Investors Face Year-End Clock on 100% Bonus Depreciation for Short-Term Rentals

Real estate investors face a year-end deadline to place properties in service and claim 100% bonus depreciation under the One Big Beautiful Bill.

COLORADO SPRINGS, CO, UNITED STATES, October 21, 2025 /EINPresswire.com/ -- Real estate investors and short-term rental owners have a limited window to capture one of the largest tax incentives in recent years: 100% bonus depreciation. Following passage of the One Big Beautiful Bill earlier in July, full expensing is temporarily reinstated for qualifying property placed in service after January 19, 2025, and before 2031.

Under the new law, taxpayers can deduct the entire cost of eligible assets with a useful life of 20 years or less in the first year. When combined with a cost segregation study, rental property owners can accelerate depreciation and therefore tax deductions that would otherwise be spread over decades. According to WCG CPAs & Advisors’ rental property guidance, components such as flooring, cabinetry, lighting, mechanical hookups, closet shelving and landscaping can often be reclassified into shorter recovery periods of five, seven, or fifteen years, qualifying for immediate depreciation.

“Cost segregation is not a loophole—it’s a timing strategy,” said Jason Watson, a real estate CPA and Partner at WCG CPAs & Advisors. “The One Big Beautiful Bill made that timing more valuable by restoring 100% bonus depreciation. But to benefit for 2025, a rental property must be placed in service by year-end, not just under contract.”

Short-term rental investors have an additional opportunity under IRS rules. If the average guest stay is seven days or less and the owner materially participates, the rental activity may be treated as nonpassive. This allows depreciation losses from cost segregation and bonus depreciation to offset active income such as W-2 wages or business earnings. This is often leveraged by high-income earners.

“This is where tax strategy and timing intersect,” said Rachael Weber, CPA, Partner at WCG CPAs & Advisors. “If you have unusually high income for 2025, time is running out to offset this with rental losses from bonus depreciation.”

The reinstated 100% bonus depreciation provision, combined with a cost segregation study and the short-term rental loophole, represents a significant opportunity for active real estate investors for 2025. However, only a few weeks remain to purchase a rental property, get it ready for rent and have at least two guest stays before the end of the year.

About WCG CPAs & Advisors

WCG CPAs & Advisors is a full-service tax and accounting firm based in Colorado Springs, Colorado. Serving clients nationwide with over 90 tax professionals, WCG specializes in small business owners, real estate investors and rental property owners. Learn more at https://wcginc.com.

Jason Watson
WCG CPAs & Advisors
+1 719-387-9800
media@wcginc.com

Legal Disclaimer:

EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.