The IRS loves short-term rentals. That's exactly the problem.

Bonus depreciation. Cost segregation. The material participation loophole. The same rules that make STRs one of the best tax shelters in real estate are the ones that get owners flagged. Most CPAs have never seen a Schedule E like yours.
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Short-term rentals don't play by landlord rules

Three provisions of the tax code decide whether your STR is a windfall or a liability. Most owners only find out which after filing.

01

 

Depreciation is a weapon, not a formality

A cost segregation study can carve a $700K property into components depreciated over 5, 7, and 15 years instead of 27.5. Done right, it can offset six figures of income in year one. Skip it, and that money stays with the IRS.

02

 

The seven-day rule changes everything

Average guest stays of seven days or less can reclassify your rental as a trade or business, not a passive activity — opening the door to offsetting W-2 income with rental losses. Miss the hour count for material participation, and the deduction gets disallowed retroactively.

03

 

Personal use days are a
trap

Stay in your own property, let family use it, or block dates for renovations, and you can trip vacation-home limits that gut your deductions. The rules track every day. Someone should be tracking them with you.

Where It Goes Wrong

 

Seven ways short-term rental owners get audited

 
01 Claiming the material participation loophole without a contemporaneous log of hours

02 Skipping a cost segregation study and taking default straight-line depreciation

03 Letting personal or family use quietly cross the 14-day / 10% threshold

04 Mixing co-hosting, cleaning, and management fees into a single expense line

05 Missing state and local occupancy or transient rental tax registration

06 Deducting startup and furnishing costs the year they’re paid instead of when placed in service

07 Selling a property with no plan for depreciation recapture
 

A generalist CPA treats your Airbnb like a duplex. An aggressive one treats it like a shell game. Neither one is protecting you.

We work with short-term rental investors — the kind of properties that don't fit neatly into standard rental accounting, and the kind of clients who'd rather spend their time on the next deal than the tax code.

What We Handle

Tax planning & strategy

Cost segregation coordination, entity structuring, and depreciation strategy built before you file — not after.

Tax return preparation

Returns prepared by people who know the difference between a Schedule C and a Schedule E, and when yours should be either.

Bookkeeping

Monthly books that separate STR income and expenses cleanly, so nothing gets missed and nothing gets flagged.

Audit defense

If the IRS comes calling, we respond — with the documentation and reasoning already built into how we filed.

FREE REPORT

7 Ways to Get Your Short-Term Rental Audited — And How to Avoid Them


A plain-English breakdown of the mistakes we see most in STR returns, and the fixes that keep the IRS from taking a second look at yours.

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