Bonus Depreciation Is Back: Here’s How Buying Property in 2025 Could Slash Your Tax Bill
If you had a strong financial year—maybe your business crushed it or you got a bonus that's pushing you into a higher tax bracket—you might be wondering:
Is there a smart way to use that extra income before the end of the year?
One powerful option? Buy an investment property and take advantage of bonus depreciation.
Here’s how it works, and why now might be the time to pull the trigger.
💡 First—What Is Bonus Depreciation?
Normally, when you buy an investment property—like a rental or Airbnb in St. Pete, Tampa Bay, or Pinellas County—you deduct improvements and items like furniture or appliances over many years.
Bonus depreciation allows you to write off a significant portion of the cost immediately in the first year. That means a big tax deduction, right when you need it most.
🏡 Example: Buying a $300,000 Rental in St. Pete
Let’s say:
You buy a $300,000 rental property in St. Petersburg
You spend $30,000 on furnishings and setup for short-term rental (beds, couch, washer/dryer, etc.)
You made $250,000 this year from your job or business
Without bonus depreciation, you’d pay taxes on most of that $250K. With it, you could knock that income way down—and lower your tax bill substantially.
✏️ Step-by-Step: How You Save on Taxes
Step 1: Buy the property
You purchase a $300K rental property before the end of the year.
Step 2: Invest in the setup
You spend $30,000 on qualifying items—things that can be depreciated quickly, such as furniture, appliances, and fixtures.
Step 3: Do a cost segregation study
Your tax pro breaks down the property’s components and identifies items you can depreciate right away. Need help here? We’ve got people who can make sure you do this properly.
Step 4: Apply bonus depreciation
You deduct the $30,000 (or more) all in year one, instead of spreading it over time.
Step 5: Lower your taxable income
Your income drops from $250,000 to $220,000.
If you're in a 35% tax bracket, that's over $10,000 in federal tax savings alone.
💸 You get to keep more of your hard-earned money by reinvesting it into a cash-flowing asset.
🙋 Why Spend the Money Now?
If you’re sitting on extra income in 2025, investing it in real estate lets you:
Reduce your current tax liability
Turn that money into a long-term asset instead of giving more to the IRS
Generate rental income while building equity
It’s one of the few year-end purchases that both reduces taxes and creates wealth.
🌅 Long-Term Wins of Real Estate Investing
While this blog is all about the immediate tax savings, it’s worth remembering:
📈 Real estate can also grow in value, generate monthly cash flow, and hedge against inflation.
Want the full breakdown on the long-term wealth-building potential of a rental property?
👉 READ: Real Estate vs. the Stock Market: What Builds More Wealth Over Time?
🤔 Does This Work for Airbnb or Short-Term Rentals?
Yes! Bonus depreciation works for short-term rentals in St. Pete Beach, Pass-a-Grille, Treasure Island, and more, as long as:
It’s not your primary residence
You furnish and operate it like a business
You (or your property manager) materially participate
📍Why This Matters in Pinellas County Right Now
Homes in the $250K–$350K range are still available in key pockets of Pinellas County, and many of them allow for short-term rentals.
With bonus depreciation back in 2025, now’s the time to:
Buy
Furnish
Deduct
And start earning passive income
And when rates go down? Refinance later. But you only get the tax break if you buy now.
💬 Final Thoughts
If you're based in Florida or thinking of buying in the St. Pete or Tampa Bay area, this could be the smartest move you make all year.
✅ Save thousands on your tax bill
✅ Invest in an appreciating asset
✅ Create income for years to come
Want help finding the right property before year-end? I work with buyers and investors across Pinellas County. Let's run your numbers and see if this strategy fits.
