Having a hot tub at your rental property can be a great way to attract…
Owning rental property provides you with a steady stream of income while your investment grows in value. While it would be easy to simply do the minimum maintenance or stick with basic improvements, we’re sharing 4 reasons to install a hot tub on your rental property and boost your short and long-term profits. But first, you might be wondering, can you put a hot tub in a rental property? The answer is yes! Not only can you install a hot tub, but it can be a game-changer for attracting guests and increasing your property’s appeal.
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Write Off Your Hot Tub on Your Taxes
Adding improvements to your rental property can be used as a tax deduction. However, you can’t deduct the cost of the hot tub all at once. See, the IRS looks at rental property deductions in one of two ways:
- Repairs: one-time fixes that keep the property in its current condition and don’t add much, if any value. This would include things like repairing a pipe, patching a roof, or installing a new sink
- Improvements: any update or upgrade that adds value to the property is a capital expense. This means the deduction must be capitalized and depreciated over multiple years, claiming a small amount of the improvement expenses in the current year and subsequent years. This includes kitchen renovations, adding a bathroom, or installing a hot tub
Hot tubs are considered capital improvements, making them eligible for a hot tub tax write off through depreciation. Unlike repairs, which are deducted in the year they occur, improvements like a hot tub provide tax savings over several years. Additionally, operating expenses such as maintenance, chemicals, and electricity for your hot tub can be deducted annually, offering immediate tax benefits to offset the costs of ownership.
Understand Hot Tub Depreciation Life for Rental Properties
When considering a hot tub for rental property, understanding the hot tub depreciation life IRS guidelines is crucial for maximizing your tax benefits. Contrary to earlier assumptions that hot tubs depreciate over 27.5 years (the period for residential rental buildings), the IRS classifies hot tubs as personal property used in rental activities, typically with a 5-year depreciation life under the Modified Accelerated Cost Recovery System (MACRS). This shorter period allows you to recover the cost faster, enhancing your investment’s financial appeal.
To calculate depreciation, you’ll use the 200% declining balance method with a half-year convention, as outlined in IRS Publication 946. For example, a $10,000 hot tub placed in service in 2025 would follow this depreciation schedule:
| Year | Depreciation Rate | Annual Depreciation |
|---|---|---|
| 1 | 20% | $2,000 |
| 2 | 32% | $3,200 |
| 3 | 19.2% | $1,920 |
| 4 | 11.52% | $1,152 |
| 5 | 11.52% | $1,152 |
| 6 | 5.76% | $576 |
| Total | – | $10,000 |
Keeping accurate records and creating a depreciation schedule ensures your hot tub depreciation aligns with IRS requirements. You’ll report this on Form 4562 and carry it to Schedule E for your rental property. Additionally, you may explore options like Section 179 expensing for immediate deductions, though passive activity loss rules may apply. Consulting a tax professional is recommended to navigate these complexities and optimize your hot tub tax deduction.
Increase Your Monthly Rent
By installing a hot tub, you can charge more in rent because you’ll have a sought-after amenity. While there isn’t a hard rule about how much you could increase rent, consider competing properties and how much more desirable adding a hot tub makes your property. If you have a single-family home, a hot tub adds significantly more appeal, whereas if you have a multi-family dwelling, the rent increase per unit would be divided by the units.
Stand Out from Competitors and Get Better Tenants
In addition to increasing your rent, you can also appeal to better-quality tenants who can afford a more luxurious property. This helps to keep tenants in your property longer because there will be less desire to move. Having luxurious amenities like a hot tub will also increase your turnover so there will be less time in between tenants.
Increase Your Property Value
In addition to short-term gains such as tax deductions and rent increases, installing a hot tub is also good for your long-term profitability by adding to your property’s value. This is especially true if you create a backyard oasis with attractive landscaping, lighting, and install a deck area to create an exterior living space around the hot tub.
Hot Tub Rules and Considerations for Airbnb Rentals
If you’re considering a hot tub for an Airbnb or other short-term rental, establishing hot tub rules for Airbnb guests is essential to protect both your investment and your guests’ experience. Hot tubs are a top filter on platforms like Airbnb, making them a powerful draw for bookings, but they require careful management. Provide clear instructions on usage, such as maximum occupancy, temperature settings, and sanitizer requirements, to prevent damage and ensure safety.
Additionally, consider the operational costs and how quickly hot tubs depreciate. While a hot tub’s value decreases over time, its appeal to guests remains strong, often justifying the investment. Regular maintenance, like frequent water testing and sanitizing, is critical for short-term rentals due to higher guest turnover. Including these costs in your pricing strategy ensures profitability while maintaining a luxurious guest experience.
Be Sure to Maintain Your Rental Property Hot Tub
If you do decide to purchase a hot tub for your rental property, it is essential that you maintain it properly. A dirty, smelly hot tub will leave your guests dissatisfied and running for the exit. Rental property hot tub cleaning varies slightly from how you would maintain a purely residential family hot tub. You may need to adjust your dosages for sanitizers or test and treat more frequently. Talking to your local hot tub dealer can help you better grasp your water maintenance routine.
Find the Best Tub for Your Rental Property
Picking the right hot tub for your rental property is different than picking a hot tub solely for your family. You may consider picking an oversized hot tub so you can fit all of your guests comfortably. Specialty features should also be considered and you might look into party hot tubs with features like speakers, lights and ice coolers.
Purchase a Hot Tub in Raleigh Today
If you’re ready to install a hot tub on your vacation or rental property, Epic Hot Tubs can help. Our Everest Spas include a free cover as well as free delivery and are ready for installation. To learn more, schedule a free consultation at 888-884-3742 or fill out the form below to get started.
About The Author:
Manny Brambila
Manny Brambila - Pool & Spa Expert
Manny has been in the Pool & Spa industry for over 15 years and is considered a pool, swim spa, & hot tub expert. He has been a Certified Pool & Spa Operator (CPO) since 2009 and worked 15 years in aquatic training and development for the largest pool chemical and customer care company. He also has been an outside consultant for the Pool and Spa industry in Chicago, New York and Los Angeles since 2018.
