Understand the potential.
See the assumptions.

Assumptions and sources

Gross yield is annual lodging revenue divided by purchase price. Net yield is net operating income after all recurring property costs and recurring AIstat fees, before debt service, income taxes and depreciation, divided by purchase price. The 9% gross / 5% net inputs imply a 4%-of-price expense budget, or 44.44% of gross revenue. These are planning assumptions, not verified U.S. averages or promised returns. Guest-paid cleaning is excluded from both revenue and costs as a matching pass-through.

The 5% net yield assumes an $80,000 annual operating-cost budget; actual costs may be higher.

This illustration assumes no personal use; personal stays can change the tax result.

How the $459,000 first-year federal depreciation is calculated. The $2,000,000 purchase price plus $40,000 of capitalized acquisition costs gives $2,040,000 of property basis. Subtract 22% allocated to nondepreciable land ($448,800), leaving $1,591,200 of building basis. The model allocates 28% to eligible short-life components: $1,591,200 × 28% = $445,536, assumed to qualify for 100% federal bonus depreciation. The remaining $1,145,664 is depreciated over an assumed 39 years. With July 1, 2027 placement in service and the mid-month convention: $1,145,664 ÷ 39 × 5.5/12 = $13,464. Total: $445,536 + $13,464 = $459,000. Loan costs and escrow deposits are excluded from property basis. The cost classifications, land allocation, cost-segregation percentage, building classification, service date and bonus eligibility require property-specific confirmation.

New York generally adds back federal bonus depreciation. This illustration uses a simplified five-year MACRS schedule (20%, 32%, 19.2%) for the entire reclassified slice; the actual mix of five-, seven- and fifteen-year assets changes these amounts. NY and NYC depreciation is $102,571, $171,948 and $114,919 across the three years. Loan-cost amortization is added separately. The assumed 30-year straight-line recovery of loan costs must be checked against the actual loan term, fee classification and required recovery method.

Household: married filing jointly, full-year NYC residents, $1.4M annual W-2 income, sufficient basis and at-risk amounts, no personal use, eligible nonpassive treatment each year and no other business income or loss. The first-year federal loss is $459,000 depreciation + $250 loan-cost amortization + $19,186 cash shortfall after interest = $478,436. This base case assumes the first-year loss is fully usable with no loss carryforward; your CPA must confirm the applicable 2027 excess-business-loss threshold and other limitations before relying on this result. If inputs create an excess loss, the CPA must separately apply the excess-loss and NOL limitations; this illustration assumes none.

Six months of operations are modeled from July 1 through December 31, 2027: $90,000 gross revenue less $40,000 operating costs gives $50,000 NOI. Interest of $69,186 leaves a $19,186 cash shortfall. Each later year uses $180,000 gross revenue, $80,000 operating costs, $100,000 NOI and $138,372 interest, leaving a $38,372 shortfall. This simple proration does not forecast seasonal revenue. The three-year cash shortfall is $95,930 before income tax. Purchase and estimated closing costs are financed upfront. Furnishings, launch costs and additional capital outlays are excluded.

The $560K portfolio line uses an illustrative 4.62% rate and the $1.5M interest-only mortgage uses 7.50%; neither is a current quote. Optional financing coordination is provided by a third-party mortgage broker licensed in your state. The broker coordinates lender applications and explores available rates and terms. No preferential rate or loan approval is guaranteed. Portfolio-backed credit can be callable, variable-rate and subject to forced liquidation.

This is a marginal-rate illustration, not a complete tax return. The stated marginal rates are held constant for 2027–2029 as planning assumptions, rather than a forecast of future tax rates. It includes the estimated closing-cost funding and tax treatment described above. It excludes incremental federal SALT effects, furnishings, launch costs, improvements, future appreciation, sale proceeds and depreciation recapture. Recurring operating costs in the 5% net-yield budget are assumed deductible for this illustration; the CPA confirms classification and timing. A future sale can reverse part of the tax benefit. Tax savings do not establish that an investment is profitable.

Sources: Closing costs and tax basis · Rental expenses and loan costs · IRS bonus depreciation guidance · Depreciation periods and mid-month convention · Excess-business-loss limits · NY depreciation schedule · NY State and NYC rate reference · NOL limits.