VaultSTRWhat QIP is
Qualified improvement property is any improvement to the interior of a nonresidential building placed in service after the building itself — think renovated kitchens in a commercial lodge, new flooring, lighting, drywall, interior HVAC distribution. Instead of depreciating over 39 years, QIP is 15-year property, which makes it eligible for 100% bonus depreciation. A $120,000 interior renovation that would have dripped out over four decades can deduct in year one.
Three exclusions are absolute: building enlargements, elevators and escalators, and internal structural framework. Exterior work — roofs, siding, landscaping — is never QIP (though some of it lands in 15-year land improvements via cost segregation).
The STR nuance worth knowing
Here’s where it gets interesting for short-term rentals. “Residential rental property” for depreciation purposes requires that the building derive most of its rent from dwelling units used for longer-term living — and property used on a transient basis (predominantly stays under 30 days) can be classified as nonresidential, depreciated over 39 years instead of 27.5.
That classification cuts both ways. The building depreciates slower — a real cost. But interior renovations to a 39-year transient-use property can qualify as QIP: 15-year, bonus-eligible. For an operator gut-renovating a lodge, cabin cluster, or condo-hotel unit, the QIP treatment on the renovation can dwarf the slower building schedule. This is genuinely two-CPAs-in-a-room territory — classification depends on facts, and getting it wrong in either direction costs money.
Where investors meet QIP most often
Boutique lodging conversions — motels, inns, cabin compounds bought to renovate and relaunch as STR portfolios. Mixed-use buildings with commercial space. Condo-hotels operated in a rental program. For a standard single-family Airbnb on 27.5-year residential treatment, QIP doesn’t apply — your renovation levers are cost segregation on short-life components, repairs-versus-improvements analysis, and partial disposition elections on what you rip out.
Renovation tax stack, in order
Before assigning anything to QIP or 27.5-year treatment, walk the stack: (1) Repairs — deductible now if they keep the property in operating condition rather than better it; the safe harbors here are underused. (2) Partial dispositions — write off the remaining basis of the roof or kitchen you demolished. (3) Short-life components — appliances, carpet, furniture from the reno are 5-year property regardless of building class. (4) QIP or building basis for what remains, per classification. Sequencing this well on a six-figure renovation is worth more than most rate shopping.
Put this to work
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Bottom line
QIP is a commercial-property provision with a real short-term-rental doorway through transient-use classification. If you’re renovating anything bigger than a single-family — or operating stays that average under 30 days at scale — put the classification question in front of a CPA before the contractor starts.
This article is research, not tax or legal advice. Thresholds, elections, and documentation requirements depend on individual facts — involve a CPA who works with short-term rentals before acting on any of it.