Rental Tax Savings Calculator

Estimate year-1 federal and state tax savings on a rental purchase using cost segregation and bonus depreciation. Models the STR loophole, REPS, and passive-loss-limited paths. Estimates only

This calculator is for illustration only and is NOT tax advice. Tax outcomes depend on your specific situation, your CPA's interpretation of facts, your state's conformity to federal bonus depreciation, the engineering results of your cost segregation study, your material participation documentation, and changes in tax law. Consult a CPA specializing in real estate taxation before relying on any of these numbers.

Your Numbers

W2 income

Marginal federal tax bracket, %32%

State income tax rate, %5%

Property purchase price

Cost segregation ratio, %30%

Percentage of purchase price reclassified into 5/7/15-year property by a cost seg study. Typical range 25-40%.

Year placed in service

Year you put the property in service. Bonus depreciation phases down each year (absent legislation).

Property type / qualifying status

STR with material participation (short-term rental loophole)Long-term rental + REPS (real estate professional status)Long-term rental, no REPS (passive loss limited)

Estimated Year-1 Tax Savings

Federal

$53,745

State

$8,398

Total year-1

$62,143

Total Year-1 Deduction Breakdown

Cost seg basis (reclassified): $300,000
Bonus depreciation portion: $120,000
Year-1 depreciation on remaining cost-seg basis: $22,500
Year-1 straight-line on 27.5-year structure: $25,455
Total year-1 deduction: $167,955
Usable against W2 income this year: $167,955

Bonus depreciation phaseout: same scenario, four years

See the urgency of the phaseout. Year-1 total tax savings at your current inputs, varying only the year placed in service.

Year	Bonus %	Year-1 deduction	Usable vs W2	Total tax saved
2024	60%	$220,455	$220,455	$81,568
2025	40%	$167,955	$167,955	$62,143
2026	20%	$115,455	$115,455	$42,718
2027	0%	$62,955	$62,955	$23,293

Bonus depreciation rate by year placed in service: 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027 absent legislation. The same property, same study, same income profile produces materially different first-year savings depending only on when it goes into service.

Strategy guides

Short-term rental loophole →
7-day average stay + material participation = W2 offset without REPS.
Real estate professional status →
750+ hours + more than 50% of personal services = unrestricted W2 offset.
Cost segregation →
Engineering study that reclassifies 25-40% of basis into 5/7/15-year property.
Bonus depreciation →
The phaseout schedule and why timing matters.

Estimates only, not tax advice. This calculator uses simplified assumptions: a 30% land-allocation alternative is not modeled (full purchase price is treated as depreciable basis less the cost-seg allocation), state conformity to federal bonus depreciation varies, the remainder of the cost-seg basis is approximated over a blended 8-year life, and the structural shell is depreciated straight-line over 27.5 years. Actual outcomes depend on the engineering result of your cost-seg study, your entity-level facts, your CPA's tax positions, state conformity, and audit considerations. Rate references on this site exclude discount points unless stated. This is not a commitment to lend or an offer of credit. Equal Housing Opportunity.