Florida Short-Term Rentals Attract Out-of-State Investors Driven by Tax Incentives

Written by:

Rudi Davis

Date:

22 Feb 2026

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The restoration of 100% bonus depreciation through 2029 has triggered a surge of out-of-state investors buying Florida short-term rentals without visiting them. This trend is changing buyer profiles and motivations in Gulf Coast markets.

The Invisible Buyer Wave

Florida’s short-term rental market is attracting investors who buy properties without visiting them. These buyers are motivated more by tax incentives than by local market conditions. Rich Clover, of Savvy Realty, a Bradenton-based realtor specializing in short-term rentals, says this represents a major change in buyer behavior.

“Last year I had 20 buyers, we did 20 transactions, and 19 of them were out of state,” Clover says. “Eighteen of them never visited before closing. They relied entirely on me and technology to view the home.”

This remote buying trend is being driven by federal legislation that restored 100% bonus depreciation through 2029. Clover says this provision has become a strong incentive for high-earning W2 employees looking to offset significant tax bills.

How the Tax Mechanics Work

The tax benefit comes from how short-term rentals are classified for depreciation. Unlike traditional residential properties, short-term rentals can be treated as commercial assets for tax purposes, allowing investors who materially participate in operations to accelerate depreciation.

Clover explains that a cost segregation analysis involves a CPA or engineer dividing a property into five-, ten-, and fifteen-year depreciation categories. These shorter-term assets, which would normally be included in a 27-year residential schedule, can instead be depreciated in the first year under the current rules.

For example, on a $1 million property with $100,000 allocated to land, about $540,000 in depreciation can be claimed in the first year. This provides a large tax offset for high-income earners.

The W2 Employee Investor Profile

This tax structure attracts a specific type of buyer. Clover says most are high earners with substantial tax obligations. In many cases, their spouse does not work, allowing the household to meet the material participation requirement needed to qualify for the accelerated deduction.

Material participation requires the investor or their spouse to be actively involved in managing the property. Often, the non-working spouse fulfills this role, allowing the household to apply tax benefits against the working spouse’s W2 income.

Clover reports that while most buyers are individuals, he has also worked with a few institutional investors targeting short-term rentals for the same tax advantages.

This activity stands in contrast to the slower pace seen in the broader residential market. “On the traditional real estate side, last year was a really slow year for a lot of people,” Clover says. “Wasn’t for us. We had a lot of buyers and a lot of activity.”

Market Sustainability Questions

The flood of tax-motivated buyers raises questions about the long-term stability of Florida’s short-term rental market. The current 100% bonus depreciation is set to begin phasing down in 2030, which could sharply reduce the appeal of these investments for buyers focused on tax savings.

Because buyers rely on virtual tours and third-party analysis, tax optimization may be more important to them than factors like local guest demand and cash flow. If tax policy changes or market conditions shift, some of these properties could struggle to deliver returns based on fundamentals alone.

The Clover Solution

Clover’s firm, Savvy STR Agents, has tailored its services to this new class of investor by combining real estate sales with operational expertise in short-term rental management. Before earning his real estate license in 2025, Clover managed about 15 short-term rental properties himself. He now provides underwriting analysis and operational guidance for buyers who may never see their investments in person.

The firm is part of a national team that Clover says “exclusively works with short-term rental investors across the country.” This approach reflects a new brokerage model serving tax-focused, remote investors, provided bonus depreciation remains available.

Looking Ahead

It is uncertain whether this surge of tax-driven investment will continue after 2029. If bonus depreciation phases out as scheduled, many of the buyers fueling today’s demand may reevaluate their strategies or exit the market altogether. In the meantime, Gulf Coast markets are seeing record activity from out-of-state investors whose primary motivation is tax reduction, not local rental performance.

As the phase-down date approaches, agents and investors must consider whether current buying patterns are sustainable or if they are creating properties that could be harder to sell or manage profitably once the tax advantage ends. Florida’s short-term rental market, for now, is being reshaped by policy as much as by real estate fundamentals.