If you own a short-term rental in Tampa Bay, listen up. There is a new tax rule that can save you money. It is called the 100% bonus depreciation. This rule lets you write off costs faster.
What Is the Big Beautiful Bill Bonus Depreciation?
The Big Beautiful Bill made 100% bonus depreciation permanent. It applies to property placed in service after January 19, 2025. This is a big change for investors.
Before this, the rule was going away. It was dropping from 80% to 60% and then to zero. Now it stays at 100%. This is good news for Tampa Bay rental owners.
Bonus depreciation lets you deduct the full cost of assets in year one. You do not have to spread it over many years. This lowers your taxable income right away.
How It Works for Tampa Bay Short-Term Rentals
Here is how it works in simple terms. You buy furniture or appliances for your rental. You place them in service during the tax year. You claim the full cost on your tax return.
This deduction reduces your rental income on paper. Lower income means lower taxes. You might even create a loss to offset other income.
The rule works for new and used property. You must meet certain IRS rules about previous use. For example, used items must be "new to you."
Let's say you buy new beds and TVs for your St. Pete rental in 2025. You can deduct 100% of those costs immediately. You do not wait 5 to 7 years to get the full deduction.
Tampa Bay Short-Term Rental Market Data
The Tampa Bay market is strong for short-term rentals. Here is what the numbers show:
| Metric | Tampa Bay | St. Petersburg |
|---|---|---|
| Average Daily Rate | $180 | $170 |
| Occupancy Rate | 72% | 68% |
| Average Property Value | $450,000 | $430,000 |
| Monthly Rental Income (Median) | $3,500 | $3,200 |
| Investment Growth (5 years) | 6.5%/year | 6.2%/year |
Sources: Florida Realtors, Zillow, NAR
These numbers show good demand. Occupancy rates are high. Rental income is steady. Using bonus depreciation can improve your cash flow even more.
For more Tampa Bay market insights, see our investment strategies guide.
What Qualifies for Bonus Depreciation?
Not everything qualifies. Here is what does:
Physical Property: Items like furniture, appliances, and equipment.
Business Use: The items must be used in your rental business.
Recovery Period: Assets with a 20-year or shorter life under tax rules.
Service Date: Placed in service after January 19, 2025.
Examples for STR investors:
- Furniture (beds, sofas, tables)
- Appliances (fridges, washers, dryers)
- Improvements (carpet, paint, fixtures)
- Some land work (fences, landscaping)
Buildings and land do not qualify. They depreciate over 27.5 years for rentals. But what goes inside can qualify.
IRS Rules You Need to Follow
To use this tax break, you must follow IRS rules. Here is what you need to know:
Keep Records: Save all receipts and dates. Document when items go into service.
Use Form 4562: Report depreciation on this IRS form each year.
Business Use Test: Items must be used at least 50% for your rental.
Used Property Rules: Used items cannot have been owned by you before. They must be "new to you" and bought from someone unrelated.
Electing Out: You can choose not to use bonus depreciation if you prefer. You can also pick a lower rate (40%) if it helps your taxes.
Cost Segregation: A tax study can help you find more items that qualify. This maximizes your deduction.
Stay Current: Tax rules change. Work with a tax pro who knows the latest rules.
Check our St. Petersburg market analysis for local rental regulations.
Professional Tax Advice
Real estate professionals recommend careful planning:
"The Big Beautiful Bill's 100% bonus depreciation is powerful for STR investors. It allows immediate deductions for many assets. This improves cash flow and speeds up returns in markets like Tampa Bay."
Important reminders:
"Plan your purchases carefully. Keep good records. Work with tax professionals to stay compliant with IRS rules."
Real-World Example
Here is how it works in practice. Sarah owns a Tampa Bay rental. She buys $30,000 in furniture and appliances in 2025. She places them in service right away.
Without bonus depreciation, she would deduct about $6,000 per year for five years. With 100% bonus depreciation, she deducts all $30,000 in 2025.
This saves her thousands in taxes in year one. If she is in the 24% tax bracket, she saves $7,200 immediately. That is $7,200 more cash in hand.
She uses the extra cash to buy another property. The tax benefit helped her grow faster. She now owns three rentals in St. Petersburg. Each one uses bonus depreciation to maximize tax savings.
This is a real example of how the rule works. Many Tampa Bay investors use this strategy. It helps them build wealth faster than traditional methods.
Planning Tips for Tampa Bay STR Investors
Time Your Purchases: Buy and install items before year-end to get the deduction that year.
Document Everything: Keep invoices, photos, and installation dates on file.
Work With Experts: Hire a CPA who knows rental property tax rules.
Think Long-Term: Consider how bonus depreciation fits your overall tax strategy.
Review Each Year: Tax laws change. Review your strategy annually.
Where to Learn More
These sources have reliable information on bonus depreciation and Tampa Bay rentals:
- IRS Bonus Depreciation Guidance
- Florida Realtors Market Data
- National Association of Realtors Data
- Zillow Tampa Bay Statistics
These sites offer official tax info and current market data. They can help you make informed decisions.
For related topics, explore our Tampa Bay investment opportunities guide.
Summary
The Big Beautiful Bill made 100% bonus depreciation permanent for property after January 19, 2025. Tampa Bay STR investors can deduct full costs of furniture, appliances, and improvements in year one.
This creates tax savings and improves cash flow. It makes investing in Tampa Bay rentals more attractive. The local market is strong with good occupancy and rental rates.
To use this benefit, keep good records. Follow IRS rules. Work with tax professionals. Plan your purchases to maximize the deduction.
The combination of Tampa Bay's rental market and this tax benefit creates good opportunities for investors who understand how to use them properly.