What Is Bonus Depreciation?
Bonus depreciation allows investors to accelerate depreciation deductions, writing off a large portion of an asset's value in the first year of ownership. Historically, investors could deduct 100% of eligible assets upfront, but this benefit is now phasing out.
2025: The Last Year for 40% Bonus Depreciation
The Tax Cuts and Jobs Act of 2017 introduced 100% bonus depreciation, but the phase-out schedule is as follows:
2023 – 80% Bonus Depreciation
2024 – 60% Bonus Depreciation
2025 – 40% Bonus Depreciation (final year)
2026 – 20% Bonus Depreciation
2027+ – Bonus Depreciation is eliminated
How to Take Advantage Before It’s Gone
Invest in real estate syndications with accelerated depreciation strategies.
Ensure your CPA applies bonus depreciation where eligible.
Consider cost segregation studies to optimize deductions.
Final Thoughts
With bonus depreciation declining, 2025 is the last opportunity to claim a significant upfront tax deduction. If you're considering a real estate investment, now is the time.
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