Depreciation Strategy and the Modern STR Operator
Summary
AirDNA's guide clarifies the strategic importance of depreciation for short-term rental owners, including bonus depreciation for assets placed in service after January 19, 2025. Depreciation impacts early-year cash flow. Understanding calculation methods and recapture implications is crucial for hosts and managers, as depreciation functions as a timing strategy.
Key Insights
- •Bonus depreciation can accelerate deductions on qualifying components such as appliances, furniture, and HVAC systems.
- •The IRS treats depreciation as claimed, even if the owner doesn't take the deduction.
- •The reinstatement of 100 percent bonus depreciation for qualifying assets placed in service after January 19, 2025, may materially impact early-year cash flow.
Action Items
- ✓Consider leveraging bonus depreciation and cost segregation to accelerate deductions.Effort: mediumImpact: medium
Tools & Resources
- →AirDNA: AirDNA provides a detailed breakdown of calculation methods, depreciation schedules, cost basis adjustments, and recapture implications in its full article.(https://www.airdna.co/blog/rental-property-depreciation)
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