The real estate investment landscape just shifted dramatically in favor of savvy investors. On July 4, 2025, President Trump signed the “One Big Beautiful Bill Act” (OBBBA) into law, permanently restoring 100% bonus depreciation for qualifying property. This isn’t just another incremental tax change, it’s a powerful wealth-building tool that smart investors are already incorporating into their strategies.
How This Can Benefit Your Project
Under the newly enacted legislation, 100% bonus depreciation has been permanently reinstated for qualifying assets placed in service after January 19, 2025. For real estate investors working on projects in the $1 million to $50 million range, this creates unprecedented opportunities to accelerate depreciation deductions and dramatically improve cash flow.
The key word here is “qualifying.” While buildings themselves don’t qualify for bonus depreciation, many components within your real estate projects do. This includes most tangible personal property with a recovery period of 20 years or less, such as land improvements, machinery, computers, and furniture and equipment. Think HVAC systems, flooring, appliances, landscaping, certain structural improvements, and specialized equipment.
The Strategic Advantage: Cost Segregation Studies
Here’s where the real magic happens. Cost segregation is a strategic tax planning tool that allows property owners to identify and reclassify components of a building to shorter depreciation periods, accelerating depreciation deductions. Instead of depreciating your entire commercial property over 39 years, a properly conducted cost segregation study can identify components that qualify as 5-, 7-, or 15-year assets.
When combined with 100% bonus depreciation, cost segregation studies can produce six- or seven-figure deductions, improving return on investment and releasing capital for reinvestment. For a $10 million commercial renovation project, this could translate to immediate tax savings of $1 million or more, depending on the specific components involved.
Real-World Impact for Mid-Market Projects
Let’s consider a practical example. Suppose you’re undertaking a $5 million mixed-use development project. Through a cost segregation study, you might identify $2 million worth of components that qualify for accelerated depreciation. With 100% bonus depreciation restored, you could potentially deduct that entire $2 million in year one, rather than spreading it over 15-39 years.
At a 37% combined federal and state tax rate, this could generate immediate tax savings of approximately $740,000. That’s capital you can reinvest in additional properties, fund ongoing projects, or simply improve your overall return on investment.
Why This Matters More Than Ever
Lawmakers cited ongoing inflation, higher interest rates, and a cooling real estate market as key reasons for reintroducing the incentive. In today’s challenging capital environment, these tax benefits can make the difference between a marginally profitable project and a highly successful one.
The timing is particularly strategic. Many provisions take effect immediately or retroactively to the start of 2025, requiring a fresh look at estimated tax payments and year-end planning. Projects currently in development or recently completed may benefit from retroactive application of these rules.
The Capital Placement Connection
This is where partnering with an experienced capital placement firm like The Chart House becomes invaluable. Understanding and maximizing these tax benefits requires careful coordination between your capital structure, project timeline, and tax strategy. Our team specializes in helping investors structure their $1-50 million real estate projects to optimize both funding and tax efficiency.
We work closely with qualified tax professionals who can conduct cost segregation studies and ensure your projects take full advantage of available depreciation benefits. More importantly, we help you time your capital raises and project milestones to maximize the impact of these tax savings on your overall returns.
Key Considerations for Your Next Project
Timing is Critical: Assets must be placed in service on or after January 19, 2025, to qualify for the full 100% bonus depreciation. If you have projects nearing completion, careful documentation of when assets are “ready and available for use” becomes essential.
Documentation Matters: Taxpayers with assets that were placed in service near the January 19, 2025 date should carefully document that the asset was “ready and available for use” in order to support 100% bonus depreciation treatment.
Professional Guidance is Essential: Even at a 40% bonus depreciation rate, cost segregation studies remain important for real estate owners, operators, and investors looking to improve after-tax cash flow. With 100% bonus depreciation restored, the benefits are amplified significantly.
Looking Ahead: Strategic Opportunities
The return of 100% bonus depreciation isn’t just about tax policy; it’s about economic momentum. This legislation signals a renewed commitment to encouraging capital investment in real estate and other productive assets.
For investors in the $1-50 million project range, this creates several strategic opportunities:
- Accelerated Project Timelines: The immediate tax benefits can justify more aggressive renovation and development strategies
- Improved Capital Efficiency: Tax savings can be reinvested into additional properties or used to reduce project financing needs
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Enhanced Returns: The combination of depreciation benefits and strategic capital placement can significantly improve overall project returns
Taking Action
Smart investors are already adjusting their acquisition and development strategies to maximize these benefits. The key is understanding which improvements qualify, timing your investments strategically, and ensuring your capital structure supports optimal tax planning.
At The Chart House, we specialize in helping real estate investors navigate these opportunities. Whether you’re planning a major renovation, developing new properties, or expanding your portfolio, we can help you structure your projects to take full advantage of the restored 100% bonus depreciation while securing the capital you need to succeed.
The window for maximizing these benefits is open now. Properties acquired and improved before year-end can generate substantial tax savings that improve overall project returns and provide capital for future investments.
In an environment designed to nurture your project, contact us to explore how these changes could impact you.
The Chart House can help you optimize both your capital structure and tax strategy to maximize returns in this new environment.
Sources:
- CSSI Services: “100% Bonus Depreciation Is Back: What This Means for Businesses and Commercial Property Owners”
- MGO CPA: “Bonus Depreciation: What Real Estate Investors Need to Know”
- KBKG: “One Big Beautiful Bill - 2025 Tax Changes”
- Plante Moran: “100% bonus depreciation returns with the One, Big, Beautiful Bill”
- CliftonLarsonAllen: “Legislators’ Proposal: 100% Bonus Depreciation Revival”
This blog post is for informational purposes only and does not constitute tax advice. Please consult with qualified tax professionals to understand how these changes may apply to your specific situation.
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