Everyone’s Talking About 100% Bonus Depreciation. Almost Nobody’s Talking About When

[William Thompson]

Lately I’ve been hearing the same thing from investors:

“Bonus depreciation is back, so I should take the biggest write-off possible, right?”

Not always.

Yes, 100% bonus depreciation is back for certain qualified property acquired after January 19, 2025. But what a lot of people are missing is that there are situations where taking the full deduction right now may not be the smartest move for the long game.

Sometimes the better question is not, “How big of a write-off can I get?”

It’s, “What actually makes sense based on my income, my deal, and my plan?”

That’s where real tax strategy starts.

I think too many investors are focused on the headline and not enough on the math.

Curious what others are seeing right now.
Are more investors chasing the biggest deduction possible, or are they actually looking at the bigger picture first?

[Henry Clark]

OP we always try to take the 100% year one writeoff and have done so twice for large projects.   Last year no taxes and also 2 quarters of this year.  

It’s a free Federal loan with no interest payment.  

Our only considerations are when so we plan to sell if ever and the Tax depreciation life buckets of the 15 and less year assets.  And the depreciation rates.

I’ll use 5 and 15 year buckets.  If most is in 5, then I don’t mind selling in year 4 or 5.    

If most of the assets are year 15, then around year 8 or 9 I don’t mind selling and taking the extra tax rate hit for recapture due to the Fed interest free loan aspect earlier.   You might do a table and show the “loan” versus tax rate penalty for an early sale.  

Another aspect.   We do development.  In the above 8 or 9 years we can quadruple that Federal tax free loan value.  Actually in 4 years.  We don’t mind paying the difference in tax rates on the recapture if we sold early.