Acquiring 2 STRs in 1 year
Member since 2023 · 17 posts · 16 votes
Acquiring 2 STRs in 1 year
Most Popular Reply
Accountant , CPA, MBA in Finance, MS in Taxation · Redmond, WA · Member since 2025 · 172 posts · 135 votes
1yYou can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
25 Replies
- 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
Loophole deduction?
- 1yJohn UnderwoodPro MemberInvestor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
It's not a loophole it is part of the tax code.
This is really a CPA question. Hopefully you have one.
- 1yMike GrudzienPro MemberLender · Eugene, OR · Member since 2019 · 2k+ posts · 1k+ votes
Talk to a CPA.
- Member since 2022 · 1k+ posts · 1k+ votes1y
Depends on how much income you are trying to offset. Nothing wrong with using the deduction on 2 properties, but as you get closer to zero income you are offsetting at a lower marginal rate and is therefore less of a benefit. That said, still worth exploring, but understand that there is diminishing returns as you offset more income and get closer to $0.
If you do not think you will launch a new property the following tax year, or if it takes your current tax bill below $0, then better to wait until next year. Another option is to depreciate but not do bonus depreciation on one of the properties, that way you take a smaller loss for year 1 but have a greater amount to offset for depreciate in each tax year for the life of the property.
As for 100% Bonus Depreciation, nobody knows unless you have direct access to hundreds of congress people.
Disclaimer: Not a CPA or tax professional.
- Member since 2023 · 17 posts · 16 votes1yYes I’m trying to offset quite a bit. The other question would be-what about all the income the STR is making? Likely it will bring in 75k before expenses. Any ideas how that works? I appreciate the advice:)
Quote from @Jon Martin:
Depends on how much income you are trying to offset. Nothing wrong with using the deduction on 2 properties, but as you get closer to zero income you are offsetting at a lower marginal rate and is therefore less of a benefit. That said, still worth exploring, but understand that there is diminishing returns as you offset more income and get closer to $0.
If you do not think you will launch a new property the following tax year, or if it takes your current tax bill below $0, then better to wait until next year. Another option is to depreciate but not do bonus depreciation on one of the properties, that way you take a smaller loss for year 1 but have a greater amount to offset for depreciate in each tax year for the life of the property.
As for 100% Bonus Depreciation, nobody knows unless you have direct access to hundreds of congress people.
Disclaimer: Not a CPA or tax professional.
- Member since 2022 · 1k+ posts · 1k+ votes1y
Quote from @Heidi Fischer:
Yes I’m trying to offset quite a bit. The other question would be-what about all the income the STR is making? Likely it will bring in 75k before expenses. Any ideas how that works? I appreciate the advice:)Quote from @Jon Martin:
Depends on how much income you are trying to offset. Nothing wrong with using the deduction on 2 properties, but as you get closer to zero income you are offsetting at a lower marginal rate and is therefore less of a benefit. That said, still worth exploring, but understand that there is diminishing returns as you offset more income and get closer to $0.
If you do not think you will launch a new property the following tax year, or if it takes your current tax bill below $0, then better to wait until next year. Another option is to depreciate but not do bonus depreciation on one of the properties, that way you take a smaller loss for year 1 but have a greater amount to offset for depreciate in each tax year for the life of the property.
As for 100% Bonus Depreciation, nobody knows unless you have direct access to hundreds of congress people.
Disclaimer: Not a CPA or tax professional.
That simply gets added to the balance sheet as income, and then your depreciation, mortgage interest, taxes, consumables, utilities etc are the costs/losses. With depreciation this will likely result in a negative number, which is what you want. IIRC that income is still considered passive, so the short term rental "loophole" is not needed to offset that.
Like I said, please verify with a professional!
- Investor · Member since 2023 · 46 posts · 34 votes1y
2nd question first … indicators are pointing to 100% bonus depreciation to be back based on current budget status. Still needs ratification etc. etc.
The STR loophole does not depend on the number of properties. It's about WHEN your 2nd property will be put into service - i.e it's furnished and ready and advertised as available for reservations. After that you need to meet the requirements for qualifying for Material Participation.
- Accountant , CPA, MBA in Finance, MS in Taxation · Redmond, WA · Member since 2025 · 172 posts · 135 votes1y
You can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
- Member since 2023 · 17 posts · 16 votes1yExcellent information! My stats are income W2 (HOH) approximately 400k and the STR was 389k-put 85k down with a mortgage of 310k. Payment is $2500ish, plus upkeep/utilities-total 3k. The STR had about 40k in furnishings and landscaping etc. it currently generates 6-7k per month. Cash flow 3k-4K. I absolutely participate as I clean and also do all the guest messaging and Airbnb work plus driving. The average stay is definitely less than 7 days.
Quote from @Stephen Nelson:
You can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
I don’t think I will get anywhere near that limit of 313k but it’s good to know. I guess it also depends on the percentage allowed for that bonus depreciation (40% vs possible new rate)
I would love to pick up another home bc I want to eventually “escape the matrix” lol
thank you! - Accountant , CPA, MBA in Finance, MS in Taxation · Redmond, WA · Member since 2025 · 172 posts · 135 votes1y
Quote from @Heidi Fischer:
Excellent information! My stats are income W2 (HOH) approximately 400k and the STR was 389k-put 85k down with a mortgage of 310k. Payment is $2500ish, plus upkeep/utilities-total 3k. The STR had about 40k in furnishings and landscaping etc. it currently generates 6-7k per month. Cash flow 3k-4K. I absolutely participate as I clean and also do all the guest messaging and Airbnb work plus driving. The average stay is definitely less than 7 days.Quote from @Stephen Nelson:
You can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
I don’t think I will get anywhere near that limit of 313k but it’s good to know. I guess it also depends on the percentage allowed for that bonus depreciation (40% vs possible new rate)
I would love to pick up another home bc I want to eventually “escape the matrix” lol
thank you!Here's some more stuff to think about:
1. Your $40K of furnishing will probably mostly be expensed using not bonus depreciation but the Section 1.263(a) tangible property regulations that say you can just write off as supplies expense anything that costs less than $2500.
2. Your building if you get a cost segregation study will probably generate a $60K-ish first year depreciation deduction. (Poke around for online calculators that estimate this. I bet the cost segregation consultants have rough approximators. And we even have simple JavaScript calculators that do this at our blog which not I'm not linking to so and so really not promoting. Just mentioning that you want to look for. Surely lots of these exist.)
3. I would guess that after the two above expenses, your rental income and expenses probably initially roughly break even in first years for tax return purposes. Thus, your tax shelter probably equals close to $100K deduction in year one?
4. Adding a $100K STR deduction to a tax return that shows $400K of income will save quite a bit of tax because you pay a lot on that last $100K. But you'd save less if you put another STR into service with another $100K tax loss in the same year so as to push the income down further from $300K to $200K. What's probably optimal is to do one STR in the years when you have income.
5. Your property will probably also generate a big deduction in year 2 if you do a cost segregation study. Maybe $25k?
- Member since 2023 · 17 posts · 16 votes1yValuable info! Thank you! Can I buy another this year, put it into service but do the 2nd STR bonus depreciation the following year in 2026? And correct me if I’m wrong, but I thought there is very little to depreciate on STR 1 in year 2?
Quote from @Stephen Nelson:
Quote from @Heidi Fischer:
Excellent information! My stats are income W2 (HOH) approximately 400k and the STR was 389k-put 85k down with a mortgage of 310k. Payment is $2500ish, plus upkeep/utilities-total 3k. The STR had about 40k in furnishings and landscaping etc. it currently generates 6-7k per month. Cash flow 3k-4K. I absolutely participate as I clean and also do all the guest messaging and Airbnb work plus driving. The average stay is definitely less than 7 days.Quote from @Stephen Nelson:
You can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
I don’t think I will get anywhere near that limit of 313k but it’s good to know. I guess it also depends on the percentage allowed for that bonus depreciation (40% vs possible new rate)
I would love to pick up another home bc I want to eventually “escape the matrix” lol
thank you!Here's some more stuff to think about:
1. Your $40K of furnishing will probably mostly be expensed using not bonus depreciation but the Section 1.263(a) tangible property regulations that say you can just write off as supplies expense anything that costs less than $2500.
2. Your building if you get a cost segregation study will probably generate a $60K-ish first year depreciation deduction. (Poke around for online calculators that estimate this. I bet the cost segregation consultants have rough approximators. And we even have simple JavaScript calculators that do this at our blog which not I'm not linking to so and so really not promoting. Just mentioning that you want to look for. Surely lots of these exist.)
3. I would guess that after the two above expenses, your rental income and expenses probably initially roughly break even in first years for tax return purposes. Thus, your tax shelter probably equals close to $100K deduction in year one?
4. Adding a $100K STR deduction to a tax return that shows $400K of income will save quite a bit of tax because you pay a lot on that last $100K. But you'd save less if you put another STR into service with another $100K tax loss in the same year so as to push the income down further from $300K to $200K. What's probably optimal is to do one STR in the years when you have income.
5. Your property will probably also generate a big deduction in year 2 if you do a cost segregation study. Maybe $25k?
STR 1 had the $40k improvements-furnishings but also a new HVAC, garage conversion and 5k in landscaping. Thanks again!! I know who I’m calling for the 2025 tax season:) - Member since 2022 · 1k+ posts · 1k+ votes1yYear 2 and onwards is the average divided over the course of 38 years for everything that does not qualify for bonus depreciation (15 year IIRC) plus the remainder of the 80/60/40/20 that would qualify for bonus depreciation but is limited to the percentages above. It is not as substantial as year 1 but it is something.
Quote from @Heidi Fischer:
STR 1 had the $40k improvements-furnishings but also a new HVAC, garage conversion and 5k in landscaping. Thanks again!! I know who I’m calling for the 2025 tax season:)
From what I understand, you can start the depreciation process in a later tax year. - Accountant , CPA, MBA in Finance, MS in Taxation · Redmond, WA · Member since 2025 · 172 posts · 135 votes1y
Quote from @Heidi Fischer:
Valuable info! Thank you! Can I buy another this year, put it into service but do the 2nd STR bonus depreciation the following year in 2026? And correct me if I’m wrong, but I thought there is very little to depreciate on STR 1 in year 2?Quote from @Stephen Nelson:
Quote from @Heidi Fischer:
Excellent information! My stats are income W2 (HOH) approximately 400k and the STR was 389k-put 85k down with a mortgage of 310k. Payment is $2500ish, plus upkeep/utilities-total 3k. The STR had about 40k in furnishings and landscaping etc. it currently generates 6-7k per month. Cash flow 3k-4K. I absolutely participate as I clean and also do all the guest messaging and Airbnb work plus driving. The average stay is definitely less than 7 days.Quote from @Stephen Nelson:
You can use a cost segregation study and bonus depreciation on more than one property.
Also just to confirm this, if your average rental interval is 7 days or less and you materially participate? Section 469 doesn't limit the losses the depreciation generates because they're not passive. The losses are nonpassive.
But if you really go gangbusters with this, there are other limiters. One you may encounter is the Section 461(l) excess business loss limitation. Basically it says you can shelter any amount of business income with a business loss (like from a STR). But you're limited in the amount of business loss you can use to shelter nonbusiness income like W-2 income and portfolio income.
In 2025, the excess business loss limitation is $313,000 for single filers and $626,000 for joint return filers.
Example: You have no business income, are single, generate $1,000,000 on your W-2 and lose $500,000 on your STRs. You can use only $313,000 of the business losses from the STRs to shelter up to $313,000 of the W-2 income.
The unused excess business losses then turn into net operating losses and carryforward to the next year.
I don’t think I will get anywhere near that limit of 313k but it’s good to know. I guess it also depends on the percentage allowed for that bonus depreciation (40% vs possible new rate)
I would love to pick up another home bc I want to eventually “escape the matrix” lol
thank you!Here's some more stuff to think about:
1. Your $40K of furnishing will probably mostly be expensed using not bonus depreciation but the Section 1.263(a) tangible property regulations that say you can just write off as supplies expense anything that costs less than $2500.
2. Your building if you get a cost segregation study will probably generate a $60K-ish first year depreciation deduction. (Poke around for online calculators that estimate this. I bet the cost segregation consultants have rough approximators. And we even have simple JavaScript calculators that do this at our blog which not I'm not linking to so and so really not promoting. Just mentioning that you want to look for. Surely lots of these exist.)
3. I would guess that after the two above expenses, your rental income and expenses probably initially roughly break even in first years for tax return purposes. Thus, your tax shelter probably equals close to $100K deduction in year one?
4. Adding a $100K STR deduction to a tax return that shows $400K of income will save quite a bit of tax because you pay a lot on that last $100K. But you'd save less if you put another STR into service with another $100K tax loss in the same year so as to push the income down further from $300K to $200K. What's probably optimal is to do one STR in the years when you have income.
5. Your property will probably also generate a big deduction in year 2 if you do a cost segregation study. Maybe $25k?
STR 1 had the $40k improvements-furnishings but also a new HVAC, garage conversion and 5k in landscaping. Thanks again!! I know who I’m calling for the 2025 tax season:)The cost segregation consultants here are the experts to consult about loading up your first year (or years) returns with depreciation. But I think they could put large deductions into your first year, yes.
But I defer to them...
- 1ySean GrahamBusiness MemberInvestor , CPA · Detroit, MI · Member since 2016 · 584 posts · 248 votes
Buy as many STRs as you want and use the STR loophole on all of them. Cost segregation should help you immensely.
Maven Cost Segregation Tax Advisors554 Reviews - 1yCollin HaysBusiness MemberProperty Manager · Gatlinburg, TN · Member since 2020 · 3k+ posts · 4k+ votes
I figured out one day that if I didn't make any income, I wouldn't have to pay taxes. Maybe I should do that.
Oh wait, I've got bills to pay.
- 1yAndrew SteffensBusiness MemberTampa, FL · Member since 2022 · 3k+ posts · 3k+ votes
You can do as many cost segregations as you would like in a year, so proceed!
Vacation Rentals of Florida53 Reviews - 1yJulio GonzalezPro MemberSpecialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votes
As others have mentioned, you can do as many cost seg studies as you want in a year. However, there are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs. If you are able to get REPS status, that would help tremendously. Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. Is it a reputable company and will the documentation provided from the study hold up in an audit? If you need any help or have any questions, feel free to reach out!
- Member since 2023 · 17 posts · 16 votes1yThank you-definitely I cannot get REPS status as I am a 40hr/wk W2. I’m literally burning candle at both ends preparing the STR and responding to guest messages. But yes I will need a cost seg for sure. How long do those take and how soon do I need it prior to tax season? Ty!
Quote from @Julio Gonzalez:
As others have mentioned, you can do as many cost seg studies as you want in a year. However, there are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs. If you are able to get REPS status, that would help tremendously. Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. Is it a reputable company and will the documentation provided from the study hold up in an audit? If you need any help or have any questions, feel free to reach out!
- Member since 2023 · 113 posts · 129 votes1y
Quote from @Julio Gonzalez:
As others have mentioned, you can do as many cost seg studies as you want in a year. However, there are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs. If you are able to get REPS status, that would help tremendously. Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. Is it a reputable company and will the documentation provided from the study hold up in an audit? If you need any help or have any questions, feel free to reach out!
Everyone here on this thread is talking about the corner case where the property's average stay duration is 7 days or less and the property is self-managed (i.e. you can meet one of the standard material participation criteria). In that case, the rental activity is considered non-passive and a loss generated by cost seg + bonus depreciation can offset other non-passive income including W-2. Even without REPS status.
I'm pretty sure this was meant to exempt lodging (i.e. hotels/motels) from passive loss limitation rules. And not really intended to benefit high W-2 earners running STRs on the side, which is a thing that didn't even exist when that tax code was created. For this reason, I think the "loophole" word is fair game. But also, fair game to apply it to STRs since there's no ruling to the contrary.
- 1yJulio GonzalezPro MemberSpecialist · West Palm Beach, FL · Member since 2008 · 4k+ posts · 1k+ votesEvery property is different, but an engineered cost segregation study typically takes 4-6 weeks to complete. Doing the study in the same tax year allows you to take full advantage of accelerated depreciation right away. Feel free to reach out if you have any questions!
Quote from @Heidi Fischer:
Thank you-definitely I cannot get REPS status as I am a 40hr/wk W2. I’m literally burning candle at both ends preparing the STR and responding to guest messages. But yes I will need a cost seg for sure. How long do those take and how soon do I need it prior to tax season? Ty!Quote from @Julio Gonzalez:
As others have mentioned, you can do as many cost seg studies as you want in a year. However, there are a lot of factors to consider when get a cost seg study to determine if the benefits outweigh the costs. If you are able to get REPS status, that would help tremendously. Have you obtained any detailed cost/benefit analysis quote? Most cost segregation study companies provide the quote for free. Is it a reputable company and will the documentation provided from the study hold up in an audit? If you need any help or have any questions, feel free to reach out!
- Investor · Atlanta · Member since 2022 · 146 posts · 72 votes1y
Totally get the frustration, Kwanza! I've been there—running numbers over and over and wondering if I'm missing something. But sometimes the market just doesn't support strong returns at current prices, especially with higher interest rates and rising expenses. The STR calculator is great, but it doesn't replace local knowledge or creative underwriting.
- Investor · Atlanta · Member since 2022 · 146 posts · 72 votes1y
Absolutely—you can take bonus depreciation on multiple STRs in the same year as long as each qualifies (put into service, materially participated, etc.). It’s not about the number of properties but how they meet the IRS criteria. But definitely check with an experienced CPA to make sure this is the right move for you & your tax situation. If 100% bonus depreciation does come back (which would be awesome), even better!
- 1yAaron ZimmermanBusiness MemberAccountant · Chicago, IL · Member since 2018 · 2k+ posts · 1k+ votes
It depends what your goals are with maximizing bonus depreciation. You can always do a cost segregation on one property in 2025 and then on a separate property in 2026. Of course, you'd need to meet the STR loophole requirements in 2026 as well.
I would talk with a CPA, make sure you meet the requirements of STR loophole, and then plan accordingly with the right strategy. It will be well worth it.
Brick House CPAs53 Reviews - 1yAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
@Heidi Fischer Yes, you can absolutely take STR "loophole" deductions on multiple properties in the same year, including bonus depreciation—as long as you meet the material participation requirements for each property individually. There's no IRS rule limiting you to one STR loss per year. So if you acquire a second STR in 2025, actively manage it, and materially participate (e.g., 100+ hours and more than anyone else), you can use accelerated depreciation from both to offset your high W-2 income.
Just be sure to track hours separately for each STR to prove material participation if audited. Keep in mind that bonus depreciation drops to 60% in 2025, unless Congress passes an extension to restore it to 100%—which is uncertain for now.
If you're prepared to manage both STRs and meet the rules, buying both in 2025 can front-load your tax savings.
This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.
INVESTOR FRIENDLY CPA®5241 Reviews - Investor · Las Vegas, NV · Member since 2019 · 19 posts · 7 votes1y
Bonus depreciation is 40% for 2025. 60% was for 2024.
Join the conversationCreate a free account to reply, vote on answers and follow this thread.