Short-Term Rental Market Update: Q4 2025

Q4 2025 in short-term rentals. 2025 was the year the acquisition date on your closing statement started to matter enormously, and october through december has its own shape on top of that. Here is what moved, what it meant for an owner, and what the quarter was actually for.

What was happening across the market

2025 was the year the tax calculation split in two. Property acquired on or before 19 January stayed on the old phase-down at 40%. Property acquired after that date, once OBBBA passed in July, qualified for 100% bonus depreciation again. The same property, the same buyer, a different acquisition date, and a materially different first-year deduction.

Supply growth had slowed enough that well-selected markets were producing consistent results again, and the gap between markets widened as regulation diverged.

Financing costs had settled into a range buyers had learned to underwrite around rather than wait out.

The seasonal shape of Q4

Q4 splits. October is a genuine peak in the mountain markets on leaf season and in the Hill Country on the harvest window. November is thin nearly everywhere. The winter holidays are a compression period in cabin and ski markets, and the desert and snowbird markets begin their climb.

Reading a quarter in isolation is how owners talk themselves into bad decisions. A thin quarter in a seasonal market is not underperformance, it is the shape of the asset, and it should have been in the model at purchase.

What Q4 is actually for

Q4 is the planning quarter. The tax year is closing, next year's calendar is opening, and the decisions made in December determine which tax year a purchase lands in and whether the property is placed in service in time.

For anyone buying after 19 January 2025, the restoration of 100% bonus depreciation returned the strategy to full strength for the first time since 2022.

The Q4 checklist

1. Confirm the running average period of customer use for the year and manage the remaining bookings accordingly.
2. If a purchase is intended for this tax year, confirm it will be placed in service, meaning furnished, permitted and available for booking, before 31 December.
3. Do not rush a December purchase to capture a deduction. A bad property bought for a tax reason is a bad property for far longer than a tax year.
4. Schedule the trough for maintenance, deep cleaning and furnishing refresh, because that work has to happen somewhere and January is cheaper than July.
5. Rebuild the reserve if the year drew it down.

The risk carried into Q4 2025

The risk in 2025 was assuming the restored bonus depreciation applied to a property already owned or already under contract before the cut-off. Acquisition date, not placed-in-service date alone, governs which schedule applies.

2025 rewarded buyers who confirmed with their CPA which schedule their specific acquisition fell under before modelling a deduction.

The consistent thread across every quarter on this site is that the environment changes and the discipline does not. Twelve individual monthly revenue figures, a complete expense stack including reserves, and a stress test at 75% of projection that still covers debt service.

What to carry into the next quarter

October through December is one quarter of a business that is measured annually. The number that matters is not what this quarter produced but whether the year is tracking to the model, and whether the reserve is intact.

If the year is behind the model, the useful question is which input was wrong: revenue, cost, or the assumption about the market. Each has a different fix, and discounting is the right answer to only one of them.

If the year is ahead, the useful question is whether that is the property or the market. A property outperforming a flat market is a property to buy more of. A property matching a rising market has told you nothing yet.

Frequently asked questions