Can I claim bonus depreciation on a used STR property I purchased?

Bonus depreciation applies to the personal property components (furniture, appliances, land improvements) of a used property, not to the building itself. The building structure (27.5-year or 39-year property) does not qualify for bonus depreciation regardless of whether it is new or used. However, 5-year and 15-year components of a used building can qualify if they meet the original use test.

What is the 'original use' requirement for bonus depreciation on used property?

Under IRC §168(k)(2)(A)(ii), property qualifies for bonus depreciation if the original use of the property begins with the taxpayer — meaning you have not previously used or owned the property in a business context. If you purchased a used STR and the furniture came with it, you can claim bonus depreciation on that furniture because it is original use to you as a business asset.

What is the bonus depreciation rate in 2026?

Bonus depreciation was restored to 100% for property placed in service in 2026 under the One Big Beautiful Bill Act. This applies to new and used qualifying property (5-year, 7-year, and 15-year MACRS assets). The building structure (27.5-year residential rental or 39-year non-residential) does not qualify for bonus depreciation regardless of the rate.

Can I claim bonus depreciation on furniture that was in the house when I bought it?

Yes, if you purchased an STR that came furnished and the furniture was included in the purchase price. The furniture is original use to you as a business asset — you have never used it in a business before. Allocate a portion of the purchase price to the furniture based on FMV, and you can take 100% bonus depreciation on that allocated value in 2026.

April 6, 2026 · 7 min read

Can I Take Bonus Depreciation on a Used Property?

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Yes—the Tax Cuts and Jobs Act (2017) extended 100% bonus depreciation to used property for the first time, provided the property has never been used by you in a business context before. Under IRC §168(k)(2)(A)(ii), eligible used property qualifies for the same bonus depreciation rate as new property: 100% in 2026, restored by the One Big Beautiful Bill Act.

The Pre-TCJA vs. Post-TCJA Rule Change

Before the Tax Cuts and Jobs Act of 2017, bonus depreciation was restricted to property whose original use began with the taxpayer—effectively limiting it to brand-new assets. If you bought a used STR with used furniture inside, none of that furniture qualified for bonus depreciation.

The TCJA changed this fundamentally. Under the revised IRC §168(k)(2)(A)(ii), property qualifies for bonus depreciation if it meets the "used property" rules: it has not been used by you or a predecessor previously in a business, and it was not acquired from a related party. This opened bonus depreciation to the enormous market of used asset purchases that STR operators make constantly.

Dollar Impact

You purchase a furnished STR for $580,000. Land: $90,000. Building: $420,000. Furniture allocation at FMV: $45,000. Land improvements: $25,000. Under the old rules, you could only take 27.5-year depreciation on the building. Under current rules, you take 100% bonus depreciation on $70,000 (furniture + improvements) in Year 1—worth approximately $21,000 in immediate tax savings at a 30% rate.

The Original Use Requirement Explained

The key phrase in IRC §168(k)(2)(A)(ii) is that the property must represent "original use" to you as a taxpayer for business purposes. This means:

You have not previously used the property in any business activity. The prior owner may have used it—that doesn't matter. What matters is whether you have used it in business before.
You did not acquire it from a related party. Purchasing from a spouse, parent, or controlled entity may disqualify the bonus deduction.
You did not acquire it in a tax-free transaction. Like-kind exchanges and certain reorganizations transfer the prior owner's depreciation history.

What Qualifies vs. What Doesn't

Asset / Situation	Bonus Dep Eligible?	Why
Used furniture bought with STR property	Yes	Original use to you
Used appliances acquired with STR	Yes	Original use to you
Used furniture bought at consignment	Yes	Original use to you as business asset
Used STR building structure (27.5-yr)	No	Building not eligible regardless
Furniture transferred from your personal home	Yes*	Original business use; use lower of FMV or basis
Property acquired from related party	No	Related-party exclusion applies
Property acquired in a 1031 exchange	No (on exchanged basis)	Carries over prior depreciation

*Personal-to-business conversions use the lower of FMV or adjusted cost basis as the depreciable amount.

The Building Itself Still Doesn't Qualify

This is the most important limitation to understand: the building structure of an STR does not qualify for bonus depreciation, regardless of whether it is new construction or a 50-year-old house you just purchased. The building is 27.5-year residential rental property or 39-year commercial property, and bonus depreciation specifically excludes property with a MACRS recovery period longer than 20 years.

Bonus depreciation is available for:

5-year personal property (furniture, appliances, electronics)
7-year property (certain equipment)
15-year land improvements (driveways, fencing, landscaping)
Qualified Improvement Property (QIP) — 15-year property for improvements to the interior of non-residential real property

Pro Tip

When you purchase a used STR, negotiate a furniture allocation in the purchase and sale agreement. A documented allocation in the contract gives you the strongest basis for a bonus depreciation election on the furniture. Without a contract allocation, you'll need to rely on FMV estimates, which are defensible but require more documentation.

How to Elect Bonus Depreciation on Used Assets

Bonus depreciation is automatic—it applies by default to all eligible property unless you elect out. To take advantage:

Identify all used assets you acquired and classify them by MACRS life (5-year, 7-year, 15-year)
Determine each asset's cost basis (FMV at acquisition for used assets, or purchase price allocation)
Report on Form 4562, Part II (MACRS depreciation) with the applicable bonus depreciation election
Elect out by asset class if you prefer to spread deductions over multiple years

For a complete look at how bonus depreciation interacts with STR cost segregation studies, see our guide to 100% bonus depreciation for STRs.

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Disclaimer

This article is for informational purposes and does not constitute tax, legal, or financial advice. Tax rules vary based on your specific situation, filing status, entity structure, and jurisdiction. Always consult a qualified CPA or tax professional for guidance on your specific tax situation. IRS rules and thresholds are subject to change—verify current requirements at irs.gov before filing.