The Tax Advantages of Buying a Short-Term Rental in Austin Under the “Big Beautiful Bill”

If you are considering purchasing a short-term rental in Austin, Texas, the current tax environment may be one of the most favorable in years.

Recent federal legislation commonly referred to as the “Big Beautiful Bill” has strengthened several provisions that directly benefit real estate investors — particularly those operating short-term rentals as active businesses. When combined with Texas’ already tax-friendly structure, the opportunity becomes even more compelling.

Below is a breakdown of how these incentives work — and how they may apply to Austin investment properties such as:

• 108 Comal – Property Infomation

• 1914 E 8th – Property Information

• The Parker Lane Collection – Property Information

1. 100% Bonus Depreciation for Short-Term Rentals

One of the most powerful components of the new legislation is the return of 100% bonus depreciation.

What This Means for STR Buyers:

When you purchase a qualifying short-term rental and place it in service, you may be able to:

• Accelerate depreciation on furnishings, appliances, and improvements

• Utilize a cost segregation study to front-load deductions

• Potentially offset active income depending on participation level

For high-income earners, this can create significant first-year tax deductions — dramatically improving early cash flow and overall ROI.

Properties like 108 Comal and 1914 E 8th, already positioned for income production, can be particularly attractive candidates for depreciation strategies.

2. 20% Qualified Business Income (QBI) Deduction

The legislation also maintains the 20% Qualified Business Income deduction for eligible pass-through entities.

If structured properly (LLC, S-Corp, etc.) and operated as an active short-term rental business, investors may deduct up to 20% of qualified net income.

For investors scaling portfolios — including multi-property opportunities like The Parker Lane Collection — this deduction enhances after-tax yield while maintaining long-term appreciation potential.

3. Increased SALT Deduction Cap

For higher-income investors, the increased State and Local Tax (SALT) deduction cap provides additional flexibility when deducting property taxes.

In markets with strong appreciation like Austin, this adjustment can meaningfully reduce federal taxable income associated with ownership.

Why Texas Is Structurally Advantageous for STR Investors

Beyond federal tax benefits, Texas provides one of the most favorable state environments in the country for real estate investors.

Key Advantages:

No State Income Tax
Rental income is not subject to state income tax — increasing net yield compared to states like California or New York.

Strong Population & Job Growth
Austin continues to attract tech, healthcare, and entrepreneurial talent — fueling consistent demand for both short-term and long-term rentals.

Business-Friendly Regulatory Climate
While short-term rental regulations vary by municipality, Texas remains broadly supportive of property rights relative to many coastal markets.

When federal tax efficiency meets state-level tax neutrality, investors retain more of their profits — improving both cash flow and compounding potential.

Austin Short-Term Rental Investment Opportunities

If you are evaluating Austin STR opportunities, consider:

108 Comal

Modern East Austin property positioned for strong rental demand.
> https://mmogavero.com/properties/108-comal-st-austin-tx

1914 E 8th

Coveted Eastside location with proven track record, delivering approximately $250k per year.
> https://mmogavero.com/properties/1914-e-8th-st-austin-tx

The Parker Lane Collection

A multi-residence compound offering scale, flexibility, and diversified income strategy.
> https://mmogavero.com/parker-lane-collection

Each presents a different risk profile and yield strategy — from boutique single-asset plays to compound-level revenue models.

Strategic Takeaway for Investors

The current landscape presents a rare alignment:

• Accelerated depreciation

• QBI income deductions

• Expanded SALT flexibility

• No Texas state income tax

• Continued Austin growth fundamentals

For investors seeking both cash flow and long-term appreciation, short-term rentals in Austin deserve serious consideration.

As always, consult your CPA or tax advisor to determine how these strategies apply to your individual situation.