What 100% Bonus Depreciation Means to You & Me
Time-Sensitive Tax Savings - Special Issue
Love the name, Hate it … or something in between – the One Big Beautiful Bill Act of 2025 (OBBBA) delivers powerful immediate tax-relief coupled with freed-up capital to upgrade existing properties. Learn how you and I may win.
Quick Recap of Depreciation
Depreciation is an income tax deduction that allows a taxpayer to recover the cost of certain property via an annual allowance for the wear and tear, deterioration, or obsolescence of the property. Prior to the passage of the OBBBA, allowable bonus depreciation deductions were 40% for early 2025 (assets placed in service between January 1 and January 19); reducing to 20% in 2026 and completely phased out in 2027.
OBBBA – Bonus Depreciation Accelerated to 100%
OBBBA Bonus Depreciation revisions offer significant financial boosts for landlords … immediate 100% expensing of qualifying improvements in the year they are placed into service. That’s in contrast to previous rules that required amortizing depreciation over an extended period. This provision applies permanently to eligible assets acquired and employed after January 19, 2025.
Freeing up capital now presents opportunities to:
- Improve existing properties.
- Enhance the asset value of your portfolio.
- Upgrades create opportunities to justify rent increases.
What Purchases Qualify for Bonus Depreciation.
Eligible items are those used in your rental property and have a useful life of 20 years or less.
Here are examples of assets that may qualify:
- Appliances, e.g. ovens, washers, dryers, refrigerators
- Carpeting and flooring
- Land improvements, e.g. driveways, fencing, landscaping
- Furniture, e.g. tables, sofas, beds
My Next Steps
Back to the “time-sensitive” reference above. End of tax-year 2025 is closer than just on the horizon. So, my intent is to review post 1/19/25 expenses and plan to move forward with appropriate upgrades before year-end.
Objective: Implement this powerful tool to enhance tax savings and escalate cash flow.
Final Thought
All the foregoing is my understanding of the OBBBA provisions … subject to advice and counsel by my tax and financial advisors.
Certainly, it is not a recommendation or call to action on your part. Your unique circumstances are best served by seeking professional advice to evaluate how 100% Bonus Depreciation fits with your tax, investment and rental pricing strategies.