Accelerated Depreciation Is Back

A powerful tax incentive is returning, and savvy real estate investors are already preparing to take full advantage. The reinstatement of 100% Accelerated Depreciation for qualified property could transform your tax position—reducing taxable income, freeing capital, and accelerating portfolio growth.

The Return of a Wealth-Building Strategy

The new 2025 tax legislation is set to bring back 100% Bonus Depreciation for qualifying assets placed in service between January 20, 2025, and December 31, 2029.This means real estate investors and business owners can immediately deduct the full cost of eligible property—such as structures, land improvements, and equipment—in the same year the asset goes into use, rather than spreading deductions over decades.

For longer-term assets (like certain agricultural or industrial properties), the window may extend through 2030, offering a limited but substantial opportunity to reshape your financial trajectory.

How It Works

Under normal depreciation schedules, assets are written off over 5, 15, or 27.5 years.With 100% Bonus Depreciation, you can deduct the entire amount upfront in the year the property is placed in service.

For example:

• A $500,000 acquisition includes $90,000 of short-life assets identified through a cost segregation study.

• With 100% Bonus Depreciation, that $90,000 can be fully deducted in Year 1—saving roughly $27,000 in taxes (assuming a 30% bracket).

That’s immediate liquidity that can be reinvested into your next acquisition or used to strengthen cash flow.

Why Timing Is Everything

Behavioral finance teaches us that investors who act during windows of opportunity create asymmetric gains—small timing decisions that produce outsized financial advantages. This isn’t about tax avoidance—it’s about asset velocity. Every dollar saved through accelerated depreciation is a dollar that compounds faster in your next deal.

By combining Bonus Depreciation with Cost Segregation Studies and 1031 Exchange strategies, investors can legally accelerate wealth accumulation while keeping their capital in motion.

Turning Tax Savings into Portfolio Growth

One Bay Area investor leveraged accelerated depreciation in 2019 to offset nearly $400,000 in taxable income. The savings allowed them to acquire a second property within the same year—doubling their rental income stream. Now, with the return of 100% Bonus Depreciation, that same strategy can be repeated—on an even larger scale.

How to Maximize the Opportunity

1. Act Within the Window – Only assets placed in service between January 20, 2025, and December 31, 2029 qualify for the full 100% deduction.

2. Order a Professional Cost Segregation Study – Work with a qualified engineer or CPA firm to separate short-life assets from structural components.

3. Integrate With Broader Strategy – Align depreciation timing with your long-term goals—especially if planning a refinance, sale, or 1031 exchange.

4. Stay Proactive – Bonus depreciation benefits diminish after 2029 unless extended by future legislation. Early movers will capture the best advantage.
   

The return of 100% Accelerated Depreciation represents one of the most significant wealth-building tools available to investors in 2025. Whether you own residential rentals, commercial properties, or agricultural land—this is your moment to structure your portfolio for maximum efficiency.