How to Claim 100% Bonus Depreciation on Your Airbnb in 2025

If you own or are planning to own an Airbnb in 2025, you must have already heard about the return of 100% bonus depreciation. Thanks to the recently passed One Big Beautiful Bill, real estate investors can once again fully deduct the cost of certain property purchases and improvements in the same year they’re placed in service.

Everyone in the rental industry is talking about 100% bonus depreciation, but do you know how you can claim your deductions? Our guide is here to help you understand how to claim this benefit step-by-step.

Determine Property Eligibility for 100% Bonus Depreciation

The first and probably most crucial step is finding out if your Airbnb is eligible for the 100% bonus depreciation benefit in the first place. The IRS has three main eligibility requirements you’ll have to meet to claim 100% bonus depreciation.

Legal Ownership Requirements

You must hold legal title to the Airbnb property and must be the direct property owner. While this is usually pretty straightforward, there are still a couple of situations where it can vary, including:

• Fee simple ownership (freehold): You own the property outright, even if mortgaged
• Condominium ownership: You hold title to your specific unit
• Joint ownership: Can typically qualify, if both owners meet other requirements. You can only claim depreciation on your percentage of ownership.
• Cooperative ownership: Generally doesn’t qualify since you own shares, not real estate
• Trust ownership: Qualifies if you’re the beneficial owner with depreciation rights

What Doesn't Qualify

Properties you lease or rent from others never qualify for depreciation, regardless of improvements you make. If you're operating an Airbnb in a leased space, you cannot claim any depreciation benefits on the building or its components.

Business Use Test

According to the IRS, your Airbnb must also pass the business use test. Typically, it requires that the property be used over 50% for a qualified trade or business, not personal use. For Airbnb hosts, this means the space and assets must be primarily rented out and actively managed as a business.

Primary Business Purpose

Your property must generate income through Airbnb rentals. Personal use properties don't qualify. The IRS considers short-term rentals like Airbnbs as business activities when operated for profit.

The 14-Day Rule

Personal use severely limits your depreciation benefits. If you want to qualify for full deductions on 100% bonus depreciation, you must not use the property personally for more than 14 days per year OR 10% of rental days (whichever is greater). Otherwise, the IRS might consider your property as a “personal use property.”

Mixed-Use Properties

Many hosts rent out portions of their primary residence. You can still qualify for deductions, given that you still meet the other IRS requirements. The depreciation will also only apply to the “business portion” of the property and will be calculated accordingly. This can include:

1. Separate unit in your home: Can be calculated by square footage or room count
2. Shared spaces: Apportion based on rental periods and space usage
3. Common areas: Include a proportional share when guests have access

Placed-in-Service Rule

Finally, to be eligible for the restored 100% bonus depreciation, property must be placed in service after January 19, 2025. The IRS defines placed in service as when property is "first placed in a condition or state of readiness and availability for a specifically assigned function.

This date is not necessarily when you purchased the property or closed on the financing. For new Airbnb properties, the entire rental must be available for booking before year-end for improvements or furnishings to count.

Let’s say you bought a property on February 1, 2025, spent about two months renovating, and were able to list it on March 15, 2025. The placed in service date is March 15, when it became available for rental.

Note: We highly recommend speaking with local professionals and tax consultants to determine your eligibility.

Identify Qualifying Property Components

Not everything in your Airbnb is eligible for bonus depreciation, but many of the most expensive and essential items are. The key rule is that the asset must have a useful life of 20 years or less, as defined by the IRS. This typically covers personal property and certain improvements, not the building or land itself.

What Qualifies for Bonus Depreciation

Bonus depreciation applies to qualifying property, which includes:

1. Tangible personal property with recovery periods of 20 years or less
2. Certain qualified improvement property
3. Building systems and equipment
4. Both new and used property, given that the used property is “new to you” and meets specific criteria

What Doesn't Qualify

Not all costs are eligible. Here are common exclusions:

1. The land itself (land is never depreciable)
2. The building/structure (depreciated over 27.5 or 39 years)
3. Major structural improvements, like roofing, foundation, or exterior walls
4. Any assets placed in service outside the tax year

Understanding these distinctions can help you group and label your Airbnb investments wisely. Take time to properly classify each component, maintain detailed records, and consider professional guidance for complex situations. Learn more about what qualifies for 100% bonus depreciation and the specifics surrounding it in our guide.

Conduct Cost Segregation (Optional but Recommended)

A cost segregation study isn’t required to claim 100% bonus depreciation, but for some Airbnb investors, it can unlock significantly larger deductions. It’s especially useful if you’ve purchased an entire rental property or made major renovations.

Cost segregation dissects your property's components into different depreciation categories, often following the 5, 7, and 15-year schedules, giving you a breakdown of every component. While optional, it's highly recommended for investors looking to maximize their bonus depreciation benefits.

While you can attempt cost segregation yourself, professional studies often identify more qualifying components and often offer better documents to back it up. Certified cost segregation specialists know exactly which items qualify and can withstand IRS scrutiny.

The main downside to going with a professional cost segregation study is that it can cost thousands of dollars upfront, making it a significant investment. Real estate investors should definitely consider the benefit-to-cost ratio before proceeding.

Generally, it’s highly recommended to go with a professional study for major renovations and large property purchases.

If you’re going with the DIY route, get started with DIY Cost Seg and save $50 using code BNBCALC.

Complete IRS Form 4562

Form 4562, also known as the “Depreciation and Amortization” form, is where your bonus depreciation becomes a deduction. Without it, you won’t be able to claim anything from your depreciations. This form is required by the due date of your tax return, including extensions.

You must file Form 4562 whenever you claim:

1. Any depreciation on property placed in service during the tax year
2. Bonus depreciation or Section 179 expensing
3. Listed property or mixed-use assets
4. Any depreciation method other than straight-line

For Airbnb properties claiming bonus depreciation, Form 4562 is mandatory. There's no exception or alternative filing method. If you don’t file it, you can’t claim it. It’s as simple as that.

The due date for filing Form 4562 is the same as the due date for your income tax return. It’s always on April 15 for individual filers and March 15 for most businesses. However, in the event that these dates fall on a weekend, the due date is moved to the next business day.

The IRS form is composed of six total sections. Here’s a short breakdown of each section and what you need to include within them.

Part I: Election to Expense Certain Property Under Section 179

This section allows you to immediately deduct up to $2.5 million of qualifying business property costs in the first year instead of depreciating over time. Focus on the highest-cost items first and ensure your total business income supports the deduction amount to maximize immediate tax savings.

Part II: Special Depreciation Allowance and Other Depreciation

Here, you claim 100% bonus depreciation on qualifying property placed in service during the tax year, plus any non-MACRS depreciation methods. List all qualifying components from your cost segregation study and multiply the total basis by 100% for maximum immediate write-offs.

Part III: MACRS Depreciation

This section reports standard depreciation for property that doesn't qualify for Section 179 or bonus treatment, typically building structures on the 27.5-year schedule. Organize assets by recovery period and use the appropriate MACRS tables to calculate annual depreciation amounts.

Part IV: Summary

Part IV totals all depreciation deductions from Parts I, II, and III, creating the final amount that flows to your tax return. Double-check all calculations and ensure cross-form totals reconcile before completing this summary section.

Part V: Listed Property

This section captures vehicles and equipment used for both business and personal purposes, requiring detailed usage logs and business-use percentages. Maintain written records of business versus personal use and complete mileage logs for vehicles to support your deduction claims.

Part VI: Amortization

Part VI handles intangible assets like patents, trademarks, and licenses that are amortized over their useful lives rather than depreciated. List each intangible asset separately with its amortization period and calculate the annual deduction based on the asset's cost basis.

File with Your Tax Return

The final step is filing Form 4562 together with your Form 1040 (income tax return). Form 1040 or the “U.S. Individual Income Tax Return” is the primary IRS form used by individuals to report income, claim deductions, and calculate tax liability.

Every Airbnb host filing as an individual uses Form 1040 to consolidate all income sources, such as wages, self-employment, and rental income, and integrate related schedules, including Form 4562, and your Schedule E or C, depending on the classification of your rental activity.

Filing Steps

Here’s the general series of steps you can expect to perform when filing your income tax return.

1. Gather Documents

1. W-2s, 1099s, bank, and rental income records
2. Form 4562 (depreciation), Schedule E or C entries

2. Choose Filing Method

1. E-file: Fastest processing; use IRS-approved software
2. Paper file: Mail to IRS address listed in instructions

3. Complete Form 1040

1. Enter personal details and income figures
2. Attach Schedule E or C
3. Include Form 4562 to claim bonus depreciation

4. Review and Sign

1. Double-check math, Social Security numbers, and attachments
2. Sign and date; include spouse’s signature if filing jointly

5. Submit and Pay

• E-file electronically or mail before April 15, 2026
• Pay any balance due via EFTPS, credit card, or check

Following these steps ensures your rental income, expenses, and depreciation flow correctly from supporting schedules into Form 1040, capturing all deductions and credits for maximum tax efficiency.

Wrapping Things Up

Claiming 100% bonus depreciation on your Airbnb in 2025 is one of the most powerful ways to reduce your taxable income. By understanding what qualifies, keeping clear records, and filing the correct IRS forms, you can take full advantage of this opportunity.

Disclaimer: This article is for informational purposes only and does not constitute legal, tax, or financial advice. Always consult with a qualified tax professional or CPA to determine how bonus depreciation and other deductions apply to your specific situation. Tax laws may change, and individual circumstances can significantly impact eligibility and outcomes.