Does the short-term rental loophole work for a Big Bear cabin?

It can. Big Bear bookings are mostly short weekend stays, which helps with the seven-day average. The two things that most often break it are material participation, when a local cleaner or caretaker works more hours on the cabin than the owner, and personal use, when owners use the cabin for more than the greater of 14 days or 10% of rented days.

Does California allow bonus depreciation on a cost segregation study?

No. California does not allow bonus depreciation and caps Section 179 expensing at $25,000, so on the California return reclassified components are depreciated over their regular lives. The federal first-year deduction still applies on the federal return.

Where can I find Big Bear permit and occupancy tax rules?

HostReady publishes the rules for Big Bear Lake with every rule linked to the government page it came from, and checks any specific address for free. The City of Big Bear Lake and the unincorporated county areas around the lake are separate jurisdictions, so check the address, not the town name.

Are Big Bear permit and license fees tax deductible?

License, permit and inspection fees paid to operate a rental are ordinary business expenses. Keep the receipt with the property record, because these fees are paid once a year and are easy to miss at tax time.

Big Bear STR Tax Guide: The Loophole, Cost Seg and Records

Big Bear is the classic drive-to cabin market: two to three hours from most of Southern California, busy on ski weekends and again when the lake opens up in summer. That is why investors buy here to run the short-term rental loophole and cost segregation, and why many of them use the cabin themselves too.

This guide covers the tax side of that strategy: what has to be true for it to work at a Big Bear cabin, how California treats the depreciation, and what to keep. It deliberately does not cover the local permit, occupancy-tax and ordinance rules. Those change, they differ between the city and the county, and HostReady publishes them with a link to the government page each one came from.

Local rules

Is your cabin in the City of Big Bear Lake, or in Big Bear City, Fawnskin or Sugarloaf?

It matters more than the address suggests. The city and the unincorporated San Bernardino County communities around the lake are separate jurisdictions with separate rules, and a Big Bear mailing address does not tell you which one binds your parcel.

HostReady answers that for any US address, free and without an account. It works out which government actually binds the parcel, then shows the licensing, permit, zoning and lodging-tax obligations that apply, with every rule linked to the government page it came from, and it tells you when a rule that binds your property changes.

See Big Bear Lake rules on HostReady Check a specific address →

Does the STR loophole work for a Big Bear cabin?

The strategy most buyers in Big Bear are running rests on one number first: the average length of a guest stay. When the average period of customer use is seven days or less, the property is not a "rental activity" under the passive activity rules, so if you also materially participate, its losses can offset your wages and other active income (how the STR loophole works). Above seven days, the only way out of rental-activity treatment is an average of 30 days or less combined with significant personal services, which ordinary hosting rarely provides.

Big Bear's booking pattern usually helps. Weekend ski trips and summer long weekends keep stays short. The risk runs the other way: owners from Los Angeles or Orange County who use the cabin themselves. Days you, your family or anyone paying less than a fair rent stay there are personal use, and once personal use passes the greater of 14 days or 10% of the days it is rented, the cabin is treated as a residence and its deductions are capped at its rental income. That ends the loss the whole strategy depends on, so log personal days as carefully as bookings.

The second half is material participation. Most hosts rely on one of two tests: more than 100 hours in the year and not less than any other individual, or 500 hours on their own. The comparison in the 100-hour test is person by person, so a cleaner, handyman or manager who puts in more hours than you do on that property defeats it (the 100-hour test explained).

Remote owners are the ones at risk here. If a local cleaner turns the cabin after every weekend stay, and someone else handles snow and firewood, their hours add up quickly over a winter. Log your own hours as you work them, and keep a reasonable record of theirs (how to track contractor hours against your own).

Cost segregation and bonus depreciation in California

The reason the loophole is worth pursuing is depreciation. A cost segregation study separates the furniture, fixtures, appliances and site work in a property from the building shell, and those shorter-lived components qualify for bonus depreciation. Under the One Big Beautiful Bill Act, 100% bonus depreciation is back for qualifying property acquired after January 19, 2025, so a large part of that reclassified basis can come off in the first year (what changed). The building itself is still depreciated over 27.5 or 39 years.

California is the hard case. It does not allow bonus depreciation at all, and it caps Section 179 expensing at $25,000, reduced once qualifying purchases pass $200,000. So on your California return the same components are depreciated over their regular lives. The first-year federal deduction can be large while California taxable income barely moves, and the difference comes back to you over the following years. California taxes its residents on rental income from anywhere and nonresidents on California property, so a Big Bear, Palm Springs or other California rental is on a California return either way.

Big Bear costs worth recording

Mountain cabins carry costs that lowland rentals do not, and each one is a deduction only if it is recorded against the right property:

Snow removal for driveways, decks and roofs, whether a service contract or your own equipment.
Propane and heating, which dominate winter utility bills, plus furnace and chimney servicing.
Defensible-space work: tree removal, brush clearing and trimming around the structure.
Guest access supplies such as loaner chains, ice melt and firewood.
Roof and deck repairs after heavy snow. Repairs are deducted; a replacement roof is an improvement and is depreciated instead.

Permit, license and lodging-tax paperwork

Every obligation HostReady lists for Big Bear comes with a paper trail, and some of it belongs in your tax records. License, permit, registration and inspection fees you pay to run the rental are ordinary business expenses. They are also the easiest deductions to lose, because they are paid once a year, in a government portal, often on a personal card.

HostReady tracks each license with its number and expiry and reminds you before renewal. When you pay it, put the receipt in DeductFlow against the cabin, so the fee is in your records instead of in a city portal you will not log into again until next year.

Lodging taxes are different. When a platform collects and remits them, they never pass through your hands. When you collect them yourself on direct bookings, that money is the guest's tax on its way to the government, so keep it separate from your rental income in your records and let your CPA decide how it appears on the return.

What to keep for a Big Bear rental

None of this is decided by where the property is. It is decided by what you can show. For a Big Bear property, that means:

Every booking with its dates, so the average stay can be calculated rather than asserted.
Your hours, logged as you work them, with the date, the task and the property, and a reasonable estimate of anyone else's hours on the same property.
Every trip to the property with its purpose, because a drive to fix a hot tub and a weekend away look the same on a credit card statement.
Receipts attached to the expense they support, including the license and permit fees above.
A personal-use log: every night you, your family or a friend stayed, and what they paid.

DeductFlow keeps all of it together, property by property, so your CPA sees the records behind the strategy instead of a summary of it.

Disclaimer: DeductFlow is a record-keeping tool, not tax advice. Consult a qualified CPA or tax professional before making tax-related decisions.

Disclosure: HostReady links on this page are referral links, and HostReady shares revenue with DeductFlow when a referral becomes a customer. HostReady is a separate company.

Big Bear STR Tax Guide for Cabin Owners