As we approach the December 31, 2025 expiration of the Tax Cuts and Jobs Act (TCJA), short-term rental (STR) owners and operators should be paying close attention. This isn’t just another round of tax updates—these changes could directly impact your revenue, deductions, and future investment strategy.
At Signature Partners, we believe in helping STR hosts make proactive, data-informed decisions. Here’s what’s at stake—and how to stay one step ahead.
Key Tax Shifts to Watch
The Mortgage Interest Deduction May Increase
The TCJA lowered the mortgage interest deduction limit from $1 million to $750,000 for new loans. If the law expires, we could see a return to the $1M cap.
What it means for you:
If you’ve purchased (or plan to purchase) higher-value properties with financing, you may be able to deduct interest on a larger portion of the loan. That’s a direct boost to your bottom line—especially for STRs in premium or competitive markets.
State and Local Tax (SALT) Deduction Cap Could Disappear
The current $10,000 cap on SALT deductions made high-tax states less attractive for real estate investors. Its potential repeal may change that.
What it means for you:
Hosts with properties in states like California, New York, or New Jersey may regain access to larger deductions—helping you hold onto more of your income and reevaluate market viability.
Bonus Depreciation Is on the Way Out
The TCJA allowed investors to deduct 100% of qualifying assets (like furniture, appliances, and improvements) in the year they were placed in service. But it’s phasing out to 0% by 2027.
What it means for you:
If you’re planning a renovation, refresh, or refurnishing, now’s the time to act. You’ll get more tax benefit by completing these upgrades before the phase-out accelerates.
QBI Deduction May Vanish
The Qualified Business Income (QBI) deduction gave many STR operators a 20% deduction on net income from pass-through entities like LLCs or sole proprietorships. That provision is also set to expire.
What it means for you:
No more QBI means a potentially higher effective tax rate. STRs operated as true businesses—not just passive rentals—could lose a powerful tax advantage unless they plan ahead.
What STR Hosts Can Do Now
- Reassess Your Investment Market Strategy. If mortgage and SALT deductions return to pre-TCJA levels, previously cost-prohibitive markets might suddenly make sense. Consider how these changes could open doors in high-demand, high-tax areas.
- Accelerate Planned Improvements. If you’ve been holding off on replacing beds, appliances, or adding amenities—don’t. Front-loading these upgrades in 2025 allows you to capture more value before bonus depreciation drops.
- Rethink Business Structure. With the QBI deduction in question, now’s a smart time to meet with a CPA or tax strategist. You may benefit from changing how your STR operation is legally structured.
- Partner With Professionals. Don’t wait until tax season to make decisions. The most successful STR owners operate with a strategy—not just a Schedule E.
The Signature Partners Perspective
Tax laws change. Strategic hosts adjust early.
We work with STR owners to think like investors—not just operators. That means understanding how tax shifts affect your portfolio and profitability—and planning accordingly.
If you’re unsure how these changes could impact your STRs, we’re here to help. Reach out for a complimentary Discovery Call, or explore our Soar solution designed to help you protect and maximize your asset performance against an evolving market.
