S179 finds its way onto the table -- S179 might be preferable to bonus).

Cost seg still might be beneficial depending on the acquisition price.

Make sure you have a deep convo with your CPA regarding STRs (hint: they usually have an average rental period of less than 7 days).  They are treated differently than traditional rentals under the passive activity loss rules...