If you’ve been around real estate investors lately, you’ve probably heard someone mention “the Big Beautiful Bill” (BBB). More importantly bringing brought back 100% bonus depreciation. For anyone building wealth with short-term rentals, multifamily, or commercial properties, this is big news—and it’s worth understanding exactly why people are so excited.
So, What Is 100% Bonus Depreciation?
In simple terms, bonus depreciation lets you write off certain parts of a property fast instead of slowly over decades. When you buy a building, not every piece of it has to be depreciated over 27.5 or 39 years. Things like appliances, flooring, cabinets, specialty lighting, demountable walls, driveways, pools, and landscaping can qualify for shorter tax lives (5, 7, or 15 years).
Under 100% bonus depreciation, you can take the full deduction for these items in year one, versus over their tax shortened life. That means a huge tax deduction immediately; money stays in your pocket and can be reinvested.
Why Do Short-Term Rental Owners Love It?
If you own or plan to buy an Airbnb or short-term rental, bonus depreciation can be a turbo boost. The deductions can offset not just your rental income, but ordinary income too. To offset ordinary (W-2) income, you need to meet the Short-Term Rental Loophole Guidelines.
For example: Let’s say you buy a $500,000 vacation rental. A cost segregation study finds $150,000 in assets that qualify. With 100% bonus depreciation, you can write it all off the first year. That can wipe out most, or all of your rental income on paper; and even offset ordinary income.
What About Multifamily and Commercial Real Estate?
Same Story, Bigger Numbers
For multifamily and commercial properties, the numbers just get bigger. Imagine a $5M apartment building or warehouse. A cost segregation study might reclassify $1M–$1.5M worth of components into shorter depreciation lives. With 100% bonus depreciation, that deduction comes fast. The result: lower taxes, stronger cash flow, and capital freed up for your next deal.
It’s a favorite strategy for syndicators and partnerships because it directly improves investor returns and allows for rapid scaling.
Timing Is Key, When Do I Do My Cost Seg Study?
The BBB’s revival of 100% bonus depreciation is now permanent but may not last forever. Tax laws tend to change under administrations. We certainly have through the Trump administration to benefit from this. The ability to take these deductions upfront is a four year opportunity at a minimum, maybe forever! If you’ve purchased property recently or have a closing coming up, now is the time to plan a cost segregation study to secure these tax benefits. It always better to do a cost segregation study in the tax year it goes “in-service”.
The Bottom Line
Having 100% bonus depreciation back is a fantastic news. This tax incentive that truly changes the game for short-term rental hosts, multifamily owners, and commercial real estate investors. It’s not just about improving cash flow and saving on federal taxes. The improved cash flow can fuels property improvements, portfolio growth and economic growth.
Ready to see what 100% bonus depreciation can do for your property? Reach out to today. We’ll help you uncover hidden tax savings and keep more of your hard-earned money working for you.
