Operations
100% Bonus Depreciation Is Here to Stay CONGRESS JUST MADE A MASSIVE TAX BREAK PERMANENT.
SEAN GRAHAM
T he 100% bonus depreciation is back. It’s permanent. And it’s a big deal. On July 4, 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), officially restoring 100% bonus depreciation and making it a permanent part of the tax code. The last few years were messy with phaseouts, deadline stress, and unclear timing rules. But now that Congress has made full bonus depreciation law again, the real opportunity is figuring out how to use it. This isn’t about whether you qualify. If you’re buying the right kind of property today, you do. The focus now is on making sure you’re using the rule the right way, so you can benefit from it.
WHAT IT MEANS FOR YOU When you buy a building, the IRS lets you depreciate it and spread the cost out over 27.5 or 39 years. That’s the default. Bonus depreciation lets you accelerate the process. With a cost segregation study, you can break out parts of the building that wear out faster—flooring, parking lots, lighting, signage, appliances—and deduct them all in year one. If your property was placed into service after Jan. 19, 2025, and meets the criteria, you can deduct 100% of those short-life assets up-front. That creates real tax savings. And now that the rule is permanent, you can build it into your strategy without worrying about sunset dates or phaseouts.
PUT IT TO WORK Bonus depreciation isn’t just a tax break. It’s a tool to strengthen your cash position, improve returns, and create more flexibility in your business. Here’s how you can use it: OFFSET INCOME FROM OTHER DEALS. If you’ve sold a property this year or generated capital gains elsewhere, bonus depreciation gives you a way to reduce your taxable income. REDUCE YOUR ACTIVE INCOME. If you or your spouse qualify as a real estate professional (REPS), these deductions can lower your W-2 income or other business income, not just passive real estate gains.
IMPROVE YOUR CAPITAL STRATEGY. Big year-one deductions increase your cash position. That can help
28 | think realty magazine :: september - october 2025
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