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 (we partner with MVO Cost Segregation). 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
Airbnb Rental Markets Set to Outperform in 2025
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- 📊 Which STR markets are set to outperform in 2025 based on revenue growth, occupancy trends, and supply shifts.
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Federal vs. state: the conformity wrinkle
Federally, 100% bonus is now permanent for qualifying property placed in service after Jan 19/20, 2025. But many states do not conform (they either disallow bonus or require add-backs with spread-out deductions in later years). If you file in nonconforming states (e.g., CA and several others), model the state impact and consider pairing or substituting §179 expensing (which more states conform to) where appropriate. Tax FoundationRSM USCohnReznickDHJJ
Using bonus depreciation with the STR “non-rental” rules
If your average guest stay is 7 days or less, your activity can fall under exceptions to the “rental activity” rules of §469. When combined with material participation, some hosts can treat losses as non-passive, potentially offsetting W-2 or business income. This is nuanced—talk to your CPA and keep meticulous participation logs. Legal Information InstituteIRS
Step-by-step: How to capture 2025 bonus depreciation on an Airbnb
- Choose the property (and financing) with an eye toward timelines—you must acquire and place in service by 12/31/2025 to use 2025 bonus.
- Furnish & finish quickly—track every asset; keep receipts to support class lives (5/7/15-year).
- List it—go live and bookable; screenshot the listing; save metadata.
- Order a cost segregation study (engineering-based). Your study will map assets into the correct buckets—now eligible for 100% bonus.
- Coordinate with your CPA on elections (e.g., opting into or out of bonus for a class if needed), entity structure, and state add-back strategies (or §179). The Tax Adviser
- Document material participation if pursuing non-passive treatment. IRS
Common questions (quick answers)
- Can I bonus the house itself? No—residential buildings (27.5-year) don’t qualify. Bonus applies to short-life components your study identifies. The Tax Adviser
- Does furniture & equipment qualify? Typically yes—these are often 5-year assets and bonus-eligible. Frost Brown Todd
- What if I bought in 2024? The old phase-down still applies to property acquired earlier; 2025’s permanent 100% starts with assets acquired/placed after Jan 19/20, 2025. Warren Averett CPAs & Advisors
- Do I need a booking to start depreciation? No—ready and available for rent is the standard. IRS
- Will my state allow it? Maybe. Many states decouple from §168(k). Plan on add-backs or §179 where helpful. RSM US
Final word (and how we can help)
2025 created a rare window: permanent 100% bonus depreciation plus the ability for savvy Airbnb hosts to accelerate large portions of their assets into Year-1 deductions—if they get placed in service and engineer a quality cost seg. We can help you buy the right STR, get it ready and available, and connect you to MVO Cost Segregation for a professional study—so you hit the tax finish line by December 31. Congress.govGrant Thornton
Compliance note: This article is general information, not tax or legal advice. Federal rules changed in July 2025; state conformity varies. Always confirm your facts with your CPA and review current IRS/state guidance. Tax FoundationRSM US
Sources & further reading
- Law & summaries: Congress.gov H.R.1 (One Big Beautiful Bill Act); Grant Thornton; Allen Matkins; CohnReznick; Comerica. Congress.govGrant ThorntonAllen MatkinsCohnReznickComerica
- Prior IRS guidance (phase-down & depreciation rules): IRS Pub 946/527/Topic 414; placed-in-service basics. IRS+2IRS+2
- State conformity: Tax Foundation; RSM; Grant Thornton SALT. Tax FoundationRSM USGrant Thornton
- STR loss treatment background: Reg. §1.469-1T; IRS Pub 925 (material participation). Legal Information InstituteIRS
