100% Bonus Depreciation Is Back

Tampa, Florida
Tax, SDIRAs & Cost Segregation
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100% Bonus Depreciation Is Back

Amber Stout
Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes

Hey BP fam — just popping in with a quick update that could save some of you a lot on taxes this year.

The recently passed (7/5) Big Beautiful Bill has some major wins for real estate investors — including the return of 100% bonus depreciation, in addition to a couple other advantages. 

1. Bonus depreciation = 100% Through 2025
You can now fully write off eligible property in year one — roofs, HVACs, appliances, etc.
Perfect for anyone doing value add or running cost seg studies.

2. Section 179 expensing increased
Landlords furnishing their units (think STR's or furnished rentals) or purchasing equipment can now deduct even more — the cap increased with inflation adjustments.

3. Business interest deduction increased
The formula changed from EBIT to EBITDA — meaning you can now deduct more of your loan interest.
HUGE win if you're using leverage (BRRRR, multifamily, or syndications especially).

If you're buying, renovating, or refinancing this year, make sure your loan and ownership structure set you up to maximize these deductions.

Let's help each other build smarter in 2025. 🚀

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Bonnie Griffin KaakePro Member
Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
1y

Seems to be a lot of mis-understanding about what the return of 100% Bonus Depreciation really means. The 100% Bonus Depreciation is ONLY available for purchases AFTER 1/19/25 going forward with occupancies AFTER January 19, 2025. 

If a purchase was made or construction started before 1/19/25, the investment applies for whatever Bonus Depreciation was available in the year of occupancy. If the construction started in 2024 and property became occupied in 2025, the Bonus Depreciation is NOT 100%.

#BonusDepreciation #100% #RealEstate #Investments #TaxBenefits #misunderstanding #RealEstateInvestors

[email protected]303-475-4459
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  • Philip Barr
    Attorney · Member since 2025 · 65 posts · 102 votes
    1y

    Thank you for the information.

    Bonus depreciation has been a strategy by investors I have worked with, many of them using short-term renting to their benefit. If you actively manage the property and meet certain time requirements, your rental income might be considered active instead of passive, allowing you to fully use these deductions.

    1Reply
  • Bonnie Griffin KaakePro Member
    Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
    1y

    Seems to be a lot of mis-understanding about what the return of 100% Bonus Depreciation really means. The 100% Bonus Depreciation is ONLY available for purchases AFTER 1/19/25 going forward with occupancies AFTER January 19, 2025. 

    If a purchase was made or construction started before 1/19/25, the investment applies for whatever Bonus Depreciation was available in the year of occupancy. If the construction started in 2024 and property became occupied in 2025, the Bonus Depreciation is NOT 100%.

    #BonusDepreciation #100% #RealEstate #Investments #TaxBenefits #misunderstanding #RealEstateInvestors

    [email protected]303-475-4459
    3Reply
  • Dylan Brown
    MN · Member since 2025 · 107 posts · 97 votes
    1y

    One other thing to add here - the bonus depreciation changes are indefinite - meaning they are no longer set to expire at any point in the near future - which is HUGE.

    And yes, @Bonnie Griffin Kaake is correct - if the dollars to acquire the property, materials, labor, or anything else in the acquisition or development of the property were incurred BEFORE 01/19/25, they are excluded from the 100% bonus.  If they were incurred AFTER, they may be counted as bonus eligible.

    This poses an interesting scenario where partially complete developments span over the date (01/19/25) can be bifurcated to be partially eligible for bonus if the correct measures are taken, a cost seg is performed, and an election under §1.168(k)-2(c) is made.

    3Reply
  • Account Closed
    Specialist · United States · Member since 2025 · 45 posts · 32 votes
    1y

    @Amber Stout It is important to note 100% bonus depreciation only applies to assets (building components and site work/improvements) with a class life of 20 years or less, not 27.5-, 31-, or 39-year assets (structural components) such as roofs, HVAC, fire protection and alarm, etc.

    2Reply
  • Kenyatta Mireku
    Member since 2025 · 1 post · 0 votes
    1y

    Question,

    If I buy a property as is and use it as an STR, can I use bonus depreciation? An accountant was saying that I had to make improvements to utilize this.

    0Reply
  • Julius VincentBusiness Member
    Tax Strategist | CPA, MBA + Wharton FP&A | CFO-Level Planning · Houston, TX · Member since 2025 · 157 posts · 172 votes
    1y

    Hey @Kenyatta Mireku - You can absolutely use bonus depreciation on an “as-is” short-term rental without making improvements. The key is that:

    - You place the property in service (i.e., it’s available and ready to rent),

    - You do a cost segregation study to break out the components that qualify (like appliances, flooring, land improvements, etc.), and

    - You meet the material participation rules (to potentially use the losses against W-2 income).

    Bonus depreciation applies to the personal property components (not the building itself) and improvements aren't required to access those benefits. If the property already has eligible components, you’re good to go.

    That accountant may have been thinking of Section 179, which sometimes requires new purchases or improvements depending on the facts. But for bonus depreciation, existing components in an acquired property still qualify.

    [email protected]281-407-7353
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  • Michael PlaksPro Member
    Tax Accountant / Enrolled Agent · Houston, TX · Member since 2014 · 5k+ posts · 6k+ votes
    1y

    I have written a detailed explanation of how 100% depreciation works under the new law:
    https://www.biggerpockets.com/forums/51/topics/1249780-expla...

    The original post o this thread correctly states that you can write off appliances, yet incorrectly claims that you can write off roofs and HVAC. Roofs and HVAC are only allowed on NON-residential properties, such as office buildings, storage facilities, retail stores etc. Not on houses and not on apartment buildings. 

    And remember about the 1/19/2025 hard cutoff.

    2Reply
  • Kevin Aumack
    Glassboro, NJ · Member since 2025 · 37 posts · 13 votes
    1y

    Also, big shoutout to the SALT cap increase from $10K to $40K! This will push way more people to itemize, especially those in lower-tax states who can bunch property tax payments to maximize deductions. Definitely a smart move for many taxpayers.

    0Reply
    • Chris SeveneyBusiness Member
      Moderator
      Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
      1y
      Quote from @Kevin Aumack:

      Also, big shoutout to the SALT cap increase from $10K to $40K! This will push way more people to itemize, especially those in lower-tax states who can bunch property tax payments to maximize deductions. Definitely a smart move for many taxpayers.

      The SALT also has limits and phases down to $10k. If you income is over $500k it phases out and reduces by 30% for income over $500k. So once you hit $600k in come it is still $10,000.
      It also expires in 2029.
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  • Amber Stout
    OP
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes
    1y

    @Philip Barr - that's a great point regarding that they must meet certain time requirements in order to fully use the deductions. 

    Always appreciate connecting with professionals who are dialed into this side of the strategy — would love to stay in touch if you ever work with clients who need lending options that complement their tax planning in FL. 

    0Reply
  • Amber Stout
    OP
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes
    1y

    @Bonnie Griffin Kaake 

    Appreciate you laying this out clearly. 

    I've also heard from a few CPAs I work with that there may be room for partial eligibility in certain cases before that date— especially when improvements span the cutoff. 

    Would love to stay connected — I’m always looking to collaborate with professionals who are dialed into this side of investing as much as you are. 

    1Reply
    • Bonnie Griffin KaakePro Member
      Real Estate Consultant · Denver, CO · Member since 2021 · 666 posts · 389 votes
      1y
      Quote from @Amber Stout:

      @Bonnie Griffin Kaake 

      Appreciate you laying this out clearly. 

      I've also heard from a few CPAs I work with that there may be room for partial eligibility in certain cases before that date— especially when improvements span the cutoff. 

      Would love to stay connected — I’m always looking to collaborate with professionals who are dialed into this side of investing as much as you are. 

       If you have a specific situation to discuss, let me know. I had a client last week that purchased a building in 2021 and started major renovations in 2024 but didn't finish until early 2025. In this situation, the client received 100% bonus depreciation on the 2021 purchase and 100% bonus on the renovations. Each situation can be so different that it is in an investor's best interests, especially right now during this transition, to get good professional advice in advance. It could save you a lot of money and cost you nothing up-front! 

      [email protected]303-475-4459
      0Reply
  • Amber Stout
    OP
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes
    1y

    @Dylan Brown – This is great insight. I really appreciate you breaking down the nuance with partially completed projects and how bifurcation might still allow for bonus eligibility. Super helpful context! 

    0Reply
  • Amber Stout
    OP
    Lender · Tampa/Saint Petersburg, FL · Member since 2014 · 356 posts · 148 votes
    1y

    @Michael Plaks – thank you for the correction on roofs and HVAC — I genuinely didn’t realize that only applied to non residential properties. 

    I also just read through your article — well written and easy to follow (even for those of us not buried in tax code daily 😅). Appreciate you sharing your knowledge here. 

    1Reply
  • Jason MalabuteBusiness Member
    Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 914 votes
    1y

    Bonus depreciation coming back to 100% is definitely a great thing for real estate investors. Before the bill was officially signed, many were hoping it could apply retroactively to 2023 — but unfortunately, that didn’t happen. Also, keep in mind that you can elect to stay with 40% bonus depreciation in 2025 if that better fits your tax planning strategy. Always worth reviewing with your CPA.

    Malabute & Company CPAs527 Reviews
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