Written by: Sanjin Hadziomerovic
The House of Representatives has approved President Trump’s sweeping tax package (dubbed the “One Big Beautiful Bill”) by a 215–214 vote. This 1,116-page bill largely makes permanent many of Trump’s 2017 tax cuts and adds new ones (e.g. no federal tax on tips, overtime pay, or car loan interest).
Crucially for real estate investors, the proposal restores extremely generous depreciation rules: it reinstitutes 100% bonus depreciation for qualifying property placed in service from 2025 through 2029, meaning owners can immediately write off the full cost of those assets.
In his March 2025 address, Trump even pledged to make the new expensing retroactive to January 20, 2025. These tax incentives – especially when combined with cost segregation – can produce huge first-year deductions on rental properties. For short-term rental (STR) investors, who often meet the IRS’s “7-day rule” (see below), the impact is particularly favorable.
Key Provisions Affecting Real Estate Investors
The new tax bill offers several features that can benefit landlords and STR owners. Most notably, bonus depreciation would jump back to 100%, allowing immediate expensing of nearly all qualifying purchases (furniture, appliances, and even some building components) placed in service by 2029. (By contrast, under prior law this was phasing down to just 40% in 2025.)
Combined with cost segregation studies, which reclassify parts of a property into shorter depreciable lives, investors can front-load deductions into the early years of ownership. In practical terms, roughly 15–30% of a building’s basis can be accelerated into 5-, 7- or 15-year assets, and under 100% bonus those amounts can be fully deducted immediately.
For example, IRS guidance notes that performing a cost segregation study “will reduce annual federal and state income tax payments, potentially freeing up money” for investors.
The bill also boosts other business-related provisions. It increases the Section 199A “Qualified Business Income” deduction for pass-through income from 20% to 23%, effectively lowering the top tax rate on eligible rental income. (Long-term wealth transfers see relief too, with a higher estate-tax exemption.)
Importantly, none of these carve-outs leave the door closed to STRs: the legislation does not revoke the special tax rules that benefit short-term hosts. In fact, by keeping STR-friendly provisions in place and adding even more depreciation incentives, the new law makes the STR strategy more lucrative than ever.
Financial Tools
STR managers should take advantage of Chalet’s financial platforms:
- STR Calculator: Pinpoint your net revenue, including updated depreciation benefits—explore it here: STR Calculator.
- Performance Overview: Monitor your income trends and expense ratios—all in one dashboard: STR Overview.
These tools are more powerful than ever. Plugging in your property’s rehab budget or equipment costs lets you instantly model the impact of 100% bonus depreciation, SALT changes, and new deductions—helping you fine-tune rental pricing, tax strategies, and seasonal forecasting.
Accelerated Depreciation: Bonus Depreciation & Cost Segregation
Two tax terms are crucial here. Bonus depreciation (sometimes called “100% expensing”) is a rule allowing owners to immediately deduct most of an asset’s cost in the first year, rather than spreading it out. In Trump’s bill, 100% bonus depreciation is fully restored for assets placed in service from 2025–2029. (Trump highlighted this in March 2025: “[A]s part of our tax cuts…we will provide 100% expensing.
It will be retroactive to January 20, 2025”.) This means, for example, that new furnishings or appliances in an STR home can be written off instantly. Cost segregation is a complementary strategy: it involves hiring an engineer or CPA to identify and reclassify portions of a building (like carpeting, fixtures, landscaping) into shorter-lived asset classes.
As one tax guide explains, cost segregation “accelerates depreciation deductions, defers taxes and improves cash flow” by moving about 15–30% of a building’s basis into 5- to 15-year categories. When you combine cost segregation with 100% bonus depreciation, STR owners can realize large up-front deductions. For instance, if 20% of a home’s basis is reclassified into 5-year property, the entire 20% can be deducted immediately under the current plan – dramatically lowering taxable income in year one.
Key takeaway: Consider obtaining a cost segregation study on any new STR purchase. By shifting value into shorter lives and using bonus depreciation, you can maximize early-year write-offs. Want a free consultation? Click here and connect with a Cost Segregation Specialist for FREE!
