⚠️ The Clock Is Ticking: Use the STR Loophole Before 2025 Runs Out

[AJ Wong]

It is nearly August..If you're thinking about buying a short-term rental this year, once you factor in searches, tours, closings and launch - the time to act is now. 

The STR Loophole—combined with 100% bonus depreciation—lets qualified investors offset W-2 or 1099 income with massive paper losses. But there's a catch: you need to close the deal and materially participate before December 31, 2025. That effectively leaves September, October, November and December.

Here’s What Needs to Happen—Fast:

1. Find and close on a STR-zoned property (in a legal market)
2. Put it into service (furnished, listed, available for rent)
3. Meet one of the IRS material participation tests (typically 100+ hours and more than anyone else)

Why Timing Matters: If you're closing in September or October, you’ll have just 60–90 days to hit the participation threshold. 

That means:

• Managing the STR yourself
• Tracking every minute spent on guest communication, pricing, cleaning coordination, and setup
• Avoiding full-service PMs until January*
  

100 hours is doable—but only if you start now. 500 hours is unlikely unless you're turning around a full (and quick) remodel. 

Move Now or Miss the Window

The 2025 STR loophole window isn't going to stay open forever—and neither will 100% bonus depreciation. If you're planning to buy in 2025, your window is closing.

Good luck! 

[Collin Hays]

Number one, there is no "loophole." It is tax law.  A tax loophole would be defined as an ambiguity in tax law, usually unintended, that invites exploitation.  

Number two, bonus depreciation became permanent law with the recent budget bill signed into law.