Complete Guide to 100% Bonus Depreciation & Tax Strategies for Short-Term Rental Properties
IRS 2026 guidance confirms 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. Assets placed in service January 1–19, 2025 generally qualify for 40% bonus under prior law. The 2024 bonus percentage remained 60% and was not retroactively increased. Always apply the percentage based on the asset’s placed‑in‑service date.
Typical STR investors save $15,000-$50,000+ annually through strategic use of bonus depreciation, regular depreciation, and business expense deductions.
Deduct the full cost of qualifying furnishings, appliances, and improvements in year one instead of spreading over multiple years.
100% bonus depreciation applies to qualified property acquired and placed in service after Jan 19, 2025. For Jan 1–19, 2025 the rate is 40%. The 2024 rate remained 60%.
Business Use Test: Property must be used for STR business more than 50% of the time to qualify for bonus depreciation. Personal use must be limited to maintain business status.
| Investment Amount | 22% Tax Bracket | 24% Tax Bracket | 32% Tax Bracket | 35% Tax Bracket |
|---|---|---|---|---|
| $25,000 (Furnishing) | $5,500 | $6,000 | $8,000 | $8,750 |
| $50,000 (Full Setup) | $11,000 | $12,000 | $16,000 | $17,500 |
| $75,000 (Premium Property) | $16,500 | $18,000 | $24,000 | $26,250 |
| $100,000 (Major Renovation) | $22,000 | $24,000 | $32,000 | $35,000 |
*Estimates based on federal tax rates only. State taxes and other factors may apply. Consult a tax professional for personalized advice.
| Placed in Service Date | Bonus Depreciation % | Notes |
|---|---|---|
| Calendar Year 2024 | 60% | No retroactive change under current guidance |
| Jan 1–19, 2025 | 40% | Prior-law phase‑down applies |
| After Jan 19, 2025 | 100% | Confirmed in 2026 IRS guidance |
Track when qualified assets are acquired and placed in service. For current 100% bonus depreciation planning, the January 19, 2025 cutoff matters, and tax pros love documents almost as much as they love ruining a good spreadsheet party.
Maintain detailed records of all purchases, including receipts, invoices, and photos. Separate business and personal use documentation. Consider professional bookkeeping for complex situations.
Work with a tax professional experienced in STR investments. The tax code is complex and proper planning can maximize your benefits while ensuring compliance.
Depreciate the building structure over 27.5 years (residential) or 39 years (commercial), providing ongoing annual deductions throughout ownership.
Deduct operating expenses including management fees, cleaning, supplies, utilities, insurance, repairs, and professional services.
Business travel to visit properties, attend conferences, and education related to STR management can be deductible business expenses.
If you manage STR properties from home, you may qualify for home office deductions for the space used exclusively for business.
Use our free STR investment calculator to model your property's financial performance including tax benefits and depreciation savings.
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