Good news for real estate investors?
According to Giulia Carbonaro of Newsweek, President Donald Trump has signed the One Big Beautiful Bill Act, which delivers substantial tax benefits to high-income homeowners and real estate investors.
The legislation increases the SALT deduction cap to $40,000—potentially saving homeowners up to $10,500 annually. It also brings back 100% bonus depreciation and permanently extends the qualified business income (QBI) deduction. While these measures are celebrated by the real estate sector as major victories, critics argue they may further widen inequality amid an already strained housing market.
STR operators often qualify as active businesses if they meet IRS rules like the “7-day rule.” When they do:
- Depreciation losses can be treated as non-passive, allowing them to offset W-2 or other active income
- With cost segregation and bonus depreciation, a large portion of a property’s value can be written off in the first year, dramatically reducing taxable income
Likely impacts:
- Increased investor interest in STR properties due to powerful tax shields
- Rising demand in tourist-heavy areas
- Potential upward pressure on property prices, especially for single-family homes and vacation rentals
Impact on the Mid-Term Rental (MTR) Market
Mid-term rentals (30+ days, often 1–6 months) are also positioned to benefit:
- Investors can use bonus depreciation, though they may need to qualify as material participants to unlock full tax benefits
- Many will attempt to structure their MTR activities to meet IRS “active participation” standards
Increased incentive to purchase MTR-suitable properties (e.g., for travel nurses, remote workers)
Potential effects:
- Growth in supply of furnished mid-term housing
- More competition for properties suitable for flexible leasing
- Rising prices in urban or job-centric areas
Possible Downsides or Risks
- Influx of investors may drive up housing prices in certain markets
- Cities might respond with stricter STR or MTR regulations
- The tax incentives themselves could be politically volatile and subject to repeal or amendment
Overall, this bill is likely to attract more real estate investment into vacation rentals aka Short Term Rentals and Mid-Term Rentals (MTR) as it is providing some great tax benefits for investors..
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