If you own a short term rental, you may be sitting on one of the biggest tax advantages available anywhere in the tax code right now.
Thanks to the permanent restoration of 100% bonus depreciation under the One Big Beautiful Bill Act, STR owners can write off a huge chunk of their purchase price in year one, not over 27.5 years. Done right, that can mean tens or even hundreds of thousands of dollars in deductions against your active income.
Here's how it works:
Step one: your STR has to qualify as an active business
The key number is 7. If your average guest stay is 7 days or less, your property is treated as an active trade or business rather than a passive rental. That one distinction changes everything. A long-term rental owner with a paper loss usually cannot touch their W2 income with it. A qualifying STR owner can.
Step two: you have to materially participate
To use those write offs against your W2 or business income, you need to pass one of these tests:
1: The 500 hour rule
2: The 100 hour rule, as long as no one else puts in more time than you do
Guest messages, cleaner coordination, restocking, listing management, and maintenance all count. Time spent inspecting the property before you bought it does not.
Step three: get a cost segregation study
A house normally depreciates over 27.5 years. But the furniture, appliances, flooring, landscaping, and parts of the plumbing and electrical inside it don't have to.
A cost segregation study reclassifies those pieces into 5, 7, and 15 year categories, which is what unlocks the bonus depreciation write off.
For Oregon properties, firms like R.E. Cost Seg and Cost Seg America can run this for you.
What this actually looks like:
Oregon coast vacation home, $750,000 purchase. A cost seg study reclassifies about $210,000. Owner writes it all off in year one.
Mount Hood cabin, $450,000 purchase plus $60,000 in furnishings. About $130,000 becomes a first year deduction, as long as the owner clears the 100 hour test.
Portland duplex converted to STR, $600,000 purchase. Roughly $150,000 reclassified and deducted in year one, because the owner personally handles both units.
Across all three, the pattern holds. Somewhere between 25% and 30% of the purchase price can come off your taxes immediately instead of trickling out over decades.
Is this you?
If you're considering an STR purchase, or you already own one and haven't looked into this, it's worth a conversation with a CPA who actually specializes in STR taxation.
Not every tax professional knows this stuff cold, and the difference shows up on your return.
Curious if this could work for you?
See you out there,
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