Why 2025 Might Be The BEST Time For You to Invest in Real Estate
If you’ve ever thought about real estate investing, specifically short-term rentals, but have never made the move because the timing has never felt right, I’m here to say that 2025 might just be the year to finally do it.
Yes you heard me right!
And I know what you might be thinking…
“Kelley, the market is literally so crazy right now!”
“Interest rates are still a little high…”
“Everything just feels a little unpredictable.”
I hear you, I really do!
But there’s recently been a MAJOR change that benefits real estate investors in a big way and if you haven’t heard about it yet, it’s time to get in the loop.
Keep reading to learn about the return of 100% bonus depreciation (thanks to the One Big Beautiful Bill), what that actually means, and why this could be your sign to finally make the leap into real estate investing.
What Is Bonus Depreciation?
First things first, let’s have a little learning moment, shall we? Knowing what exactly bonus depreciation even is will help you better understand these big changes!
In simple terms, bonus depreciation is a tax incentive that allows real estate investors to deduct a large portion of the cost of certain property improvements and purchases immediately, rather than spreading those deductions out over many years.
For short-term rental owners, this means you can potentially write off things like:
Furniture and appliances
Renovation costs
Landscaping
Equipment purchases
Even parts of the property itself (when certain cost segregation rules apply)
Instead of depreciating those over 5, 7, or 15 years, bonus depreciation lets you take the full deduction upfront in year one! 🙌🏼
The Return of 100% Bonus Depreciation in 2025
Under the Tax Cuts and Jobs Act of 2017, 100% bonus depreciation was in place, but it began phasing out in 2023, dropping to 80%, then 60%, with plans to continue decreasing.
But in 2025, in the new One Big Beautiful Bill, 100% bonus depreciation is back baby!!!
That means if you invest in a short-term rental this year and place it in service (meaning you start renting it out), you could potentially write off 100% of qualified property costs in the same year.
And what that REALLY means for you?? A major cash flow and tax-saving advantage. 💸
This can dramatically reduce your taxable income and free up more money to reinvest, renovate, or simply reduce your overall tax burden.
And for short-term rental owners, who often invest heavily upfront in furnishings, décor, and improvements to create that “wow” factor for guests, this change couldn’t have come at a better time.
Who Qualifies for 100% Bonus Depreciation in 2025?
Okay, but now that bonus depreciation is back at 100% in 2025, the real question is: who actually qualifies to take advantage of it?
Short-term rental owners may qualify, even if you’re not a full-time real estate professional, so here’s a breakdown of what you need to know:
✅ You must own eligible property.
Bonus depreciation applies to certain types of tangible property with a useful life of 20 years or less. For real estate investors, this can include things like appliances, furniture, equipment, and even specific improvements made to the property (like landscaping or fencing).
Through a cost segregation study, you may also be able to break out portions of the property purchase itself that qualify.
✅ The property must be placed in service in 2025.
To qualify for the full 100% bonus depreciation, your property needs to be available for rent and actively being used as an income-producing asset in 2025. So even if you buy it this year, the key is making sure it's up and running during the same tax year!
✅ You don’t have to be a real estate professional, BUT…
If you’re not a full-time real estate pro, you can still take the deduction if your short-term rental activity qualifies as a business and you materially participate in it, meaning you're actively involved in managing the property in some way.
This can look like communicating with guests, handling cleanings, managing booking platforms, or overseeing the day-to-day operations.
In the eyes of the IRS, short-term rentals fall into a unique category because they typically have an average guest stay of less than 7 days, which means they’re not treated the same as long-term rentals. This can open the door to greater tax advantages, even if you have a W-2 job or another business!
✅ Work with a real estate-savvy CPA.
Here’s my very important disclaimer for you! While real estate investing can be a huge benefit to you, I’m not a CPA and the details of real estate investing can vary based on your situation.
A tax professional who understands short-term rentals and cost segregation can help ensure you're set up to maximize your deductions while staying compliant.
So, before you make ANY moves, be sure to talk to a trusted professional to make sure it’s a good move for you specifically.
Butttt what about the market?!
Understandably, one of the biggest hesitations people have about investing in real estate right now is the market.
Prices are still high in many places.
Interest rates haven’t dropped as much as expected.
And inventory can be tight depending on where you're looking.
But the thing that I’ve always said as a real estate agent in Billings is that you can’t time the market. This proves true when you’re purchasing your primary home AND when you’re looking to purchase an investment property.
There will never be a perfect time to invest, so instead of trying to wait for that, look at the pros and cons of the current market and make your decisions based on that.
And right now, a HUGE pro is the return of bonus depreciation! 🎉
Now, the market isn’t always the biggest concern when people are thinking about investing in short-term rentals, so let’s talk about some other things you might be thinking…
“What if the property doesn’t rent?”
This is a very normal thing to consider when you’re entertaining the idea of investing in real estate and is why making sure that you conduct market research and understanding your location is so key!
A trusted real estate agent in your area can help you better understand what the short-term rental inventory is like in your area and help guide you on making a decision that’s effective.
“I don’t want to be tied to managing it 24/7.”
Totally fair, especially if your short-term rental isn’t your only gig. That’s where short-term rental management companies or co-hosts come in. And like mentioned above, you can still reap the tax benefits as long as you materially participate in some way!
“I’m not sure if I’ll qualify for all the tax advantages.”
This is truly one of the biggest concerns that people have when it comes to investing in real estate and to that I say: WORK WITH A PROFESSIONAL who understands STR’s.
With bonus depreciation back on the table, and depending on how actively you participate in managing the property, you might qualify for some serious deductions, but you’ll never know what those are if you don’t start the conversation!
Ready to start your real estate investing journey in Billings, MT?
Overall, if you’ve been waiting for the “right time” to invest in a short-term rental, 2025 could be the window you’ve been looking for.
Between the return of 100% bonus depreciation and the growing popularity of STRs in desirable areas, now might be the ideal time to start building long-term wealth through real estate, while also creating a property that’s uniquely yours!
If you’re ready to talk more about where and how to invest in Billings, MT specifically, I’d love to help you navigate it! CLICK HERE to connect and get the process started.
P.S. Looking for more real estate investing resources?
While we’re on the topic of real estate investing, I want to share a few other resources that you might find helpful:
How You Can Finance an Invest Property (Q+A with local lender, Dede with Guild Mortgage)
6 Things To Do Before You Buy Your First Investment Property