How Has 100% Bonus Depreciation Impacted Real Estate Prices and Strategy?

General Real Estate Investing
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How Has 100% Bonus Depreciation Impacted Real Estate Prices and Strategy?

John Becker
Member since 2025 · 1 post · 1 vote


Curious if anyone has come across research or data on how 100% bonus depreciation affects real estate prices. Intuitively, it seems like it would drive values up—especially for properties that qualify—but by how much?

Also, how do you think it’s influenced investor behavior? I’d imagine it encourages more buy-and-hold strategies, since investors might want to avoid depreciation recapture unless they’re using a 1031 exchange to trade up.

Would love to hear your thoughts. Has anyone looked back at the last time we had 100% bonus depreciation? The context was different then with much lower interest rates, but it might still give us clues.

Let’s discuss—what are you seeing in your market?

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y
    Quote from @John Becker:


    Curious if anyone has come across research or data on how 100% bonus depreciation affects real estate prices. Intuitively, it seems like it would drive values up—especially for properties that qualify—but by how much?

    Also, how do you think it’s influenced investor behavior? I’d imagine it encourages more buy-and-hold strategies, since investors might want to avoid depreciation recapture unless they’re using a 1031 exchange to trade up.

    Would love to hear your thoughts. Has anyone looked back at the last time we had 100% bonus depreciation? The context was different then with much lower interest rates, but it might still give us clues.

    Let’s discuss—what are you seeing in your market?


     I think its had little impact on real estate values - where i thnk it actually has had a negative impact is people are too focused on getting 100% depreciation and not focused on the other metrics of the deal and doing deals only because of depreciation. Just my gut feeling (no data to back it up) but see alot of posts about people buying online to take advantage of it.

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  • Rick Pozos
    Wholesaler, Rehabber and Landlord · San Antonio, TX · Member since 2014 · 2k+ posts · 2k+ votes
    1y

    I dont think it had a super duper impact, but I bet it influenced some ok deals into some pretty good deals. BUT when you take it away, then there are problems, like now. Through the late 20-teens and early 2020s, you could depreciate 100% in first year. This is very similar to 1981 Economic Tax Recovery Act. It gave lots of accelerated depreciation. THEN in 1986 took it away. There were other factors, of course, but this was a big one. If you know your history or lived through it, there was a BIG downturn in 86 that lasted into 90 and 91.

    It is kinda like 3% interest rates. It kinda makes people want to really, really buy a house. When everyone feels this way, there will be a change of sentiment. When rates go to 7 or 8%, things change. 

    When you have depreciation changing, AND interest rates up, it's kinda the perfect storm for a bad situation.

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