Q4 Planning for Short-term Rentals: Maximize Profits and Ace Tax Planning

Working ON your short-term rental business not just in it is a Boss-move you need to make

October is here! You know what that means: Quarter 4—the final, critical stretch for your short-term rental (STR) business. This is your last chance to strategically "work on your business" for the year, ensuring you maximize your profits, nail your compliance, and, most importantly, lock in those valuable STR depreciation and tax advantages.

This updated post will cover:

Why "working on your business" is crucial for STR owners.
A quick 3-point check-in on your financials, maintenance, and reviews.
The essential tax planning moves for Q4, including a critical 2025 update on Bonus Depreciation.
Your clear, actionable Quarter 4 Action Plan.

What Does 'Working ON Your Business' Even Mean in 2025?

Let's be real: you got into the short-term rental game for the return on investment (ROI), the cash flow, or maybe even the lifestyle. You likely didn't dream of becoming a tax-law expert or a master accountant. Yet, these are the strategic functions that separate a hobby from a high-performing business.

"Working on your business" means stepping out of the day-to-day operations—the cleaning, the guest messaging, the small repairs—and becoming the strategic mastermind of your growing empire. October is the ideal time to make those strategic moves.

Where Are You Now? A Quick Check

Before you make any big Q4 moves, you need an accurate map of where you stand.

Financials: The True North

How's your profit and loss statement looking? Are your revenues and expenses logged and categorized? Don't let a "shoebox full of receipts" derail your year-end. Commit 10 minutes a day to clear up that backlog. Getting a better grip on your finances now is the only way you can effectively plan for tax-advantaged purchases and deductions.

Customer Feedback: Maintaining Quality

Have you checked your recent reviews and compared yourself to the competition? A quick check on feedback can reveal easy, inexpensive changes that lead to premium pricing and better occupancy. You can't optimize your revenue if you don't keep your thumb on the pulse.

Maintenance: Prepping for Winter

Have you scheduled a seasonal check-up for your property? Whether you're in a snowy climate or a mild beach town, October is the time to schedule those essential winterization and maintenance tasks. Not only does this protect your asset, but a well-timed repair or replacement can tie into your year-end tax deductions.

Let's Talk Strategic Tax Planning (The Wealthy Investor's Secret)

Many successful investors know that the massive wealth-building power of real estate lies less in the monthly rent and more in the tax benefits. You need to take full advantage of these—especially the power of depreciation.

Disclaimer (Read This!): I am an STR business coach, not a tax advisor, planner, or CPA. I am not qualified to give you tax or financial advice. The information below is for informational purposes only. You must consult with your qualified tax professional for advice specific to your business and situation. If you’re looking to dive deep on the philosophy behind real estate tax advantages, check out Tax-Free Wealth by Tom Wheelwright, CPA.

The Critical 2025 Update: Bonus Depreciation is Back to 100%!

This is the big news! Bonus Depreciation allows you to accelerate the write-off of certain eligible property assets—a huge win for cash flow.

For assets placed in service in 2023, Bonus Depreciation was 80%.
It was set to dropped to 60% for assets placed in service in 2024.
It was projected to be 40% in 2025 (and was for the first 19 days)
MAJOR UPDATE: Due to recent legislation, Bonus Depreciation has been restored to 100% for assets placed in service after January 19, 2025.

If you are planning significant capital expenditures or a full cost segregation study for a new purchase, this change is a massive factor in your Q4 planning with your CPA! Buying or selling decisions as well as capital investments impact your specific tax situation - tax implications should be a key consideration.

Other Key Tax Deductions to Maximize

Home Office: If you have a dedicated, exclusive space for managing your STR business, you may be able to claim a deduction.
Maintenance and Repairs: Any upkeep done on the property is typically written off. Keep those receipts organized!
Travel Costs: Don't forget to log your miles or expenses for all business-related trips to and from your property. Pro-tip: Take a photo of your odometer Jan 1 of each year - set a cal reminder!
Payroll: Did you hire your kids to help with cleaning, staging, or social media? Make sure you have the proper documentation and payment structure to qualify for this deduction (and teach your kids great habits!).
Accounting Method: Now is the time to confirm with your accountant if the cash or accrual accounting method makes the most sense for your business and its effect on your taxable income.

Your Quarter 4 Action Plan

1. Book an Appointment with Your Accountant—Now.

This is your most important move. Don't wait until December 30th. Your CPA can only provide strategic guidance before the year ends. Update your books first so they can accurately analyze your position and advise on any last-minute moves, like timing capital expenditures.

2. Review Your Business Structure

Are you a sole proprietor, an LLC, or another entity? Your structure affects your liability, your self-employment taxes, and your filing deadlines. For instance, did you know business taxes for a partnership (Form 1065) are often due before personal taxes? Review your structure and deadlines with your CPA.

3. Time Your Capital Expenditures

Need new appliances, furniture, or a hot tub? Capital Expenditures are big-ticket items that can be depreciated. Discuss with your CPA whether to place them in service before the end of the year to take advantage of the 2024 rules (60% Bonus Depreciation) or wait until after January 19, 2025, to potentially capture the 100% bonus depreciation.

4. Optimize Your Rates and Data

Your software is a tool, not a brain.

Review and Update Rates: October kicks off the holiday booking season. Look for opportunities to charge premium pricing for major holidays or events, even in traditionally "off-peak" markets.
Track Your Market: I track the total supply of rentals and competition quarterly. Are new units coming online? Are your competitors offering deep discounts? Stay informed to make smart pricing moves.

Your Quick Q&A: Tax and Depreciation FAQs

We know that Q4 tax planning can bring up some tricky questions, especially around the powerhouse tax deduction: Depreciation. Here are answers to three common questions we hear from short-term rental (STR) owners:

Q1: I've owned my STR property for five years. Is it too late for me to benefit from Bonus Depreciation or a Cost Segregation Study?

A: Absolutely not! This is a major misconception.

While the initial in-service date of the property itself might be years ago, the benefit of depreciation (and therefore accelerated depreciation tools like Bonus Depreciation) applies to eligible assets placed in service.

Property Depreciation: This benefit starts when the property is first rented out, but only applies to the structure (typically over 27.5 years).
Asset Depreciation: This is where the magic happens! Any new capital improvements you make now (like a new roof, upgraded HVAC, or new furniture) have a brand-new "in-service date." Even better, you can hire a professional to conduct a Cost Segregation Study on your older property. This study reclassifies parts of the original purchase (like landscaping, parking areas, and certain interior components) as shorter-life assets (5, 7, or 15 years), allowing you to "catch-up" on missed depreciation deductions now.

The takeaway: A property you've owned for years is still a goldmine for current and future depreciation deductions!

**Q2: Does the new 100% Bonus Depreciation rule for 2025 apply to all assets I buy for my STR?**

A: Not necessarily, but it applies to many major purchases.

Bonus Depreciation is generally available for assets with a recovery period of 20 years or less, which includes items commonly found in your short-term rental:

Furniture, appliances, and smaller equipment (5- and 7-year property).
Land improvements (fences, driveways, etc.).
Qualified Improvement Property (QIP), which covers many interior, non-structural improvements.

It does not apply to the main structure itself (the 27.5-year property), land, or certain inventory. Always talk to your CPA to confirm the specific recovery period and eligibility of your planned purchase, especially if you are debating placing the asset in service in late 2024 (60% Bonus) versus early 2025 (100% Bonus).

Q3: What's the single most important document I need to have ready for my CPA for our Q4 planning meeting?

A: Your finalized Profit & Loss (P&L) statement through September 30th.

Your accountant can't give you strategic advice ("Should you buy a new hot tub in December?" or "Should you delay a major repair until January?") without a clear, accurate, and categorized picture of your business's year-to-date performance. Having your P&L and a summary of all your capital expenditures ready will maximize the value of your meeting, allowing you to move past basic bookkeeping and into high-level tax optimization strategies.

Final Thoughts: Invest in Planning

Don't let Quarter 4 catch you off guard. The small amount of time you spend now working on your short-term rental business—focusing on tax strategy, finance review, and market optimization—will yield a massive return. By mastering STR depreciation and planning ahead for the new 100% Bonus Depreciation rules, you're not just prepping for this tax season; you're setting the stage for an exponentially more profitable 2026.

Your future mogul self will thank you. 🌟

Need help making sense of your data or creating a customized Q4 action plan for your STR? I offer 20-minute calls with no strings attached to help you tackle your trickiest questions. A good CEO knows when to bring in expert help! Book a time HERE.

Don't Miss -

Hiring Your Children in Your Business: 2025 Tax Benefits & Guidelines

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Bonus Depreciation, Short-term Rental Loop Hole, and Wealth Building through Tax Strategies

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Hey Boss! I'm Kate, owner/founder of The CEO Host. If you are interested in taking a leap into short-term rentals - or have some questions about your existing business, my goal - passion, and career, is to help YOU succeed. I've coached hundreds of folks getting started or looking to optimize, analyzed more deals (and duds) than I could count, completed thousands of hours of education and training, attended conferences... So don't be shy. A good CEO knows to bring in expert help - and that's what I'm here for! Lets HOP ON A CALL and chat!

Categories: : STR finances taxes and risk management

P.S. Got questions? Need more guidance? Feel free to reach out. We're in this together!