Immediate tax deductions for STR improvements: What the new law means for you
If you're planning improvements to your short-term rental, a recent tax law could make those investments significantly more valuable.
A major update for short-term rental operators
If you're planning improvements to your short-term rental—such as upgrading appliances, replacing flooring, or enhancing outdoor areas—a recent tax law could make those investments significantly more valuable.
On July 4, 2025, the One Big Beautiful Bill Act (OBBB Act) was signed into law. Among its provisions, the bill reinstates 100% bonus depreciation for certain business property acquired and placed in service after January 19, 2025. This means STR operators can deduct the full cost of qualifying improvements immediately, rather than depreciating them over several years.
Which upgrades qualify?
To qualify for bonus depreciation, the property must generally have a recovery period of 20 years or less. That includes tangible personal property, qualified improvement property (QIP), and land improvements.
Appliances
Appliances are typically considered 5- or 7-year property and qualify for full expensing. Examples include:
- Refrigerators
- Washers and dryers
- Dishwashers
- Ovens and cooktops
- Microwaves
- HVAC units
Flooring
Most flooring materials are also eligible, including:
- Vinyl and laminate
- Engineered hardwood
- Carpet and carpet tile
These are classified as tangible property and are not considered part of the building structure, which makes them bonus depreciation-eligible.
Bathroom fixtures
Fixtures installed as part of a renovation—not structural construction—may also qualify:
- Toilets
- Vanities and countertops
- Sinks and faucets
- Tubs and shower units
Eligibility often depends on how the item is installed. If it's not permanently affixed or structural, it likely qualifies.
Outdoor features and amenities
Outdoor improvements generally fall under land improvements (typically 15-year property) and can qualify for bonus depreciation. These include:
- Decks and patios
- Pergolas and fencing
- Retaining walls and walkways
- Irrigation systems
- Exterior lighting and non-permanent grills
Hot tubs and portable amenities
- Portable hot tubs that are not built into the ground or permanently installed generally qualify.
- Outdoor seating, fire pits, and moveable kitchen setups may also be eligible, provided they are not structural components.
The financial benefit
Bonus depreciation allows STR owners to recover their investment costs in the same tax year rather than spreading deductions out over time. Here's an example of how this might look:
If you invest in:
- A refrigerator for $2,800
- A washer and dryer set for $3,200
- New flooring for $7,500
- A portable hot tub for $5,500
That’s $19,000 in upgrades—all potentially deductible in full in the current tax year.
This type of immediate deduction can reduce taxable income significantly and improve year-end cash flow, especially when combined with other allowable business expenses.
Key considerations for STR owners
To ensure eligibility and compliance:
- The items must be used exclusively in your short-term rental business.
- They must be installed and placed in service in the tax year you're claiming the deduction.
- Keep thorough records, including receipts, installation dates, and proof of business use.
Bonus depreciation applies regardless of how many properties you own, making it just as valuable for solo hosts as for larger STR operators.
Final thoughts
The reinstatement of 100% bonus depreciation through the OBBB Act gives STR operators a valuable opportunity to reinvest in their properties while capturing meaningful tax savings. From appliances and flooring to outdoor amenities like hot tubs and patios, a wide range of improvements now qualify for immediate expensing.
Before making large purchases, it’s worth consulting your tax advisor to confirm eligibility and ensure proper documentation. Used strategically, these deductions can support long-term growth, reduce your tax liability, and help maintain a competitive, high-quality rental property.
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Immediate tax deductions for STR improvements: What the new law means for you
If you're planning improvements to your short-term rental, a recent tax law could make those investments significantly more valuable.
A major update for short-term rental operators
If you're planning improvements to your short-term rental—such as upgrading appliances, replacing flooring, or enhancing outdoor areas—a recent tax law could make those investments significantly more valuable.
On July 4, 2025, the One Big Beautiful Bill Act (OBBB Act) was signed into law. Among its provisions, the bill reinstates 100% bonus depreciation for certain business property acquired and placed in service after January 19, 2025. This means STR operators can deduct the full cost of qualifying improvements immediately, rather than depreciating them over several years.
Which upgrades qualify?
To qualify for bonus depreciation, the property must generally have a recovery period of 20 years or less. That includes tangible personal property, qualified improvement property (QIP), and land improvements.
Appliances
Appliances are typically considered 5- or 7-year property and qualify for full expensing. Examples include:
- Refrigerators
- Washers and dryers
- Dishwashers
- Ovens and cooktops
- Microwaves
- HVAC units
Flooring
Most flooring materials are also eligible, including:
- Vinyl and laminate
- Engineered hardwood
- Carpet and carpet tile
These are classified as tangible property and are not considered part of the building structure, which makes them bonus depreciation-eligible.
Bathroom fixtures
Fixtures installed as part of a renovation—not structural construction—may also qualify:
- Toilets
- Vanities and countertops
- Sinks and faucets
- Tubs and shower units
Eligibility often depends on how the item is installed. If it's not permanently affixed or structural, it likely qualifies.
Outdoor features and amenities
Outdoor improvements generally fall under land improvements (typically 15-year property) and can qualify for bonus depreciation. These include:
- Decks and patios
- Pergolas and fencing
- Retaining walls and walkways
- Irrigation systems
- Exterior lighting and non-permanent grills
Hot tubs and portable amenities
- Portable hot tubs that are not built into the ground or permanently installed generally qualify.
- Outdoor seating, fire pits, and moveable kitchen setups may also be eligible, provided they are not structural components.
The financial benefit
Bonus depreciation allows STR owners to recover their investment costs in the same tax year rather than spreading deductions out over time. Here's an example of how this might look:
If you invest in:
- A refrigerator for $2,800
- A washer and dryer set for $3,200
- New flooring for $7,500
- A portable hot tub for $5,500
That’s $19,000 in upgrades—all potentially deductible in full in the current tax year.
This type of immediate deduction can reduce taxable income significantly and improve year-end cash flow, especially when combined with other allowable business expenses.
Key considerations for STR owners
To ensure eligibility and compliance:
- The items must be used exclusively in your short-term rental business.
- They must be installed and placed in service in the tax year you're claiming the deduction.
- Keep thorough records, including receipts, installation dates, and proof of business use.
Bonus depreciation applies regardless of how many properties you own, making it just as valuable for solo hosts as for larger STR operators.
Final thoughts
The reinstatement of 100% bonus depreciation through the OBBB Act gives STR operators a valuable opportunity to reinvest in their properties while capturing meaningful tax savings. From appliances and flooring to outdoor amenities like hot tubs and patios, a wide range of improvements now qualify for immediate expensing.
Before making large purchases, it’s worth consulting your tax advisor to confirm eligibility and ensure proper documentation. Used strategically, these deductions can support long-term growth, reduce your tax liability, and help maintain a competitive, high-quality rental property.
Related Posts
Immediate tax deductions for STR improvements: What the new law means for you
If you're planning improvements to your short-term rental, a recent tax law could make those investments significantly more valuable.
A major update for short-term rental operators
If you're planning improvements to your short-term rental—such as upgrading appliances, replacing flooring, or enhancing outdoor areas—a recent tax law could make those investments significantly more valuable.
On July 4, 2025, the One Big Beautiful Bill Act (OBBB Act) was signed into law. Among its provisions, the bill reinstates 100% bonus depreciation for certain business property acquired and placed in service after January 19, 2025. This means STR operators can deduct the full cost of qualifying improvements immediately, rather than depreciating them over several years.
Which upgrades qualify?
To qualify for bonus depreciation, the property must generally have a recovery period of 20 years or less. That includes tangible personal property, qualified improvement property (QIP), and land improvements.
Appliances
Appliances are typically considered 5- or 7-year property and qualify for full expensing. Examples include:
- Refrigerators
- Washers and dryers
- Dishwashers
- Ovens and cooktops
- Microwaves
- HVAC units
Flooring
Most flooring materials are also eligible, including:
- Vinyl and laminate
- Engineered hardwood
- Carpet and carpet tile
These are classified as tangible property and are not considered part of the building structure, which makes them bonus depreciation-eligible.
Bathroom fixtures
Fixtures installed as part of a renovation—not structural construction—may also qualify:
- Toilets
- Vanities and countertops
- Sinks and faucets
- Tubs and shower units
Eligibility often depends on how the item is installed. If it's not permanently affixed or structural, it likely qualifies.
Outdoor features and amenities
Outdoor improvements generally fall under land improvements (typically 15-year property) and can qualify for bonus depreciation. These include:
- Decks and patios
- Pergolas and fencing
- Retaining walls and walkways
- Irrigation systems
- Exterior lighting and non-permanent grills
Hot tubs and portable amenities
- Portable hot tubs that are not built into the ground or permanently installed generally qualify.
- Outdoor seating, fire pits, and moveable kitchen setups may also be eligible, provided they are not structural components.
The financial benefit
Bonus depreciation allows STR owners to recover their investment costs in the same tax year rather than spreading deductions out over time. Here's an example of how this might look:
If you invest in:
- A refrigerator for $2,800
- A washer and dryer set for $3,200
- New flooring for $7,500
- A portable hot tub for $5,500
That’s $19,000 in upgrades—all potentially deductible in full in the current tax year.
This type of immediate deduction can reduce taxable income significantly and improve year-end cash flow, especially when combined with other allowable business expenses.
Key considerations for STR owners
To ensure eligibility and compliance:
- The items must be used exclusively in your short-term rental business.
- They must be installed and placed in service in the tax year you're claiming the deduction.
- Keep thorough records, including receipts, installation dates, and proof of business use.
Bonus depreciation applies regardless of how many properties you own, making it just as valuable for solo hosts as for larger STR operators.
Final thoughts
The reinstatement of 100% bonus depreciation through the OBBB Act gives STR operators a valuable opportunity to reinvest in their properties while capturing meaningful tax savings. From appliances and flooring to outdoor amenities like hot tubs and patios, a wide range of improvements now qualify for immediate expensing.
Before making large purchases, it’s worth consulting your tax advisor to confirm eligibility and ensure proper documentation. Used strategically, these deductions can support long-term growth, reduce your tax liability, and help maintain a competitive, high-quality rental property.
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