Placed a building in service after January 19? You’ve got reason to smile.
In a legislative twist that caught even seasoned investors off guard, Congress passed the One Big Beautiful Bill Act (OBBBA) in July 2025—an ambitious piece of tax policy that brought back full 100% bonus depreciation for qualified property placed in service on or after January 20, 2025.
For commercial real estate investors navigating an already complex tax landscape, this wasn’t just noise from Capitol Hill. It’s a real shift—restoring a powerful tool for accelerating deductions and shaping after-tax cash flows.
A Second Wind for Full Expensing
Bonus depreciation, at its core, isn’t new. Originally championed under the Tax Cuts and Jobs Act (TCJA), the provision gave investors the option to immediately expense 100% of certain asset costs rather than depreciating them over time. That benefit started phasing down in 2023, prompting many firms to adjust strategies and timing.
The OBBBA effectively hit the reset button. Property that qualifies—and is placed in service on or after January 20, 2025—can now be fully depreciated in year one. Property placed into service between January 1 and January 19, however, remains stuck under the 40% phase-down rule.
That 19-day window has become an odd tax limbo. “We had clients rushing projects in early January who ended up just missing the mark,” says one Florida ROI partner. “Now, everyone’s scrutinizing service dates like it’s a closing deadline.”
What Qualifies—and What Doesn’t
Let’s be clear: This isn’t a free-for-all. Entire commercial buildings are still subject to standard 39-year MACRS treatment. But several asset classes are now prime candidates for accelerated depreciation:
- Qualified Improvement Property (QIP) – Interior improvements (no elevators, no structural work)
- Personal property – Think fixtures, furniture, or equipment with under 20-year life.
- Land improvements – Parking lots, landscaping, fencing—often overlooked, but now in play.
To properly carve out these items, most investors will turn to a cost segregation study. These engineering-driven reports break down construction costs, allocating line items to depreciation-friendly buckets.
A Quick Math Example
Say you just placed a $5 million medical office building into service on February 1, 2025. A cost segregation study identifies $1.5 million in personal property and QIP. Under the reinstated rule, that $1.5 million doesn’t trickle down over years. It’s expensed now.
That’s not just a line on a tax return—it’s a liquidity lever.
Why This Matters for CRE Strategy
Timing has always mattered in CRE, but 2025 makes that clearer than ever. Projects completed after January 19 are suddenly more tax-efficient than those barely squeezed in weeks earlier.
Bonus depreciation also offers flexibility. Whether you’re repositioning assets or adding value through renovations, immediate write-offs can tilt returns in your favor—especially in higher-rate environments.
“We’re advising clients to revisit underwriting assumptions,” says a tax specialist working with Florida ROI. “What looked like a 6.5% yield might now push closer to 8% once you account for year-one tax benefits.”
What Smart Investors Should Do Now
- Audit placement dates — Confirm which properties qualify post-cutoff.
- Commission cost seg studies — Especially for ground-up builds or major renovations.
- Update projections — Model revised after-tax cash flows.
- Talk to your CPA — The IRS isn’t exactly lenient on gray areas.
Experience from the Ground
At Florida ROI, we’ve already worked with clients who saw significant swing in project viability purely due to bonus depreciation reinstatement. One Tampa-based investor delayed their interior build-out just long enough to qualify under the new effective date—and ended up writing off nearly 30% of their project costs in year one. The decision wasn’t just smart. It was strategic.
Conclusion: A Policy Shift Worth Acting On
In a sector where returns often hinge on timing, 100% bonus depreciation is no longer a fading benefit—it’s back, and it’s potent. The window is wide open for CRE investors who know how to use it. But like any tax advantage, it rewards the proactive, not the passive.
If your project went into service after January 19, don’t leave money on the table. Work with your advisors, recheck your allocations, and make sure your capital stack reflects today’s tax realities.
For tailored guidance on maximizing bonus depreciation in your next investment, connect with the team at Florida ROI.
Frequently Asked Questions
Q: What types of commercial real estate qualify for 100% bonus depreciation?
A: Only certain components qualify—not entire buildings. Eligible assets include interior improvements (QIP), personal property (like furniture and fixtures), and land improvements (like paving and fencing). The building’s structural shell does not qualify.
Q: How do I know if my property is eligible under the 2025 changes?
A: The key is the in-service date. If your property was placed in service on or after January 20, 2025, and includes qualifying assets, it likely qualifies. A cost segregation study can help confirm and quantify those assets.
Q: Should I invest in a cost segregation study for smaller properties?
A: In many cases, yes. Even mid-size projects can unlock significant deductions. The cost of the study is often far outweighed by the tax savings—especially under the reinstated 100% bonus rule.
