Permanent bonus depreciation lures high earners into vacation-rental bets

Permanent 100% bonus depreciation lets high-earning investors offset much of a vacation rental’s cost against current income if they actively run the business and meet the material-participation rule. This has spurred a surge in pricey vacation-home purchases as a wealth-building strategy, with upfront tax savings touted as a big upside. However, depreciation is a deferral (not forgiveness), benefits depend on strong cash flow and market viability, and gains can be recaptured on sale or via exchanges; rigorous record-keeping and audit risk accompany the strategy.