How the 2025 Tax Law Brings Bonus Depreciation Back to 100%

When I bought my first rental property back in 2009, I thought real estate was only about cash flow and appreciation. Taxes? That was something I left to my CPA.

Over time, I learned that tax strategy is one of the biggest levers in this business. And in 2025, real estate investors just got a huge gift: 100% bonus depreciation is back — retroactive to January 20, 2025.

What Bonus Depreciation Means in Plain English

Normally, when you buy property, you depreciate it slowly over decades. That’s the IRS’s way of letting you recover the cost of wear and tear.

But with a cost segregation study, you can break out parts of the property — things like flooring, lighting, appliances, roofing — that have shorter useful lives.

Bonus depreciation lets you write off 100% of those components in year one. Instead of waiting 27.5 years for deductions, you get the benefit immediately.

Why This Matters in 2025

The One Big Beautiful Bill (OBBB), signed on July 4, restored bonus depreciation to 100% and made it permanent for qualifying property. That’s a game-changer.

For investors, this means:

• Passive LP investors in syndications can often see 30–40% of their investment amount show up as a first-year paper loss.

• High-income professionals who qualify may offset significant taxable income.

• Operators and developers can accelerate CapEx-heavy projects and unlock major deductions right away.

In short: if you’re investing this year, you’re in one of the best tax environments we’ve seen in years.

A Real Example from My Deals

In a multifamily acquisition we closed earlier this year, several LPs who invested $500K are now seeing $150K–$200K in first-year deductions thanks to bonus depreciation.

That’s money they don’t have to send to the IRS — and instead can recycle into the next opportunity. It’s the wealth-building flywheel at work.

Mistakes to Avoid

Even with this opportunity, I’ve seen investors trip up. Here are the big ones:

• Not doing a cost segregation study — without it, you miss out.

• Assuming it lasts forever — tax law is political; windows open and close quickly.

• Not planning with your CPA — bonus depreciation is powerful, but only if it’s applied correctly.