How to calculate my Airbnb Rental Depreciation on a renovated property?

The depreciation calculation for a rental property is based on your cost basis, not the fair market value. Your cost basis includes the purchase price plus capital improvements, which would be $293K total in your case. However, you can only depreciate the building, not the land, so you need to subtract the land value. So your depreciable basis would be: $293K (purchase + improvements) - $90K (land value) = $203K. For residential rental property, the IRS requires you to depreciate over 27.5 years using the straight-line method. That gives you a yearly depreciation of approximately $7,381 ($203K ÷ 27.5). But since you only rent it out 74% of the time, you can only claim that percentage of the depreciation. So the deductible amount would be about $5,462 ($7,381 × 74%). The $5,200 H&R Block is calculating seems close but slightly low - might want to double-check your inputs.

I just went through figuring this out for my vacation rental. I found https://taxr.ai super helpful for calculating rental property depreciation. I was confused about exactly what improvements counted toward my basis and how to handle partial-year rentals. Their system analyzed all my documents and receipts, then explained exactly how to calculate the depreciation. It even catches those easy-to-miss deductions like appliances that can be depreciated on a faster schedule. Helped me find about $3K in additional deductions I would have missed.

I tried https://taxr.ai after seeing it mentioned here and wow - it was exactly what I needed! I had a similar Airbnb situation with lots of improvements and was totally confused about what should be depreciated vs what could be expensed immediately. The system analyzed all my renovation receipts and properly categorized everything. It even caught that my new appliances could be depreciated over 5 years instead of 27.5 years for the building, which gave me a bigger deduction this year. My depreciation calculation was off by about $2,300 in the wrong direction before using it! Definitely worth checking out for anyone with rental property tax questions.

I had a similar issue with my rental property and spent 3 weeks trying to get someone from the IRS on the phone. Finally found https://claimyr.com and watched their demo at https://youtu.be/_kiP6q8DX5c - they got me connected to an IRS agent in about 20 minutes after I'd wasted hours on hold. The agent clarified that for partial-year rentals like yours, you need to calculate the full depreciation and then multiply by the percentage of time it was rented or available for rent. But personal use days don't count toward that percentage. Also confirmed that improvements definitely add to your depreciable basis, which affects your annual deduction amount.

I was totally wrong about Claimyr - I tried it yesterday after seeing it here and it actually worked! I'd been trying to get specific guidance on rental property depreciation for weeks with no luck. Their system got me through to an IRS agent in about 15 minutes who confirmed exactly how to handle my situation. The agent explained that I needed to separate out certain components of my renovation (like appliances) that qualify for shorter depreciation periods. This ended up increasing my deduction significantly. I can't believe I wasted so many hours trying to call directly when this option existed!

One thing to watch out for with Airbnb rentals is the personal use calculation. If you or family members use it for more than 14 days OR more than 10% of the days it's rented out (whichever is greater), it's considered a mixed-use property and the depreciation rules change slightly. In your case, with 74% rental usage, you need to determine if the other 26% was simply vacant or if it included personal use days. If you personally used it for more than about 27 days (10% of the 74% rented days, assuming a full year), then you need to allocate expenses differently.

Just a heads up - don't forget to report all your Airbnb income! They now send 1099-K forms to the IRS for any amount earned, so everything is tracked. But on the plus side, you get all these great deductions like depreciation to offset that income.