How to Deduct Furnishings and Appliances for Your Short-Term Rental

When you outfit a short-term rental property — buying furniture, appliances, smart TVs, a hot tub, or kitchen equipment — you're not just creating a guest experience. You're acquiring tax-deductible assets that can generate significant deductions in the year of purchase.

Why Furnishings Are Treated Differently Than the Building

Under MACRS, the building structure of a residential rental property depreciates over 27.5 years. But personal property — items that are not permanently attached to the building — has a much shorter depreciation life. Furnishings, appliances, and equipment in a rental property are typically classified as 5-year property under asset class 00.11 (furniture) or 00.12 (appliances) in Rev. Proc. 87-56.

This matters enormously because 5-year property qualifies for 100% bonus depreciation (since January 19, 2025 under the OBBBA). You purchase a $15,000 furnishing package for your Airbnb this year and you can deduct the entire $15,000 in year one — not $3,000 per year over 5 years.

What Qualifies as 5-Year Personal Property?

• Sofas, beds, dining sets, and all freestanding furniture
• Refrigerators, dishwashers, washers, dryers, and other appliances (not permanently affixed)
• Smart TVs, streaming devices, sound systems
• Small kitchen appliances (coffee makers, blenders, etc.)
• Art, mirrors, and decorative items
• Linens, towels, and bedding (deductible as supplies or depreciable assets depending on cost)
• Hot tubs (if freestanding, not built-in; built-in hot tubs are typically 15-year land improvements)
• Outdoor furniture, gas grills, fire pits

The Cost Segregation Connection

When you purchase a property that already has furnishings included in the purchase price, those furnishings are not automatically separated from the building cost. The IRS default assumes the entire purchase price is real property (27.5-year). A cost segregation study identifies and values all the personal property components embedded in your purchase price, allowing the correct MACRS classification and bonus depreciation treatment.

This is one of the primary reasons cost segregation studies generate such large deductions for STR properties: a furnished vacation rental often has $50,000–$150,000 or more in personal property embedded in the purchase price that would otherwise be lost in the 27.5-year depreciation pool.

What About Furnishings You Purchase After Acquisition?

Furnishings purchased separately after you acquire the property are easier to handle — they're clearly personal property and you simply track them on your depreciation schedule as 5-year MACRS assets eligible for 100% bonus depreciation.

Keep all receipts and invoices. If you buy a $3,500 sectional sofa for your rental, that's a 5-year depreciable asset eligible for immediate full expensing. Track these separately from the property itself on your asset schedule.

Section 179 vs. Bonus Depreciation for Furnishings

For furnishings purchased and used in a rental business, both Section 179 and bonus depreciation allow immediate full expensing in the year of purchase (post-OBBBA, with 100% bonus now permanent).

The key difference: Section 179 is limited by your taxable income from the activity and cannot create a loss. Bonus depreciation has no such limitation — it can create or increase a net loss, which is critical for STR investors trying to offset W-2 income via the STR tax loophole.