The Tax Window You Don’t Want to Miss
If you’ve been on the fence about short-term rentals (STRs), 2025 isn’t the year to wait. With 100% bonus depreciation reinstated and STRs still qualifying for favorable tax treatment, investors have a rare chance to cut their tax bill while building a cash-flowing asset.
Reason 1: 100% Bonus Depreciation is Back
Normally, property improvements and furnishings are depreciated slowly over decades. But with bonus depreciation back at 100% for assets placed in service after January 19, 2025, you can expense much of it in year one. That means real, immediate savings—not years of waiting.
Reason 2: STR Loophole = Active Losses
Most rentals are “passive” in the IRS’s eyes, so losses can’t offset your W-2 or business income. STRs are different. If your average guest stay is seven days or less and you materially participate, the IRS treats your property as an active business. This opens the door for depreciation losses to offset other income.
Reason 3: Cost Segregation Studies Supercharge It
Cost segregation takes the property apart on paper—categorizing items like flooring, appliances, and landscaping into shorter depreciation schedules. Combine that with 100% bonus depreciation, and you could deduct 20–40% of your property’s purchase price in year one. For some investors, that’s tens of thousands (or more) in immediate tax relief.
What This Means for You
- You can use tax rules to reduce your 2025 liability instead of just writing checks.
- STRs give you both cash flow from nightly bookings and tax offsets.
- This window may not last—tax laws evolve, and bonus depreciation is unlikely to stay at 100% forever.
Bottom Line
Have you considered owning a short-term rental? With 100% bonus depreciation back in play, 2025 may be your best year to act. The right property, operated the right way, can both build wealth and dramatically cut your tax bill.