Under Contract on an STR? What to Ask Before Closing

Why These Questions Belong in Due Diligence, Not After Closing

Everything on this list is easier to get in writing before closing than to reconstruct afterward. A seller under contract still has closing statements, renovation invoices, and rental platform exports on hand; a seller three months gone does not always answer calls. None of these questions predict what a study on this specific property will find. They describe what a cost segregation study works from, so a buyer knows what to ask for while the seller is still motivated to provide it. This page covers before closing; once the deal closes, the first 90 days after closing checklist picks up from there.

Ask: How Does the County Split Land Value From Building Value?

Every county assessor's office maintains its own record of a property's assessed land value versus its assessed building value, usually available from the same public record that shows the tax bill. That split is not the final number a study or a CPA will use, an appraisal or a cost segregation study itself can refine it, but it is a real, documented starting point. Asking a seller or their agent for a copy of the current assessment, or pulling it directly from the county's public site, costs nothing and gives a first look at how the property's value is currently divided before a purchase price is even allocated.

Ask: Do Furnishings Convey, and How Does the Contract Price Them?

Short-term rentals are typically sold furnished, sometimes down to the linens and the kitchen supplies, and how the purchase contract treats that furniture matters for depreciation. Furniture and certain fixtures generally fall into 5- or 7-year property, a faster schedule than the building itself, but only the furniture a buyer actually purchases and can allocate a value to. A contract that lists "furnishings included" with no itemization or separate value gives a study far less to work with than one that breaks out a furniture value, or at minimum, a seller-provided inventory list with approximate values.

Asking for that itemization, or at least a photo inventory, before closing is far easier than trying to reconstruct what a previous owner's furniture was worth after it has already been swapped out or replaced.

Ask: What Renovations Happened, and Are There Receipts?

A kitchen remodel, a new roof, a bathroom update, any capital improvement made before the sale changes what basis exists inside the building and what condition the components a study will classify are actually in. Asking directly for renovation receipts and permits, rather than assuming "recently renovated" in a listing description covers it, gives a study real documentation instead of a description to work backward from. It also matters for a different reason: if a component like a roof or an HVAC system was replaced during the seller's ownership, the seller, not the buyer, would have been the one eligible to claim the partial asset disposition on the old component, a fact worth knowing for how the property's basis history actually looks, even though that election belongs to whoever owned the property at the time of the replacement.

Ask: What Does the HOA or Condo Declaration Actually Own?

For a condo or an HOA-governed property, the recorded declaration determines what the unit owner holds title to versus what the association owns and maintains, the roof, the parking lot, common landscaping, sometimes even a balcony or a storage locker depending on the specific declaration. That split determines what a study can reclassify at all; a study can only depreciate what a buyer will actually own. Asking for the current declaration and any resale disclosure package before closing, rather than assuming a condo works like a house, sets the right expectation for what a study on that specific unit can and cannot reach. See what a study can still reclassify on a condo for the fuller picture of that narrower scope.

Ask: What Is the Rental History and the Average Stay?

A platform export showing reservation dates and lengths for the property's operating history, even under the current owner, gives an early read on where the average-stay-of-7-days test might land once a buyer's own bookings start accumulating. That history belongs to the seller's operation, not the buyer's, and a new owner's own booking pattern is what will ultimately control the test for their own tax years. Asking for it anyway is useful context on the market's typical booking rhythm, not a substitute for tracking a buyer's own reservations going forward.

Ask: How Does the Closing Date Land Relative to the Tax Year?

A closing near a calendar year-end can determine whether the property's first depreciation schedule falls in the current tax year or the next one, and how much of the first year's operating history exists to establish the average-stay test in that same year. Neither a late-December closing nor an early-January one is better or worse in the abstract; each simply starts the depreciation and the passive-activity clock at a different point. Confirming the exact planned closing date early, rather than treating it as a scheduling detail, lets a buyer's CPA plan which tax year a cost segregation study and its filing mechanics actually attach to.

Putting the Answers in One Place

None of these questions need a formal disclosure form to answer them; most sellers can respond to a short written list through the agents within a few days. A simple table, one row per question, keeps the answers organized alongside the closing statement once it arrives, rather than scattered across email threads and text messages that are easy to lose track of once closing itself gets busy.

A Number Before Any of These Answers Come Back

A free Preliminary Benefit Estimate at /qualify can run on the purchase price and property type while the due-diligence period is still open, before the seller has answered a single question on this list. It gives an early number to compare against whatever the land split, the furnishings, and the renovation history turn up once the answers are in hand.

Frequently asked questions

Should these questions go through my real estate agent or directly to the seller?

Either path works, though a written request through the agent creates a clearer record than a verbal conversation. What matters more than who asks is getting documentation, receipts, the county assessment, a furnishings inventory, rather than a verbal assurance that everything is fine.

What if the seller doesn't have receipts for past renovations?

It happens often, and it doesn't block a cost segregation study from being done later. It does mean a cost segregation study works from photos and observable condition rather than documented cost, which is normal for a resale property regardless of how the due-diligence period went.

Does asking about the land-to-improvement split affect the purchase price negotiation?

Not directly. The county's assessed split is a public record used for tax administration, not a number that determines fair market value or negotiating leverage. Asking for it is about gathering documentation for a future study, separate from any price discussion.

Why does it matter whether furnishings are itemized separately in the contract?

Furniture and certain fixtures generally depreciate faster than the building itself, but a study needs some value or count to work from. A contract that lists furnishings as one bundled term with no itemization gives less for a study to classify than one with a breakdown or an attached inventory.

Is the seller's rental history relevant to my own average-stay test?

It is useful context on the property's typical booking pattern, but the average-stay test runs on a buyer's own reservations once ownership changes hands. The seller's history does not carry over as the buyer's tax record; each owner's own bookings control their own tax years.

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