If you’re a commercial property owner, developer, or value-add buyer, here’s a piece of legislation worth tracking: 100% Bonus Depreciation is back on the table. Tucked inside what’s been unofficially dubbed the “Big Beautiful Bill,” this provision could deliver massive tax savings to real estate investors—just when the market needs a boost of confidence.
Let’s break it down.
What Is Bonus Depreciation—and Why Should You Care?
Let's revisit the basics: typically depreciation is spread over decades—27.5 years for residential and 39 years for commercial real estate. It’s a slow drip of tax benefit.
Bonus depreciation changes that.
If reinstated, it allows investors to front-load depreciation, deducting 100% of qualifying costs in year one—but only for assets placed into service during the eligible window (expected to be retroactive for 2024 and extended through at least 2026).
This includes:
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Interior improvements (flooring, cabinetry, lighting, etc.)
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Mechanical and HVAC systems
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Site improvements (parking, landscaping)
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Fixtures and finishes
But it gets better: a cost segregation study allows you to reclassify those improvements into 5-, 7-, or 15-year property categories—making them eligible for immediate deduction under the bonus depreciation rule.
“When 100% bonus depreciation is in play, we see first-year deductions that rival the total equity invested. Even on smaller properties under $2M, the impact can be six figures—or more.”
— Tim Hepburn, Cost Segregation Specialist, Specialty Tax Group
Why This Matters in 2025 (and Beyond)
If this bill passes, the return of full bonus depreciation could catalyze a wave of transactions and capital reinvestment across the country—especially in high-growth markets like Nashville. This will create a huge justification for capital to be invested into commercial real estate investment.
Here’s what’s at stake:
✅ Immediate Tax Relief – Big first-year deductions free up capital
✅ Liquidity Advantage – Use tax savings to reinvest in operations, improvements, or new deals
✅ Strategic Timing – Renovations completed in 2025–2029 could unlock huge deductions
✅ Investor Appetite – Syndicators and equity partners love accelerated depreciation
“The timing couldn’t be better. With interest rates compressing margins, bonus depreciation gives sponsors another tool to create real return—even in a tighter debt market.”
— Tim Hepburn, Cost Segregation Specialist
A Personal Take
I’ve lived in high-tax states like California, where writing a check to the government can feel like funding someone else's midlife crisis. Now based in Tennessee—where we keep it lean and smart—I’m all in on any policy that puts money back into the hands of entrepreneurs, property owners, and job creators.
And this one? This one’s a biggie.
If you're planning to invest in, renovate, or reposition commercial property in the next 12–36 months, pay close attention. Because if the federal government is handing out a legal tax shelter—you’d better take it.
Interested in learning if your property qualifies? Let's connect and discuss.
Let’s talk cost segregation, depreciation strategies, and how to position your asset for maximum benefit if this bill passes.
