STR savings Estimator

The verdict

The numbers

Bonus depreciation

$250,000

Why this number

bonus-rate-obbba-permanent-100

• OBBBA §70301 (4 Jul 2025); IRC §168(k) — 100% bonus permanent for property both acquired and placed in service after 19 Jan 2025
• IRS Notice 2026-11 (14 Jan 2026) — interim guidance confirming the permanent 100% regime and the pre-existing acquisition-date rules
• Reg. §1.168(k)-2(b)(5) — acquisition date = written-binding-contract date; self-constructed property is acquired when physical construction begins

• five-year-personal-property — $100,000 basis, bonus-eligible
• fifteen-year-land-improvements — $100,000 basis, bonus-eligible
• qualified-improvement-property — $50,000 basis, bonus-eligible

Loss before limits

$230,000

Why this number

$40,000 operating expenses + $250,000 bonus depreciation − $60,000 rental income.

Deductible loss

$230,000

Why this number

loss-ordering

• IRS Pub. 925 — apply the basis limits first, then the at-risk limits, then the passive-activity rules
• IRC §461(l)(6) — the excess-business-loss limit is applied after §469 — the last gate before the NOL
• docs/05a-tax-deep-dive.md §K — the four-gate gauntlet: basis → at-risk (§465) → passive (§469) → §461(l) → NOL

W-2 income left

$170,000

Why this number

$400,000 W-2 income − $230,000 deductible loss.

State add-back

$250,000

Why this number

state-depreciation-delta

• docs/05a-tax-deep-dive.md §R — California does not conform to §168(k) bonus; §179 capped at $25,000
• Cal. Rev. & Tax. Code §§17255, 24356 — state §179 limited to $25,000
• docs/05-tax-reference.md §6 — state conformity shifts yearly — a maintained feed re-checked against current DOR guidance, not a fixed fact
• docs/05a-tax-deep-dive.md §R — year-one add-back signal only; the state-side recovery schedule (state depreciation on the added-back basis) is deferred to the depreciation engine

QBI carryforward

$230,000

Why this number

qbi-gate

• IRC §199A(a); OBBBA (permanent) — up to 20% of qualified business income from a qualified trade or business — the activity must rise to a §162 trade or business to play
• Rev. Proc. 2019-38 §3.03 — the safe harbor is conjunctive: ≥250 hours of rental services (year-indexed table, C16) AND separate books and records AND contemporaneous logs (2023 on) — hours alone never satisfy it; it is an ANNUAL election attached to the return (docs/06 Part 3)
• Rev. Proc. 2025-32 — phase-out threshold from the year-indexed table (2026: $201,750 single / $403,500 MFJ)
• IRC §199A(b)(2)–(b)(3) — W-2-wage/UBIA limits phase in above the threshold — that math is deferred beyond S1; this returns the gate verdict and the applicable threshold only
• Rev. Proc. 2025-32; OBBBA §199A minimum deduction — the 2026 $400 minimum deduction (≥$1,000 QBI + material participation, both indexed after 2026) is NOT modeled here — deferred beyond S1; qbiAfterCarryforward is only the base a later stage multiplies by 20% (docs/05 §6; docs/05a §O)
• IRC §199A(c)(2) — negative combined QBI carries forward and reduces next year's QBI — a loss year yields no deduction and banks a carryforward

3.8% surtax

Outside the 3.8% surtax

Why this number

niit-1411

• IRC §1411(a)(1), (b) — 3.8% of the lesser of net investment income or MAGI over $200,000 single / $250,000 MFJ — statutory and not inflation-indexed, yet read from the year-indexed table per C16
• IRC §1411(c)(1)(A)(i), (iii); §1411(c)(2) — rents and gain on disposition are NII unless derived in the ordinary course of a trade or business that is not §469-passive to the taxpayer
• Reg. §1.1411-4(g); T.D. 9644 — material participation in a §162 trade-or-business STR keeps operating income AND the gain at sale out of the surtax — both conditions required
• docs/05a-tax-deep-dive.md §M (SPA trap) — if material participation rests only on the significant-participation test, §1411 recharacterization can pull the income back into NII

Vendor 1099-NEC

1099-NEC due to your vendor

Why this number

1099-nec-threshold

• IRC §6041(a); OBBBA (4 Jul 2025) — 1099-NEC required at $2,000 of 2026 payments to one vendor (OBBBA raised the old $600 line; indexed after 2027) — collect the W-9 up front or face 24% backup withholding

The four gates

• Basis: lets the full amount through
• At-risk (§465): lets the full amount through
• Passive (§469): skipped — the loss is non-passive
• Excess business loss (§461(l)): lets the full amount through

Exit preview

§1245 ordinary recapture

$100,000 at up to 37%

Why this number

recapture-1245-ordinary

• IRC §1245(a)(1) — gain on §1245 property is ordinary income to the extent of depreciation taken — at the taxpayer's ordinary rate, up to the 37% top bracket, never capped at 25%
• docs/05a-tax-deep-dive.md §N — the cost-seg exit cost: 5/7-yr personal-property depreciation recaptures as ordinary income; post-TCJA §1031 cannot defer it

§1250 ordinary excess

$144,000 at up to 37%

Why this number

recapture-1250-ordinary-excess

• IRC §1250(a), (b)(1) — gain on §1250 property is ordinary income to the extent of additional depreciation — depreciation in excess of straight line; 100% bonus and accelerated MACRS on 15-yr land improvements and QIP are all excess over straight line
• IRC §1(h)(6) — amounts recaptured as ordinary income under §1250 are excluded from unrecaptured §1250 gain — the excess never takes the 25% ceiling
• docs/05a-tax-deep-dive.md §N — M5 must show the exit tax (competitors hide it): the bonus taken on §1250 buckets comes back at ordinary rates, not 25%

Unrecaptured §1250 gain

$16,000 at up to 25%

Why this number

recapture-unrecaptured-1250

• IRC §1(h) — unrecaptured §1250 gain — straight-line depreciation on real property not recaptured as ordinary income under §1250 — is taxed at a maximum 25%
• docs/05a-tax-deep-dive.md §N — the building's straight-line depreciation comes back at ≤25% — a different, lower ceiling than the ordinary components

This is the exit cost most calculators hide.