Why and Where the STR Depreciation “Loophole” Will Create Booming Housing Markets Next Year
Summary
According to this article, the "One Big Beautiful Bill Act" tax code changes will likely cause STR markets to boom in 2026 and 2027 by allowing owners to write off 100% of the purchase price of eligible assets. Hosts should begin planning for depreciation before closing on properties and consult with their CPAs to maximize potential tax savings.
Key Insights
- •The tax code changes from the "One Big Beautiful Bill Act" enable businesses to write off 100% of the purchase price of eligible assets, creating an STR "loophole" that allows short-term rental owners to treat depreciation losses as active, not passive, potentially offsetting W-2 income.
- •For a physician earning $600K per year, purchasing a $1M STR property with 20% down ($200K) and $600K in depreciable assets can effectively swap paying the tax bill for a real estate asset.
Action Items
- ✓Begin depreciation planning before you close on properties.Effort: mediumImpact: medium
- ✓Communicate with your CPA.Effort: lowImpact: medium
Tools & Resources
- →STR-specific brokers, lenders, and CPAs: Work with STR-specific brokers, lenders, and CPAs.
Watch Out For
- ⚠Even if the property is advertised as “STR eligible,” reverify directly with the municipality before contract and during the contingency period to ensure active participation thresholds can be met on time (100+ hours).
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