How to Track Depreciation and Assets in DeductFlow

Depreciation is the largest single deduction for most STR owners—often exceeding all operating expenses combined. But it only generates a return if it's set up correctly from the start. This guide walks through adding assets, selecting the right class life, applying acceleration elections, and generating the Form 4562 support your CPA needs.

What Assets Should STR Hosts Track

Step-by-Step: Tracking Assets in DeductFlow

1. 1

   Add the Asset with Date and Cost

   Navigate to Assets > Add Asset. Enter:

   • Description — Specific enough to identify the asset (e.g., "Samsung 65" Smart TV – Bedroom 2" not just "TV")
   • Placed-in-service date — When you first used it in the STR business (the date it was available for guest use)
   • Cost basis — Purchase price plus shipping, installation, or any costs to make it ready for use
   • Property — Which STR this asset belongs to
   • Business use % — Usually 100% for STR-specific assets; lower if you also use it personally
2. 2

   Select the Asset Class

   From the Asset Class dropdown, select:

   • Residential Real Property — 39-year, straight-line, mid-month convention; for the building itself
   • 5-Year MACRS — For personal property: appliances, furniture, carpets, electronics
   • 7-Year MACRS — For office equipment used in business operations
   • 15-Year MACRS — For land improvements: landscaping, driveways, outdoor structures

   DeductFlow automatically sets the depreciation method (200% declining balance for 5-year/7-year, 150% for 15-year, straight-line for 39-year) and convention (half-year for personal property, mid-month for real property).

3. 3

   Choose Bonus Depreciation or Section 179

   For 5-year, 7-year, and 15-year personal property and land improvements, select your acceleration election:

   • 40% Bonus Depreciation (2026) — Deduct 40% immediately; depreciate remaining 60% over class life. No taxable income limitation.
   • Section 179 — Deduct up to $1,220,000 (2026 limit) of qualifying property immediately. Cannot create a loss from S179 alone.
   • MACRS Only — Standard declining balance over class life; no current-year acceleration.

   Most active STR hosts with Schedule C losses benefit most from bonus depreciation because it has no income limitation and the resulting loss can offset W-2 income if material participation is established.

4. 4

   Review the Depreciation Schedule

   Navigate to Assets > Depreciation Schedule. For each asset, verify:

   • Year 1 amount uses the half-year convention for personal property (or mid-month for real property)
   • Bonus depreciation shows as a separate line from regular MACRS
   • The remaining basis and future depreciation years look correct
   • The total current-year depreciation column matches your expectations

   This schedule is the source document for Schedule C Line 13. Export as PDF and share with your CPA before they complete Form 4562.

5. 5

   Handle Asset Disposition at Sale or Retirement

   When an asset is sold, traded, lost, or retired from service, navigate to the asset in your Assets list and select Mark as Disposed. Enter:

   • Disposition date
   • Sale proceeds (or $0 if abandoned/scrapped)
   • Disposition method (sale, abandonment, casualty loss)

   DeductFlow calculates: adjusted basis (original cost minus accumulated depreciation), gain or loss on disposal, and any depreciation recapture amount. These figures feed into your Schedule C and require Form 4797 reporting in the year of sale. Share the disposition report with your CPA.

Sample Depreciation Schedule: First-Year View

Example only. Building basis assumes $600K purchase with 20% land allocation. 2026 40% bonus depreciation rate applied to 5-year and 15-year property.