Boost Your Returns with Bonus Depreciation & the STR Loophole I For Real Estate Investors
Richard Bloom • August 14, 2025
Boost Your Returns with Bonus Depreciation & the STR Loophole:
Why Real Estate Investors Should Act Now
The tax landscape for real estate investors has shifted again—and this time, in your favor.
100% bonus depreciation is back, and when paired with the Short-Term Rental (STR) loophole, it creates one of the most powerful tax-saving opportunities we’ve seen in years.
If you own or are considering investing in short-term rentals, this is your moment to leverage the tax code strategically, reduce your taxable income, and accelerate your path to portfolio growth.
What Is Bonus Depreciation?
Bonus depreciation is a tax incentive that allows property owners to deduct a significant portion (sometimes all) of an asset’s cost in the first year it’s placed in service. Instead of spreading the depreciation over decades, you take the deduction immediately—lowering your taxable income now.
Example:
✅Purchase a short-term rental property and complete a cost segregation study.
✅This study breaks down components of the property (appliances, flooring, certain fixtures, etc.) into categories eligible for accelerated depreciation.
✅With 100% bonus depreciation, you could deduct the full amount of those eligible components in Year 1 instead of over 5, 7, or 15 years.
The STR Loophole Advantage
The STR loophole allows investors to use losses from short-term rentals against ordinary income—as long as you meet specific participation rules.
Why this matters:
✅ Normally, rental property losses are passive and can only offset passive income.
✅But if you qualify under the STR rules (for example, by materially participating and keeping rental periods under 7 days on average), those deductions can offset your active income—like W-2 wages, business income, or other earnings.
✅But if you qualify under the STR rules (for example, by materially participating and keeping rental periods under 7 days on average), those deductions can offset your active income—like W-2 wages, business income, or other earnings.
Paired with bonus depreciation, this means:
✅ Large Year-One Deduction: Deduct potentially six figures in depreciation.
✅ Reduced Tax Liability: Apply that deduction against your non-passive income (if you qualify).
✅ Immediate Cash Flow Impact: More money stays in your business to reinvest in additional properties, pay down debt, or fund renovations.
Why Now?
Tax law changes constantly. 100% bonus depreciation had been phased down in recent years, and its return is a window of opportunity. But windows close.
Investors who delay cost segregation studies or fail to properly structure their STR operations risk losing access to these benefits—or worse, triggering IRS issues for improper use.
So, What Do You Do? Here's an Action Plan for Real Estate Investors
1. Determine if Your Property Qualifies for STR Treatment
Average guest stays must be 7 days or less (or meet other IRS tests).
You must materially participate (or have a spouse who does).
2. Get a Cost Segregation Study
This breaks down property components eligible for accelerated depreciation.
A study from a reputable provider paired with CPA oversight ensures compliance and maximized deductions.
3. Review Your Tax Position Now, Not at Year-End
Bonus depreciation and STR strategies work best when planned in advance—not after the year closes.
This ensures you’re structured correctly, tracking hours and stays, and documenting material participation.
4. Reinvest Your Tax Savings
Use accelerated deductions to free up cash flow for additional acquisitions, upgrades, or portfolio diversification.
A strategic approach can compound returns without adding a single new door.
Where Entrie Comes In
This isn’t a “do-it-yourself” area of tax planning.
The STR loophole + bonus depreciation strategy is powerful, but nuanced.
One wrong step
can invalidate the deductions or trigger costly IRS scrutiny.
That’s where I come in:
✅CPA-Led Tax Strategy: Identify eligibility and execute correctly.
✅ Real Estate-Specific Bookkeeping: Track your STR income and expenses to support tax positions.
✅ Fractional CFO Guidance: Help you see how tax savings translate into long-term portfolio growth.
Don’t wait for year-end.
→ Book your call with me today
and let’s make sure you don’t miss this window of opportunity: https://www.entrie.io/contact
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