Can I deduct the full cost of a kitchen remodel in my STR in the year I pay for it?

Generally no — a kitchen remodel is a capital improvement under IRC §263, which means you must depreciate it over time rather than deducting the full cost immediately. A kitchen remodel that adds to or substantially improves the building structure is typically depreciated over 27.5 years. However, new appliances installed during the remodel are 5-year MACRS property and qualify for 100% bonus depreciation.

What is Qualified Improvement Property (QIP) and does it apply to my STR?

Qualified Improvement Property (QIP) is any improvement to the interior of a non-residential building placed in service after the building was first placed in service. For most STRs (residential rental property), QIP does not apply — QIP is specifically for non-residential real property. Interior improvements to residential STRs are generally depreciated as 27.5-year structural improvements.

What recovery period applies to a new roof on my STR?

A new roof is a structural improvement to your STR building and is depreciated over 27.5 years as residential rental property. However, when you install a new roof, you can make a partial disposition election to write off the remaining undepreciated basis of the old roof immediately, which can reduce the net cost significantly.

How are new appliances treated when I renovate my STR?

New appliances (refrigerators, dishwashers, washers, dryers, microwaves) are 5-year MACRS personal property regardless of when they are installed. They qualify for 100% bonus depreciation in 2026, allowing you to deduct their full cost in the year they are placed in service — separate from the structural renovation costs.

April 6, 2026 · 8 min read

Depreciating Renovations and Improvements to Your STR

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Capital improvements to your STR must be depreciated over time—they cannot be deducted in full the year you pay for them, unlike ordinary repairs and maintenance. Under IRC §263 and §168, structural improvements are depreciated over 27.5 years, land improvements over 15 years, and personal property (appliances, equipment) over 5 years with 100% bonus depreciation available in 2026.

Capital Improvement vs. Repair: The Critical Distinction

Not every dollar you spend on your STR property is a capital improvement. The IRS distinguishes between repairs (fully deductible in the year incurred) and improvements (must be capitalized and depreciated). The general rule under the Tangible Property Regulations (Treas. Reg. §1.263(a)-3):

Repairs and maintenance: Deductible immediately. Fixing a broken window, patching drywall, touching up paint, unclogging a drain.
Capital improvements: Must be capitalized and depreciated. Work that betters, restores, or adapts a unit of property to a new or different use.

The BAR Test

The IRS uses a "BAR" framework: work is a capital improvement if it Betters the property, Adapts it to a new use, or Restores it to working condition after it was worn out. Replacing every window in the house is a restoration (capital improvement). Replacing a single cracked window is maintenance (immediate deduction).

Recovery Periods for Common STR Improvements

Improvement Type	Recovery Period	Bonus Dep?	Notes
New roof (structural)	27.5 years	No	Structural component
HVAC system replacement	27.5 years	No	Building system
Kitchen remodel (structural)	27.5 years	No	Cabinets may be separate
Bathroom remodel (structural)	27.5 years	No	Fixtures may be separate
New deck (outdoor, land improvement)	15 years	Yes (100%)	Attached to land, not building
New appliances (installed)	5 years	Yes (100%)	Personal property
New flooring (non-structural)	5 years	Yes (100%)	Carpet, vinyl; hardwood may be 27.5yr
Fencing	15 years	Yes (100%)	Land improvement
Pool (in-ground, structural)	27.5 years	No	Structural component of property

Structural Improvements: 27.5-Year Schedule

Structural improvements to a residential rental property are depreciated over 27.5 years, just like the original building. These are improvements that become part of the building structure or its integrated systems.

New Roof: 27.5-Year Example

Structural Improvement

New roof installation in April 2026: $22,000. Starts depreciation in April 2026 under the mid-month convention.

Year 1 depreciation: $22,000 ÷ 27.5 years × (8.5/12 months) = $568
Annual depreciation (full years): $22,000 ÷ 27.5 = $800/year
Consider: Make a partial disposition election to write off the old roof's remaining basis immediately

Land Improvements: 15-Year Schedule with Bonus Depreciation

Improvements to the land surrounding your STR—decks, patios, driveways, fencing, landscaping—are 15-year land improvements and qualify for 100% bonus depreciation in 2026. This is one of the highest-leverage categories for STR renovations because you can deduct the full cost immediately.

New Outdoor Deck

15-Year · 100% Bonus

New wood deck installed June 2026: $18,500. The deck is attached to the land, not integrated into the building structure.

With 100% bonus depreciation: Deduct $18,500 in 2026
Without bonus (standard 15-yr MACRS): $1,850/year for 15 years
Tax savings difference at 30% rate: ~$5,550 additional savings in Year 1

Appliances and Personal Property: 5-Year with Bonus

When you renovate, pay close attention to appliances and personal property items installed as part of the project. These should be separated from the structural work on your invoices and depreciated at their shorter 5-year life with bonus depreciation available.

Kitchen Remodel: Breaking Out the Components

Mixed Asset Classes

Full kitchen renovation: $38,000 total invoice. Breaking it down correctly:

Structural (cabinets, countertops, plumbing rough-in): $22,000 @ 27.5 yr = $800/yr
Appliances (refrigerator, dishwasher, range, microwave): $9,500 @ 5 yr + 100% bonus = $9,500 Year 1
Lighting fixtures (non-structural): $3,200 @ 5 yr + 100% bonus = $3,200 Year 1
Flooring (vinyl plank): $3,300 @ 5 yr + 100% bonus = $3,300 Year 1
Total Year 1 deduction: $800 + $9,500 + $3,200 + $3,300 = $16,800 vs. $1,382 if everything were lumped into 27.5-yr

Partial Disposition Election When Replacing Components

When you replace a structural component (a roof, HVAC system, windows), you can make a partial disposition election under Treas. Reg. §1.168(i)-8 to write off the remaining undepreciated basis of the old component immediately. This is covered in detail in our guide to partial disposition elections.

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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.