Bonus Depreciation 2025 for STR Hosts: 100% Is Back Under OBBBA

The 60-second answer

100% bonus depreciation is back, permanently. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21, signed July 4, 2025) restored full first-year expensing under IRC §168(k) for qualifying property acquired AND placed in service after January 19, 2025. The pre-OBBBA phase-down (40% for 2025, 20% for 2026, 0% after) is superseded. IRS Notice 2026-11 (January 14, 2026) is the interim guidance.
The building itself doesn't qualify; cost-segregated components do. The 27.5-year residential-rental building stays on straight-line. A cost-segregation study carves out 5-year personal property (appliances, carpets, furniture, decorative lighting), 7-year equipment, and 15-year land improvements (driveways, fences, landscaping, outdoor lighting); those get the 100% first-year deduction.
The binding-contract trap. If the purchase contract was signed on or before January 19, 2025, acquisition is pre-cutoff even if you closed and placed in service later. The pre-OBBBA phase-down applies: 40% for 2025, 20% for 2026, 0% after. Review your contract date before assuming 100%.
Pairing with the §469 STR loophole changes what the deduction can offset. Non-passive STR losses (property meets the §1.469-1T(e)(3)(ii)(A) 7-day average-stay rule AND you meet one of the seven §1.469-5T(a) material-participation tests) can offset ordinary W-2 income. Bonus depreciation on cost-segregated components, applied against ordinary income, is a materially different outcome than against passive income only.
§179 cap also rose. OBBBA raised the §179 expensing limit to $2.5 million (from $1.25M) and the phase-out threshold to $4 million (from ~$3.13M); both are permanent and inflation-indexed starting 2026. For most single-property STR hosts §179 is overkill, and bonus depreciation does the same work without §179's business-income limit.

Not tax advice; general framework. Acquisition-date determinations and §469 non-passive treatment are facts-and-circumstances IRS determinations; your CPA has the call on your specific facts.

What OBBBA actually changed on bonus depreciation

The Tax Cuts and Jobs Act of 2017 set 100% bonus depreciation under IRC §168(k) through the end of 2022, then scheduled a five-year phase-down: 80% for 2023, 60% for 2024, 40% for 2025, 20% for 2026, and 0% for 2027 onward. At the start of 2025 the rate was 40%, and many STR hosts timing cost-segregation studies against that schedule were calibrating around the step-down.

The One Big Beautiful Bill Act (OBBBA, Public Law 119-21), signed July 4, 2025, interrupted the phase-down. It restored 100% first-year bonus depreciation under §168(k) permanently for qualifying property acquired and placed in service after January 19, 2025. The 100% rate is now the law going forward, not a time-limited incentive.

IRS Notice 2026-11 (issued January 14, 2026) is interim guidance implementing the OBBBA change. Treasury and the IRS have signaled that proposed regulations are coming and will largely follow the notice. Until those regulations are issued, taxpayers may rely on Notice 2026-11, but only if they follow it in its entirety from the first year of reliance (not pick and choose provisions). The notice shifts the acquisition and placed-in-service date references in the existing Treas. Reg. §1.168(k)-2 framework to January 19 and January 20, 2025.

The pre-OBBBA phase-down still exists (for pre-cutoff property)

Property acquired on or before January 19, 2025 stays on the TCJA phase-down schedule even if placed in service later: 40% for 2025, 20% for 2026, 0% for 2027 onward (60% for property with a long production period or certain aircraft, under existing §168(k) rules). The OBBBA restoration applies forward, not retroactively, from the Jan 19, 2025 cutoff.

The January 19, 2025 cutoff: both acquisition AND placed-in-service must land after

The 100% rate requires that two separate dates both fall after January 19, 2025: the acquisition date and the placed-in-service date. Either side of the two-part test failing drops the property onto the old phase-down. For STR hosts buying property in 2025, this is one of the most important mechanics to get right; see the hypothetical example below for how the gap between 100% and 40% treatment can play out in year one.

How the IRS defines each date

Acquisition date (written-binding-contract rule). For property purchased from an unrelated party, acquisition is the date the purchase contract becomes a written binding contract under state law. "Binding" means enforceable, past any cancellation period, and with any material contingencies satisfied. It is not when negotiations began, not when shopping started, and not the closing date.
Placed-in-service date. Property is placed in service when it is "ready and available for a specifically assigned function," meaning the taxpayer could use it for its intended purpose if they chose to. For a residential rental, this is typically when the property is listed and available to accept guest bookings, with utilities on and the listing live. Facts and circumstances control; your CPA has the call on your specific situation.
Self-constructed property. For property the taxpayer builds (ground-up construction, major renovations), the acquisition date is deemed to be when "physical work of a significant nature begins." Notice 2026-11 keeps the 10% cost safe harbor: if less than 10% of the project's total expected cost has been incurred on or before January 19, 2025, the project is treated as acquired after the cutoff.
Component election. For large or phased projects, the notice allows individual components to qualify under the post-cutoff 100% rule even if the overall project started before, as long as the specific component's own 10% threshold had not been crossed on January 19, 2025. The election is per-component; your CPA documents it on the return.

Scenario	Contract date	Closed / placed in service	Bonus rate
Clean post-OBBBA buy	Feb 1, 2025	Closed Mar 15, 2025; listed Apr 10, 2025	100% (both dates after Jan 19, 2025)
Contract pre-cutoff, close after	Dec 1, 2024	Closed Feb 1, 2025; listed Mar 15, 2025	40% for 2025 (pre-OBBBA phase-down; acquisition was Dec 1, 2024)
Contract post-cutoff, delayed placed-in-service	Mar 1, 2025	Closed Apr 1, 2025; listed Jan 15, 2026	100% (both dates after Jan 19, 2025; placed-in-service year determines deduction year)
Ground-up construction, 15% complete at cutoff	Project started Oct 2024	Completed and listed May 2025	Phase-down for the overall project; component election may rescue individual post-cutoff components
Ground-up construction, 5% complete at cutoff	Project started Nov 2024	Completed and listed Sep 2025	100% (10% safe harbor: project treated as acquired after Jan 19, 2025)

Illustrative only, not tax advice. Acquisition and placed-in-service date determinations depend on the specific contract language, state binding-contract rules, and operational facts; your CPA makes the call on your return.

How Airbnb and other STR hosts actually use OBBBA bonus depreciation: cost segregation 2025

§168(k) continues to exclude buildings and their structural components from bonus depreciation. A newly-acquired residential rental building depreciates straight-line over 27.5 years; nothing in OBBBA changed that. The question for an STR host is not "can I bonus-depreciate the building?" (no) but "how much of my purchase price can I legitimately reclassify out of the building into shorter-life assets that do qualify?"

That reclassification is what a cost-segregation study produces. A qualified engineering firm walks the property, identifies the portions of your basis that are personal property or land improvements rather than structural components, and documents the result in a report your CPA uses to file. Industry results vary widely; the reclassified portion then takes 100% in year one under OBBBA, so that whatever the study produces lands in year one rather than straight-lining over 27.5 years.

MACRS class	Typical STR examples	Pre-cost-seg treatment	Post-cost-seg + OBBBA
5-year personal property	Appliances, carpets, decorative lighting, in-unit guest furniture, window treatments	Buried in the 27.5-year basis	100% bonus in year 1
7-year property	Office furniture / office equipment used by the host in a dedicated workspace (typically minor for single-property hosts)	Buried in the 27.5-year basis	100% bonus in year 1
15-year land improvements	Driveways, walkways, fences, landscaping, outdoor lighting, pool/hot-tub decks, retaining walls	Previously inside the 27.5-year basis, or carved out of the land line (otherwise non-depreciable) by the study	100% bonus in year 1
27.5-year residential rental property	Structural components (walls, roof, foundation, plumbing systems, electrical systems)	Straight-line over 27.5 years	Unchanged (§168(k) still excludes buildings)

For the full stack (how §469 non-passive treatment multiplies the cost-seg + bonus-depreciation benefit, Form 3115 look-back on already-depreciating property, recapture at sale, examination-risk considerations), see our cost segregation guide for STR hosts. For how MACRS depreciation works on the building portion that isn't bonus-eligible, see the Airbnb depreciation guide.

Pairing bonus depreciation with the §469 STR loophole

The multiplier for STR hosts is not the depreciation rate itself; it is what the depreciation gets to offset. Under the §469 default, rental activity losses are passive and only offset passive income (other rental profits, limited partnership income). A $150k first-year bonus-depreciation loss with no passive income to absorb it just suspends under §469, carrying forward until future passive income or a complete disposition of the activity. Nothing hits your ordinary-income tax bill in year one.

The STR loophole changes that. If the property meets the §1.469-1T(e)(3)(ii)(A) 7-day-average-stay test (the average period of customer use for the year is 7 days or less), the activity is no longer a §469(c)(2) passive rental. If you then meet one of the seven §1.469-5T(a) material-participation tests, the loss is non-passive. A non-passive loss offsets ordinary income: W-2 wages, 1099 self-employment, other active business income.

Hypothetical example, not a projection of your result

Purchase: $750k residential STR, placed in service Feb 2025, both acquisition and placed-in-service after Jan 19, 2025
Land allocation (illustrative; your appraisal or assessor ratio controls): $150k land (non-depreciable), $600k depreciable improvements
Cost-seg study reclassifies 20% of the depreciable improvements basis ($120k) into 5/7/15-year components (industry ranges vary; your study determines yours)
Under OBBBA: $120k x 100% = $120k first-year bonus depreciation on the segregated portion
Plus year-1 straight-line on the remaining $480k of 27.5-year building basis (mid-month convention ≈ $16k)
Plus other operating expenses, interest, insurance, repairs
Less year-1 gross rental income
Hypothetical resulting loss: in the $70k-$120k range on these assumptions; your numbers depend on the actual study, your basis, financing, and operating economics
If §469 passive: loss suspends; no current-year offset to ordinary income
If STR-loophole non-passive: loss offsets W-2 wages / business income, subject to the §461(l) excess business loss cap ($313k single / $626k married-filing-jointly for 2025 per Rev. Proc. 2024-40, indexed annually)

Hypothetical only, not typical and not an expected outcome; no tax outcome is guaranteed. The example also omits the cost-seg study fee, closing costs, and the §465 at-risk interplay. Your CPA runs the actual numbers.

The §469 non-passive determination is annual and fact-specific. See how to qualify for the STR tax loophole for the two-prong structure, the 7-day average-stay rule for the §1.469-1T(e)(3)(ii)(A) side, and the 100-hour vs 500-hour material-participation tests for which §1.469-5T(a) test to target. The STR-loophole stack is also the structure that makes bonus depreciation work against a W-2 salary from a full-time job.

The §469 evidence is contemporaneous and cannot be rebuilt later. If you want the loss to offset W-2 income in the acquisition year, you need the 7-day average stay from real reservations and the material-participation hours by activity, logged as the facts happen. Start the record now.

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The transitional 40% election: when (if ever) to use it

IRS Notice 2026-11 permits a one-time election to use the TCJA phase-down rate (40%) instead of 100% for property placed in service during the first tax year ending after January 19, 2025. The election applies to all qualifying property placed in service during that first year (not asset-by-asset), is made on a timely-filed return, and is irrevocable once filed.

For a single-property STR host chasing the §469 non-passive stack in the acquisition year, this election is rarely chosen; moving from 100% to 40% forgoes 60% of the first-year deduction. A handful of planning situations exist where a CPA might model it:

State non-conformity. Many states (including PA, NJ, NC, CA, and others) decouple from §168(k) and require federal bonus depreciation to be added back on the state return, with state-class-life depreciation substituted. Taking 40% federally can simplify the state computation if the state hasn't conformed to OBBBA either.
§461(l) excess business loss cap already binding. If other business activities already generate a loss that is capped at the §461(l) threshold, additional first-year depreciation is wasted against the cap and carries forward as an NOL anyway. A lower federal rate might smooth the deduction across years.
Existing NOL or passive carryforwards you want to use first. Older carryforwards may expire or be rate-limited; a CPA may stage current-year deductions around them.
Depreciation timing across a multi-property portfolio. Hosts acquiring multiple properties in short succession may prefer to level the deductions, especially if §461(l) is a constraint across years.

The election is a CPA planning decision, not a self-serve option. Because it is irrevocable, modeling the multi-year outcome matters more than the single-year number. Not tax advice; consult a qualified tax professional before making or declining the election.

§179 vs bonus depreciation: ordering, limits, and state add-backs

OBBBA also raised the §179 expensing limits, which is relevant for STR hosts buying equipment, furniture, or vehicles for the rental activity. The expensing cap went from $1.25 million (pre-OBBBA 2025) to $2.5 million; the phase-out threshold went from ~$3.13 million to $4 million. Both figures are permanent and inflation-indexed starting 2026.

	§179	§168(k) bonus depreciation
2025 maximum deduction	$2.5M (phase-out begins at $4M)	100% of qualifying basis, no dollar cap
Can create a loss?	No. Limited to taxable business income.	Yes. Can create or deepen a loss.
Carryforward if cap applies	Yes. §179 excess carries forward until used.	Not applicable; always deducts in year placed in service (unless taxpayer elects out of §168(k) under §168(k)(10)).
Ordering when combined	Applied first.	Applied to the remainder after §179.
State conformity	Most states follow federal §179 (with some caps).	Many states decouple and require add-back.
Typical fit for STR hosts	Office equipment, computers, individual furniture purchases.	Cost-segregated building components (5/7/15-year classes).

For single-property STR hosts the practical pattern many CPAs follow is: §168(k) bonus depreciation on the cost-segregated portions of the building, and §179 as a tool for standalone equipment where capping the deduction at business income is useful. Bonus depreciation can create a loss; §179 cannot. State conformity differs by state. Your CPA runs the comparison on your specific facts.

Common OBBBA bonus-depreciation traps

Binding contract date. The single most common miss. If you signed before January 19, 2025 (even if closing and placed-in-service were much later), the pre-OBBBA phase-down rules apply. Pull the contract and read it carefully; a letter of intent is not a binding contract. The IRS applies the latest of: contract date, enforceability under state law, end of any cancellation period, or satisfaction of contingencies. Your CPA makes the final call on your specific agreement.
§461(l) excess business loss cap. For 2025, non-corporate taxpayers' aggregate business losses are capped at $313,000 (single) or $626,000 (married filing jointly) under Rev. Proc. 2024-40, indexed annually; excess carries forward as an NOL to the following year. A large first-year bonus-depreciation loss plus active W-2 income can hit this cap. The deduction is not lost, but the current-year offset is limited.
§280F luxury auto limits. Bonus depreciation on a passenger vehicle used in the rental activity is capped by §280F. The first-year cap for a passenger auto with bonus depreciation is a small five-figure number (around $20,000-plus for recent years); the exact 2025 figure is published in the current Rev. Proc. and your CPA will verify it against the year the vehicle is placed in service. Trucks and vans above the §280F weight threshold may fall outside the limitation.
State non-conformity. States including California, Pennsylvania, New Jersey, and North Carolina decouple from federal §168(k) and require bonus depreciation to be added back on the state return, with slower state-class-life depreciation substituted. Expect a state/federal timing difference for several years; your CPA tracks the state basis separately.
§168(n) qualified production property does NOT include lodging. OBBBA added §168(n) qualified production property (QPP) with its own 100% treatment for domestic nonresidential real estate used in qualified production activity. QPP explicitly excludes portions used for lodging. An STR cannot be structured as QPP; stick with the §168(k) + cost-seg path.
Recapture on disposition. The cost-segregated portion carved out as personal property is §1245 property; gain on sale up to prior depreciation taken is ordinary income (not §1250 straight-line-cap or §1(h)(6) unrecaptured §1250 gain treatment). For STR hosts who may sell or 1031-exchange within a few years, model the recapture against the acceleration benefit.
Notice 2026-11 "all or nothing" reliance. If you rely on Notice 2026-11 for one determination (acquisition date, component election, etc.), you must rely on the notice in its entirety for the first year of reliance and all subsequent years until proposed or final regulations are issued. You cannot pick the taxpayer-favorable provisions and ignore the rest.
§465 at-risk and §469 passive rules still apply. Even with 100% bonus depreciation and the STR loophole non-passive treatment, your current-year deduction is also limited to the amount you have "at risk" in the activity under §465 (generally cash invested, recourse debt, and qualified non-recourse real-estate financing under §465(b)(6)). A conventional mortgage from a bank or institutional lender, secured by the real property, generally qualifies as §465(b)(6) non-recourse financing and builds at-risk basis. Non-qualified non-recourse financing (seller carrybacks from related parties, financing from non-qualified lenders) does not; that is where the at-risk cap can bite.

How Field Ledger helps

Field Ledger is not a cost-segregation provider; the engineering study for your building belongs with a qualified cost-seg firm, and your 2025 return belongs with a qualified CPA. What Field Ledger does is the record layer your CPA will want sitting underneath both of those: you log capital purchases with their placed-in-service dates as the facts happen, log guest stays so the 7-day average stay is computed from real reservations, log §280A(d) personal-use days, and keep the §469 participation hours by property and activity, all exported as a per-property Schedule E CSV that flags capital purchases with a suggested MACRS class life (5/7/15-year) for your CPA to review.

The differentiator vs Stessa, track750, and other hours-only trackers: Field Ledger ties the four pieces (participation hours, guest-stay average, personal-use days, capital purchases with suggested MACRS class) together per property in one journal, instead of leaving them split across a bank-feed app, a separate spreadsheet, and a hours tracker. The depreciation inputs and the §469 evidence sit in the same place. Your CPA reviews and adjusts; nothing in the tool asserts tax eligibility on its own.

Keep your signed purchase agreement, closing documents, and cost-seg report alongside the Field Ledger record. The written-binding-contract date lives on the purchase agreement itself; Field Ledger does not record contract dates separately.

Keep the records your CPA will want for cost seg and bonus depreciation

The §469 non-passive determination is annual, fact-specific, and leans on contemporaneous records. You cannot rebuild participation hours or guest-stay averages in April from calendar memory. Start the record now, hand it to your CPA with your closing documents and cost-seg report.

§469 participation hours per property and activity, with 100-hour and 500-hour threshold reports
Guest-stay tracker with average-stay calculation against the 7-day threshold under §1.469-1T(e)(3)(ii)(A), computed per (iii)(A)
§280A(d) personal-use days per property against the 14-day-or-10% ceiling
Capital purchases log with placed-in-service dates and a suggested MACRS class life (5/7/15-year) on each line
Per-property Schedule E CSV export at year-end for your CPA

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Frequently asked questions

Is 100% bonus depreciation really back for 2025?

Yes. The One Big Beautiful Bill Act (P.L. 119-21, signed July 4, 2025) restored 100% bonus depreciation permanently under IRC §168(k) for qualified property acquired AND placed in service after January 19, 2025. The pre-OBBBA phase-down (40% for 2025, 20% for 2026, 0% after) is superseded. IRS Notice 2026-11 (January 14, 2026) is the interim guidance; proposed regulations are expected to follow. Not tax advice; consult a qualified tax professional.

What's the January 19, 2025 cutoff date, and does it mean acquisition or placed-in-service?

Both dates must land after January 19, 2025: the acquisition date AND the placed-in-service date. Acquisition is the written-binding-contract date under state law, not when you started shopping or negotiating. Placed-in-service is when the property is ready and available for its intended use (for an STR, typically when it's listed and available for guests). If either side of the two-part test falls on or before January 19, 2025, the property stays on the pre-OBBBA phase-down. Not tax advice; consult a qualified tax professional.

Can an STR host take 100% bonus depreciation on the building itself?

No. IRC §168(k) continues to exclude the building and its structural components from bonus depreciation; a residential rental building depreciates straight-line over 27.5 years. What gets 100% bonus is the shorter-life portion of the building basis that a cost-segregation study carves out: 5-year personal property (appliances, carpets, furniture, decorative lighting), 7-year equipment, and 15-year land improvements (driveways, fences, landscaping, outdoor lighting). The cost-seg study is what creates the bonus-depreciable basis; OBBBA just restored the rate to 100% for post-cutoff property. Not tax advice; consult a qualified tax professional.

Does OBBBA bonus depreciation combine with the STR tax loophole?

Yes, when the STR loophole stack holds. Without it, bonus depreciation creates passive losses suspended under §469 until future passive income or disposition. With the STR loophole (property meets the §1.469-1T(e)(3)(ii)(A) 7-day average-stay rule AND the host meets one of the seven §1.469-5T(a) material-participation tests), the resulting rental loss is non-passive and can offset ordinary income like a W-2 salary, subject to the §461(l) excess business loss cap. Both the STR-loophole qualification and the depreciation deduction are facts-and-circumstances IRS determinations. Not tax advice; consult a qualified tax professional.

What if I signed the purchase contract before January 19, 2025?

The pre-OBBBA phase-down applies even if you closed and placed the property in service after January 19, 2025. IRS Notice 2026-11 applies the existing written-binding-contract rules under Treas. Reg. §1.168(k)-2 to determine acquisition date. A contract signed December 1, 2024, with closing on February 1, 2025 and first guest check-in on March 15, 2025, means acquisition was December 1, 2024, so the property's first-year bonus rate is 40% in its 2025 placed-in-service year under the pre-OBBBA schedule (property with later placed-in-service dates on that same track drops to 20% in 2026 and 0% in 2027+). Review your contract date before assuming 100%. Not tax advice; consult a qualified tax professional.

What's the §179 cap under OBBBA?

OBBBA raised the §179 expensing cap to $2.5 million (from the prior $1.25 million) and raised the phase-out threshold to $4 million (from the prior ~$3.13 million). Both figures are permanent and inflation-indexed starting 2026. For most single-property STR hosts §179 is overkill, and bonus depreciation generally does the same work without §179's business-income limit (which caps §179 at taxable business income for the year, while bonus depreciation can create a loss). When combined, §179 is applied first and bonus depreciation applies to the remainder. Not tax advice; consult a qualified tax professional.

Related guides

Statutory sources

General information about U.S. federal tax rules; not tax advice.

The key takeaway

OBBBA brought 100% bonus depreciation back and made it permanent for qualifying property acquired AND placed in service after January 19, 2025. For STR hosts the mechanics are straightforward in the clean case: a cost-segregation study carves out the 5/7/15-year component portions of your building basis, bonus depreciation accelerates those into year one, and if the §469 STR-loophole stack holds (7-day average-stay test plus one of the material-participation tests), the resulting loss offsets ordinary income like a W-2 salary rather than suspending as passive. The traps worth checking first are the binding-contract date (one of the most-missed items), the §461(l) excess business loss cap, state non-conformity add-backs, and §280F if a vehicle is in the deduction. Not tax advice; acquisition-date determinations and §469 non-passive treatment are both facts-and-circumstances calls your CPA makes on your specific facts.