Using Interior Design to Unlock Tax Deductions: A Renovation Guide for Property Investors in 2025
For maybe the first time ever, spending = savings… at least when it comes to investment and rental properties.
The recently updated bonus depreciation tax law is a game-changer for hospitality projects and investment properties. If you’re considering a rental or income property, now is the time. You can fully deduct 100% of qualifying improvements made after January 19, 2025, provided they meet IRS eligibility criteria.
But the real advantage of bonus depreciation is the ability to claim larger deductions right away, rather than spreading them over many years, significantly lowering your taxable income in the year the improvements are made.
So what does this mean for you? That rental repair you’ve been putting off, the addition you’re dragging your feet on, or the beach house rental you’ve been eyeing? Renovate & rent for top dollar to qualify for the full deduction.
What do interior designers have to do with it?
We turn the IRS and ROI into your BFFs.
Smart design choices can align with IRS guidelines for deductions, allowing your capital improvements to be beautiful, functional, and financially strategic.
According to PWD Studio Founder, Patti Wilbourne, an experienced interior designer can help with hospitality or rental properties by:
- Optimizing space layout and flow for maximum appeal
- Selecting finishes and furnishings that meet depreciation criteria
- Ensuring fast turnaround and cost-efficient sourcing
"Interior Designers that specialize in commercial projects are well-versed in specifying hospitality-friendly finishes, fixtures, and furnishings that are visually pleasing and withstand commercial use. Now, we can also assist you with selecting depreciation-eligible updates and grades under the IRS’s 20-year lifespan rule", says Patti Wilbourne.
What Interiors Qualify?
Strategic improvements with a useful life of 20 years or less may qualify. This includes:
- Rugs and carpets
- Furniture and case goods
- Appliances and lighting
- Millwork and modular cabinetry
- Decorative items used commercially
Why It Pays to Invest in Design
It’s no secret that well-designed spaces book better. Data shows that rental property owners who invest $100,000 or more in strategic renovations can see revenue increases of 20–22%, on average, through higher nightly rates and occupancy on rental platforms. source
In one Miami condo renovation case study, a $32,000 design upgrade resulted in an astonishing 85% ROI through increased bookings and profitability. source
Interior Designers are Team Players
Patti Wilbourne emphasizes, "Regardless of project, our number one goal is always to create a favorable outcome for a client. Whether that is improving the way they live and work in their primary residence, or enhancing livability and memorable experiences in a hospitality environment".
Collaborate with your team of financial advisors, designers, and contractors to identify and classify improvements correctly, meet IRS eligibility, and ensure no deduction is overlooked. As your design experts, we can prioritize interior investment opportunities that align with deductions. *Always consult your financial advisor for personalized advice on thresholds, eligibility, and potential risks.
How It Works
- Partner with an interior designer to strategically identify upgrades, replacements, and improvements that will enhance ROI and livability.
- Prioritize qualifying purchases like beds, lighting, appliances, and even custom millwork.
- Put plans in motion now to ensure delivery and installation in time for Q1/Q2 2026.
- Understand the key difference between repairs and renovations—the right classification can maximize your tax benefit.
5. Send me an email about the income property you are considering purchasing, or the updates you’re thinking of making to your existing income property.
6. We’ll set up a time to discuss PWD Studio’s approach to designing investment properties, the scope of work, timeline, and how to prioritize your spending for maximum benefit.
