Why It Matters

The OBBBA creates a rare opportunity for short-term rental and multi-family property owners to dramatically accelerate deductions and reduce taxable income, starting immediately. With 100% bonus depreciation permanently restored and the QBI deduction locked in, strategic planning now can improve cash flow, unlock non-passive losses, and generate long-term tax savings that won’t be available retroactively if missed.

How does the OBBBA impact bonus depreciation?

Under OBBBA, 100% bonus depreciation is permanently restored for qualified property placed in service after January 19, 2025, allowing businesses to fully expense most new and used assets, like equipment, furniture, and land improvements in the year they’re placed in service rather than depreciating them over time.

Qualified property can include furniture and appliances, equipment and machinery, land improvements (e.g., landscaping, parking lots) and certain interior and exterior property improvements. Check out our blog, Big Beautiful Bill Act Restores 100% Bonus Depreciation: What Businesses Need to Know for 2025 for the full details. 

What benefits can short term rental owners take advantage of?

STR investors can fully deduct the cost of furniture, appliances and qualified improvements in year one.  Additionally, 

• If you meet material participation rules, you can benefit from cost segregation studies, which can accelerate even more deductions.
• If you meet the trade or business requirements, you can maximize deductions and qualify for QBI benefits.

How can Multi-Family Property Owners Benefit? 

Multi-family property owners can also leverage OBBBA, but there are some nuances:

• Apartment complexes and multi-unit buildings can qualify for bonus depreciation on building components like appliances, carpeting, and certain improvements under cost segregation.
• Passive vs. non-passive income: Multi-family investors must track hours and meet material participation requirements to convert deductions into non-passive losses, which can offset other active income.
• Multistate holdings: Owners with properties in multiple states should be aware that each state may treat bonus depreciation and QBI differently. Some states do not conform to federal bonus depreciation rules, which can affect state taxable income. Coordinating with a tax professional familiar with multistate property taxation is critical to ensure deductions are maximized without triggering unexpected state liabilities.

How OBBBA Impacts the Qualified Business Income (QBI) Deduction

Thanks to OBBBA, the QBI deduction is now permanent. Eligible STR and multi-family owners operating as a business can claim up to 20% of net rental income. To qualify you must:

• Track hours spent managing properties
• Meet the “trade or business” or 250-hour Safe Harbor
• Provide guest or tenant services to substantiate active participation

Treating your properties like a business unlocks non-passive loss treatment, QBI eligibility, and more flexible deductions (though in some cases it may trigger self-employment taxes).

STR & Multi-Family Owners Should Act Now

Top priorities include:

1. Planning renovations and property improvements before year-end to capture 100% bonus depreciation
2. Considering cost segregation studies, especially for high-value or multi-unit properties
3. Reevaluating whether to file on Schedule E vs. Schedule C
4. Tracking hours carefully to maximize QBI eligibility
5. Reviewing entity structure for long-term planning and multistate compliance

OBBBA creates a unique opportunity for STR and multi-family investors to accelerate deductions, reduce taxes, and improve cash flow, but careful planning and professional guidance are key to maximizing benefits.