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May 22, 2025
Miami isn’t just beaches, mojitos, and neon-lit nights — it’s one of the hottest short-term rental markets in the country. If you’re lucky (or smart) enough to own a property here, you probably already know how lucrative it can be.
But here’s the thing most new owners miss: depreciation. And not just any kind — short-term rental depreciation in Miami, which, as it turns out, plays by its own set of rules.
If that sounds complicated, don’t sweat it. It’s one of the biggest financial advantages you can have — if you understand how it works. Let's break it down, Miami-style.
Okay, real talk: depreciation sounds boring. Like something you hear about once during tax season and then promptly forget.
But the truth is, it's a hidden weapon for real estate owners.
Depreciation is just the IRS’s way of recognizing that stuff wears out over time — buildings, furniture, appliances — they all get older, less shiny, and less valuable. So the IRS lets you deduct a little chunk of that “wear and tear” from your taxes every year.
It’s kinda like how your brand-new car loses value the second you drive it off the lot — except, with real estate, you get paid for it in tax savings. Wild, right?
In the world of long-term rentals, depreciation is usually pretty straightforward.
Residential rental properties are depreciated over 27.5 years. That means each year, you can deduct about 1/27.5th of the building’s value from your taxable income.
Quick example:
Pretty neat, huh? But hold onto your sunhat, because Miami short-term rentals don’t always follow the same playbook.
Now, Miami’s got its own vibe — and that spills right into real estate depreciation, too.
Here’s why short-term rental owners in Miami need to think a little differently:
First off, most short-term rentals here aren’t your basic one-bedroom crash pads. They’re luxurious waterfront condos, art deco bungalows, or sprawling party houses with rooftop decks. That means high-value properties and higher stakes when it comes to taxes.
Secondly, many short-term rentals are mixed-use. Maybe you rent it out most of the year, but stay there a couple of weeks yourself during Art Basel or Ultra. When you use your rental personally, it messes with how much you can depreciate — and how you calculate it.
Finally, Miami's relentless tourist demand can push your rental into business property territory rather than just a passive rental. That opens the door for some juicy tax moves, like bonus depreciation — but only if you’re doing it right.
The IRS has strict rules when it comes to properties you use yourself. If you personally use the place for more than 14 days a year (or more than 10% of the days it's rented at fair market value), it’s no longer considered 100% business property.
Translation? You could lose some sweet tax perks. But if you stay under those limits and your property is rented frequently, you're golden.
You may even qualify for bonus depreciation, which lets you deduct a HUGE portion of certain property costs upfront instead of waiting 27.5 years.
Think things like:
Timing is everything here. Getting the math wrong could mean leaving thousands on the table.
Alright, you’re probably thinking, "Sounds great, but how do I actually do this?"
Let’s walk through it real quick:
Simple? Kind of. But if you’re mixing short stays with premium upgrades, calculating short-term rental depreciation in Miami isn’t always plug-and-play.
That’s why it helps to work with a local tax professional who’s been around the block (and the beach)—especially one familiar with vacation rental violation remediation and the ins and outs of local compliance.
Even seasoned investors trip up when it comes to depreciation. Some common blunders?
Want to avoid these mistakes? Keep good records—like, obsessively good. Receipts, invoices, and property management statements are your armor against future audits.
Here’s where things get a little spicy. Depreciation is fantastic while you’re raking in the tax savings each year. But when you sell? The IRS wants some of that money back — it’s called depreciation recapture.
Basically, the government "recaptures" the depreciation deductions you took and taxes them at a special 25% rate when you sell. Ouch.
Does that mean depreciation isn’t worth it? Absolutely not. It's still a massive benefit. But just know it’s a bit like a tab at the bar — eventually, you’ve gotta settle up.
Smart owners plan ahead by considering 1031 exchanges or holding long enough to balance out the tax hit with capital gains exclusions.
Bottom line: don't let the fear of recapture stop you from claiming depreciation you’re entitled to.
Short-term rentals in Miami can feel like a dream — sunshine, cash flow, tax breaks. But managing short-term rental depreciation in Miami takes a little more finesse than your average investment.
Getting it wrong could mean leaving tens of thousands in tax savings behind. Getting it right? It’s like finding out that a beachfront condo came with a hidden stash of gold doubloons.
You shouldn’t have to tackle all of this alone. Vacation Rental License LLC specializes in helping Miami property owners navigate the tricky world of short-term rental licensing, compliance, and — yes — tax nuances like depreciation.
Want to make sure you're maximizing every advantage (and minimizing every risk)? Reach out today.
We'll help you keep more of your hard-earned rental income — and maybe even make taxes a little less boring along the way.
