On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law — bringing major news for real estate investors: 100% bonus depreciation is back, and it’s here to stay.

This change permanently reinstates the ability to deduct the full cost of eligible property components in the year they’re placed in service. When combined with a cost segregation study, it can deliver powerful, immediate tax savings and significantly improve cash flow.

Why This Is a Big Win for Property Investors

Bonus depreciation allows you to deduct the entire cost of certain assets — generally those with a useful life of 20 years or less — in the same year they’re placed in service. 

Under the OBBBA:

• 100% bonus depreciation is permanent for eligible assets placed in service after January 19, 2025.
  
• Applies to new construction, acquisitions, and renovations.
  
• Pairs with cost segregation to identify qualifying short-life assets for immediate expensing.
  
• Boosts cash flow when you need it most — immediately after purchase.
  
  

How Cost Segregation Enhances Bonus Depreciation

Typically, a building depreciates over 27.5 years (residential) or 39 years (commercial). 

Cost segregation reclassifies components like:

• Carpets, cabinets, and appliances (5-year property)
  
• Parking lots and landscaping (15-year property)
  

Once reclassified, these assets qualify for 100% bonus depreciation, allowing you to deduct their full value in the first year.

Example: A $2 million property might have $500,000 in reclassified assets. Without cost segregation, you’d deduct ~$18,000 per year over 27.5 years. With cost segregation and 100% bonus depreciation, you can deduct the full $500,000 in Year 1 — putting significant cash back in your hands.

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Cash Flow Impact

Front-loading deductions means more capital for:

• Reinvesting in additional properties
• Funding renovations or upgrades
• Strengthening reserves for operating expenses
  

Example: If you expense $300,000 in Year 1 at a 35% tax rate, that’s $105,000 in immediate tax savings—money you can redeploy now instead of over decades.

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Why Timing Still Matters

Even though 100% bonus depreciation is now permanent, it only applies to assets placed in service. To maximize the benefit:

• Align property acquisitions and renovations with your tax strategy.
  
• Work with a qualified cost segregation provider to ensure IRS-compliant documentation.
  
• Maintain detailed records to substantiate deductions.
  

Maximize Your Savings with Expert Guidance

Whether you’re buying, renovating, or holding income-producing property, pairing cost segregation with the OBBBA’s permanent 100% bonus depreciation can dramatically improve your bottom line.

We help property owners:

• Identify qualifying assets
• Complete professional cost segregation studies
• Coordinate with your CPA to apply deductions correctly on your tax return
  

Let’s put your property to work—starting in Year 1.

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