100% bonus depreciation is back—and Airbnb/STR investors can use it in 2025. Here’s the plain-English guide, with timelines, examples, and a step-by-step plan to get “placed in service” by year-end.
TL;DR (for busy hosts)
- What changed: The One Big Beautiful Bill Act (H.R.1), signed July 4, 2025, permanently restores 100% bonus depreciation for qualifying property acquired and placed in service after Jan 19/20, 2025. That reverses the old phase-down (60% in 2024, 40% in 2025, 20% in 2026).
- How Airbnbs benefit: You can’t bonus-depreciate the building (27.5-year property), but you can bonus the short-life components identified by a cost segregation study—things like furniture, appliances, certain electrical/plumbing serving equipment, and many site improvements. These are generally 5-, 7-, or 15-year assets and now eligible for 100% bonus. Legal Information InstituteFrost Brown Todd
- Placed in service (critical): For depreciation, your STR must be “ready and available for rent.” You don’t need the first booking to start depreciation—your listing can be live and bookable. Document it. IRSHall CPA
- State taxes: Some states don’t conform to federal bonus depreciation. Plan for potential state add-backs (and consider §179 where states do conform). Tax FoundationRSM USCohnReznick
- Action: If you want 2025 deductions, aim to acquire and place in service before 12/31/2025, then complete a cost seg study. Grant Thornton
What exactly changed in 2025?
Congress passed the One Big Beautiful Bill Act (H.R.1). Among many provisions, it permanently reinstates 100% bonus depreciation under §168(k) for qualifying property acquired and placed in service after Jan 19/20, 2025. Prior law had bonus depreciation phasing down (60% in 2024; 40% in 2025; 20% in 2026) per IRS guidance—this new law eliminates that phase-down going forward. Congress.gov+1IRS
Key points to anchor to:
- Permanent 100% bonus on qualifying property placed in service after Jan 19/20, 2025. Multiple national firms and legal analyses confirm this detail. Grant ThorntonAllen MatkinsWarren Averett CPAs & AdvisorsComerica
- Not retroactive to assets acquired in earlier years. If you bought in 2024, the old phase-down likely still applies. Warren Averett CPAs & Advisors
How bonus depreciation works for Airbnbs
Buildings vs. components
- The building itself (27.5-year residential rental property) does not qualify for bonus depreciation. The Tax Adviser
- Components with recovery periods of 20 years or less do qualify—think FF&E (furniture, fixtures & equipment), appliances, certain dedicated electrical/plumbing, carpeting, and many land/site improvements. A professional cost segregation study identifies and substantiates these components so they can be depreciated over 5, 7, or 15 years—and now, bonused at 100% in Year 1. Legal Information InstituteFrost Brown Todd
Why cost seg matters: Without a study, nearly everything rides the 27.5-year schedule. With a study, a meaningful slice (often double-digit %) becomes short-life property eligible for 100% bonus. (Exact percentages vary by property type, finishes, and site work.)
“Placed in service” — your year-end countdown
To claim 2025 depreciation, your STR must be placed in service in 2025—that means ready and available for rent (habitable, furnished, photographed, listed, and bookable). You can document this with a live listing, timestamped photos, and an owner log. You do not need a first guest stay to begin depreciation. IRSHall CPA
30-day quick plan (backing into 12/31)
- Furnish & equip (beds, sofas, dining, smallwares, linens, smart locks).
- Complete safety & compliance (smoke/CO, extinguisher, any local STR permits).
- Shoot photos; write listing; publish and open calendar.
- Keep a file: receipts, delivery dates, listing go-live screenshots, utility confirmations—anything that proves “ready and available.”
Real-world examples (illustrative only)
- Example A: $500,000 purchase; allocate 20% to land → $400,000 building basis. Cost seg identifies 25% as 5/7/15-year property → $100,000 qualifies for 100% bonus in Year 1. At a 32% federal rate, that’s roughly $32,000 reduction in federal tax before state effects. (Math: $400,000 × 0.25 = $100,000; $100,000 × 0.32 = $32,000).
- Example B: $800,000 purchase; 20% land → $640,000 basis. Identify 30% short-life → $192,000 bonus. At a 37% federal rate, ~$71,040 reduction before state. (Math: $640,000 × 0.30 = $192,000; $192,000 × 0.37 = $71,040).
Your actual numbers depend on your study results, bracket, and state conformity (some states add back bonus depreciation—see below). Tax FoundationRSM US
