Turn this year’s tax bill into an Airbnb.

A short term rental you actively run can be treated as a business instead of a regular rental. A cost seg study splits out the short life parts of the property, and bonus depreciation writes those parts off in the first year. That loss can offset your other income, like W-2 or business income. Your CPA confirms the numbers and files.

It is how the tax code and the IRS rules are written. The IRS publishes the 7 day average stay rule and the hour tests itself. It only works if you actually meet them, which is why you keep records from day one and your CPA reviews everything.

An engineering report that breaks the purchase into parts: furniture, appliances, finishes, outdoor improvements and the building itself. Short life parts can be written off much faster than the building. On many properties 20 to 30% gets reclassified. It is ordered after closing and can be finished after the year ends, before you file.

It lets you deduct the full cost of qualifying short life parts in the year the property goes into service. Under the 2025 tax law, 100% bonus depreciation is permanent for property acquired after January 19, 2025. Land is never depreciable, and the building itself is still written off over decades. Your CPA confirms which parts qualify.

A regular rental is usually treated as an investment, so its losses cannot offset your salary. When the average guest stay is 7 days or less, the IRS does not treat it as a rental activity. If you also materially participate, the loss can offset your other income. You do not need real estate professional status for this.

Total rented days divided by the number of stays, for that tax year, from actual stays. It is not based on your listing settings. In a thin first year, one long booking can push the average over 7, so we watch the calendar with you.

You have to be involved in running it, regularly. Most owners use the 100 hour test: more than 100 hours in the year, and at least as much as any other person, with each cleaner counted one by one. Other tests are more than 500 hours, or you doing substantially all of the work. The tests are not prorated for a short first year. Your CPA picks the test you meet.

Yes. The IRS counts your spouse’s work with yours for material participation, even if your spouse is not on title. Log both of you, with the date, the task and the time.

Real operating work: guest messages, pricing, scheduling cleaners and checking turnovers, restocks, reviews, repairs and walkthroughs. Investor style work, like only reading statements, may not count. Our owner plan is about 4 to 5 hours a week, about 200 to 250 hours a year.

No. That status takes more than 750 hours a year and more than half of your working time in real estate, which most people with a full time job or business cannot meet. The short term rental route does not need it.

Yes, up to a yearly limit. The loss offsets profit from a business you actively run in full, plus up to the yearly cap of W-2 and investment income. For 2026 the cap is $256,000 single and $512,000 married filing jointly.

How the cap works

It is not lost. It carries forward as a net operating loss that does not expire, and in later years it can offset up to 80% of your taxable income. The cap goes up with inflation each year, so size the purchase with it in mind. Some buyers spread purchases over two tax years.

It depends on the property, your income, your filing status, your state and your hours. A deduction saves roughly your top tax rate times the deduction. The calculator above gives an estimate, and your CPA confirms the real number. Nothing here is a promise of any savings.

It depends on the state. Some follow federal bonus depreciation, some add it back and spread it over several years, and some have no income tax. The federal savings do not change either way. The calculator shows federal savings only, and your CPA confirms your state before you buy.

State by state rules

Some of the depreciation comes back as recapture. Short life parts are usually taxed at ordinary rates, and the building part at up to 25%. A 1031 exchange into another property can defer it. Plan the exit with your CPA from day one.

Keep it to a minimum. Personal use of more than 14 days, or more than 10% of the days it is rented, whichever is greater, breaks the strategy. Plan family trips somewhere else.

The 7 day average and the hour test are checked every year. Year one is usually the big write-off, and later years have smaller regular depreciation. A later year that misses a test does not undo year one, but that year’s loss is held back. Your CPA tracks it with you.

One that guests book for short stays and that cash flows on its own. We pick for both, not just the write-off. Local rules, HOA rules and any permit or license are the buyer’s own due diligence.

We do. Our own in-house designer leads the design, and our team furnishes and sets up the home, then gets the listing photos taken. The furniture, appliances and finishes are also the short life parts a cost seg study can break out. Your CPA confirms what qualifies.

See how we design

Most buyers finance. The calculator uses 25% down, about 3% closing costs and about 4% for setup. Our lender partners confirm your real terms. The write-off is based on the depreciable cost of the property, including the part you finance, not only your cash.

It has to be live and bookable this tax year. Plan about 3 weeks to contract, about 3 weeks to close and about 10 days to set up. Later than that, you plan for next tax year.

Ready and available for guests: furnished, listed and bookable. Closing alone does not count. Keep proof of the go live date, like the listing date, photos and the open calendar.

Many owners do for liability. A single member LLC is usually ignored for income tax, so the strategy works the same way. Your CPA and your attorney confirm the right setup for you.

You do, with our systems. Guest messages with saved replies, pricing you approve, cleaners you schedule. About 4 to 5 hours a week. We set it up, find and train the cleaners, and you call us when something breaks.

Yes. Full management at 20% runs through Aurelian. A manager’s hours usually pass yours, so you will likely not meet the hour test. Plan that property for cash flow and equity, not the year one write-off. Your CPA confirms.

See management

Yes. The test compares you to every person one by one, and that includes each cleaner and our team. So we split the work across two or more cleaners, and you note their hours too.

No. Most of your tasks are done from your phone. The monthly walkthrough is the one in person task, so choose a property you can reach.

We set it up to cash flow as an Airbnb, not just to write off. The calculator shows rental returns on the same property from market averages. Real results depend on the market, the property and how you run it. Nothing here is a promise of income.

Markets move, so we vet the property and walk you through the numbers before you sign. After go live we help you adjust pricing and the listing. A bad deal is still a bad deal with tax savings, which is why we never pick a property for the write-off alone.

Your records are your answer, and your CPA handles the response. Keep an hours log, the stay records behind the 7 day average, the cost seg report, closing and setup receipts, and proof of the go live date. The IRS accepts any reasonable proof of hours, but a log kept as you go is the strongest.

CPAs do. We are not a CPA firm. We work with STR and cost seg tax CPAs, or you can bring your own. Your CPA confirms your numbers and files your return.

Aurelian by BNB Portfolio handles the property side: market and deal analysis, finding the property, full setup, cleaners and owner led support, plus our network of licensed agents, lenders and CPAs. Our team has set up 500+ Airbnbs and operated 300+.

It depends on the property and how much help you want. We go over it on the call, before you commit to anything.

It logs your hours by date and task, for you and your spouse, and exports a clean report for your CPA. It is the simplest way to keep the records the hour test needs.

Open the tracker

Fill out the short form above. Derek and his team read it and you book a 30 minute call. Bring your CPA’s questions, and the person you decide with.

See if it fits