STR Tax Benefit Calculations

In general, a short-term rental (STR) property valued at $700,000 generates around $40,000 in federal tax benefits during the first year, while a $900,000 STR yields about $50,000 in federal tax benefits during the same period. 

Please see the exact Federal Tax savings using six scenarios spanning wages of $500K, $700K, and $1.0M below. The list of assumptions is also included below and incorporates 80% bonus depreciation.

Filing Status
Wages
Federal Tax
First Year Federal
Tax Reduction
No STR
With $700K STR
With $900K STR
With $700K STR
With $900K STR
Married Filing Joint
500,000
106,539
62,880
55,200
43,659
51,339
Married Filing Joint
700,000
176,539
137,399
126,139
39,200
50,400
Married Filing Joint
1,000,000
286,964
245,524
233,684
41,440
53,280
Single
500,000
134,663
95,463
84,263
39,200
50,400
Single
700,000
206,402
165,463
154,263
40,939
52,139
Single
1,000,000
317,402
275,962
264,122
41,440
53,280

Assumptions

  • 80% bonus depreciation
  • 20% land value
  • 25% of building value eligible for 5, 7 & 15 asset class
  • Meets STR loophole requirements
  • Schedule E is net zero without cost segregation study
  • W-2 wages are only income
  • Standard deduction taken
  • No dependents
  • 2023 tax rates