Hi everyone! It’s me, Bette Hochberger, CPA, CGMA. The One Big Beautiful Bill Act (OBBBA) just shook up the tax landscape with a wave of new changes—especially for real estate investors, business owners, and high-income taxpayers. If you’re serious about maximizing deductions and minimizing your tax bill in 2024 and 2025, now’s the time to rethink your strategy.

What Changed—and What Didn’t

One of the biggest wins in OBBBA is the return of 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This lets you fully write off eligible business assets in the first year, boosting cash flow and reducing taxable income.

The short-term rental (STR) loophole is still alive—but now under greater scrutiny. It’s still possible to avoid passive activity loss limitations if you materially participate in your STR business. But the IRS is watching more closely, and documentation matters.

Other key provisions remain intact, like cost segregation, real estate professional status (REPS), and aggregation elections—but how and when you apply them is more important than ever.

New Strategies to Consider

The updated rules create fresh opportunities for advanced tax planning. Here are a few strategies worth revisiting:

  • Bonus Depreciation: Now permanent, it’s a powerful tool to accelerate deductions. Use it for new or used assets that qualify—especially large real estate investments.
  • STR Material Participation: If you own short-term rentals, document your hours and tasks. This can allow you to deduct losses against non-passive income.
  • Cost Segregation Studies: These are even more valuable under the new rules. Group assets strategically to front-load deductions.
  • Aggregation: If you own multiple rental properties, combining them can help meet REPS requirements and boost loss deductions.

Audit Risk and Red Flags

With new rules come new risks. The IRS has flagged areas like REPS and STR use for increased enforcement. Red flags include:

  • Lack of time logs or inconsistent material participation records
  • Aggressive cost segregation studies without support
  • Claiming REPS without aggregation or with minimal rental activity

Now is not the time to cut corners—have solid documentation and professional support.

Take Action Now!

Waiting until tax season is too late. These strategies need to be set up in advance. Whether it’s adjusting your depreciation plan, reevaluating your property groupings, or updating your STR participation, these moves can dramatically affect your 2024 and 2025 tax outcome.

Need help navigating the changes? Schedule a meeting now and make sure you’re ahead—not behind—on the new rules. I also have a upcoming webinar on the OBBBA tax changes, get more info and register here!