Trump Floats Personal Residence Depreciation—A Big Move That Can Unlock Savings For Investors

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Depreciation has been the gift that keeps on giving for President Donald Trump and his many real estate investments. Now, it appears that everyday American homeowners could enjoy some of the same.

As BiggerPockets has reported, the president has been on a tear recently, offering a deluge of ideas to help the affordability crisis in the lead-up to the 2026 midterm elections. Among his aerosol-spray approach to brainstorming money-saving strategies for homeowners, he’s turned to one that has served him well in his own business. Often called a “phantom tax,” depreciation is essentially a tax on the wear and tear of the property, calculated over 27.5 years of ownership.

Even if the property is maintained in immaculate condition, you can still claim depreciation. The tax break is currently limited to investment properties. However, by floating the notion that owner-occupied homeowners could also benefit from the break, the president could potentially save homeowners a fortune in taxes. 

Considering many real estate investors also own personal residences, it could offer a double whammy of savings.

What the President Actually Said About Home Depreciation

As President Trump is often prone to do, his words on depreciation fell into the “musing out loud” category rather than any specific proposal, draft legislation, or Treasury regulation. 

The president was speaking at the World Economic Forum in Davos, Switzerland, last month. His exact words, according to CNBC and other outlets, were, “The crazy thing is a person can’t get depreciation on a house, but when a corporation buys it, they get depreciation.” He added, “OK, here’s something we’re gonna have to think about.”

How Personal Home Depreciation Would Work in Practical Terms

One of the main advantages of owning a rental property is the depreciation it generates, so that even if a property is breakeven on cash flow, the depreciation could still make it worthwhile to hold on to if rents and equity are expected to increase.

Depreciation on personal property raises some interesting questions—mainly, would it be calculated under the same guidelines as investment properties? Under current rules, depreciation is calculated on the building’s cost basis (purchase price plus certain improvements, excluding land).

Ultimately, it would be up to Congress to apply the same recapture rules. Questions about whether deductions would phase out at certain income levels need to be ironed out.

There is no question that depreciation on a personal residence would be a significant benefit to homeowners, offsetting the taxes they owe. For W-2 earners, it would mean getting a bigger refund from the IRS, and for real estate investors, it would mean more deductions they could throw into the kitty. 

In short, the fewer taxes the public has to pay, the more money they have to spend and/or reinvest.

The Depreciation Headache: House Hacking and Short-Term Rentals

If you rent part of your home, the income-producing area (measured in square feet as a percentage of your home) can be depreciated. For example, if you own a four-unit home and all units are the same size, and you live in one, assuming the other three units are rented, 75% of your property qualifies for depreciation. The actual equation is: 

Adjusted basis of the property x rental use percentage = Depreciable value of rental portion.

Using the example from REIhub, if a duplex is rented and the owner lives in one unit (50%), and the property’s adjusted basis is $350,000, the property’s depreciable value is $175,000.

Depreciable value of rental portion ÷ 27.5 = Annual depreciation for your house hack

For the duplex example, the annual depreciation amount is $6,363.63.

However, issues arise in calculating depreciation when individual rooms are rented, and certain living spaces are shared, making the calculations more difficult. Short-term rental sites such as Airbnb do not calculate your depreciation for you. That headache should be left to an experienced accountant specializing in short-term rentals.

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How Bonus Depreciation Fits Into the Equation

Bonus or “accelerated” depreciation has been one of the most lauded tax breaks for real estate investors in recent years, and the president has been a champion of it. 

Bonus depreciation is a federal tax incentive that allows businesses to deduct a large percentage of the equipment they purchase for their business in the first year of use, rather than over a long period. For real estate investors, this includes all appliances and materials not included in the property’s construction (stoves, refrigerators, cabinets, etc.). The good news this tax year (2025) is that 100% bonus depreciation is back, meaning investors can depreciate their equipment in one year rather than spreading it out over several years.

It’s unlikely bonus depreciation would play a role in the personal home depreciation scenario, unless a part of that home is used for a business—such as a short- or long-term rental—in which case, it could offer another source of tax savings for homeowners.

Final Thoughts

The slew of recent housing ideas by the president, broadly geared toward increasing cash flow for everyday Americans, has arrived like a flash flood in a dry valley creek for one reason: politics, namely the 2026 midterm elections. 

Whether suggestions such as the 50-year mortgage, Fannie Mae and Freddie Mac buying mortgage-backed securities, and a ban on large investors buying single-family homes will have much effect on moving the affordability needle is questionable. 

However, two of Trump’s most recent topics for discussion—increasing capital gains exclusions on single-family homes and allowing homeowners to claim depreciation—will have tangible results. Whether talk turns to reality remains to be seen.