When Depreciation Starts (Placed-in-Service)
Last updated: January 2026 · 6 min read · Written by Hawaiʻi STR Advisor
What “Placed in Service” Means
The IRS defines placed-in-service as the date when a property is ready and available for its intended use. For an STR, this means the property is furnished, listed, and ready to receive guests. It’s not necessarily the closing date, and it’s not the date of the first guest. It’s when the property is in a condition to be used as a rental.
Why Timing Matters for Cost Seg
Your placed-in-service date determines which tax year you can begin claiming depreciation. If you place a property in service on December 15, you can claim a full year of bonus depreciation for that tax year (if applicable). If you miss the December 31 deadline, those deductions shift to the following year. For large properties, this timing difference can mean tens of thousands in deferred tax savings.
Renovations and Placed-in-Service
If you purchase a property that needs renovation, the placed-in-service date is when the renovations are substantially complete and the property is ready for rental use. Partially completed renovations don’t count. This is important for planning your cost seg study — you want the study done after renovations are complete so it captures the full value of all improvements.
Educational only; not tax or legal advice. Consult your CPA before making decisions.