The tax world just gave commercial property owners a major opportunity. After several years of phasing out, 100% bonus depreciation is officially back for qualifying property placed in service after January 19, 2025.
If you own, improve, or invest in commercial real estate, this isn’t just news. It’s a planning window. And if you understand how to pair bonus depreciation with cost segregation, it could be one of the most powerful tax moves you make all year.
Here’s how to make the most of it.
Bonus depreciation is powerful. But it’s even better when you break the building apart
Let’s say you place a new property in service in early 2025. Under the updated rules, you’re eligible to deduct 100 percent of any qualifying short-life assets in year one. That’s great. But what exactly counts as a short-life asset?
This is where most owners miss out. They depreciate the entire building over 39 years, assuming that’s the only option.
What they don’t realize is that their lighting, flooring, landscaping, cabinetry, electrical, and plumbing systems may all qualify for much shorter timelines — many just 5, 7, or 15 years.
The catch? You can’t just guess. You need a cost segregation study to identify and document these components correctly. When done right, that study unlocks the ability to apply 100% bonus depreciation to many of those assets immediately.
The value is in the timing
To benefit from this new rule, your property has to be placed in service after January 19, 2025. That means if you’re developing or improving a property now, this is the time to think about cost segregation. Not after tax season. Not when your CPA is rushing to close out the year.
Now.
The same applies if you’re planning a big improvement or capital investment. That work may come with serious depreciation potential — but only if it’s properly classified and placed in service during the eligible window.
The earlier you plan, the more you can control the outcome.
It’s not just for new buildings
Bonus depreciation isn’t limited to acquisitions or ground-up developments. If you’re making improvements to a property you already own, you may be able to accelerate the depreciation on those upgrades.
In fact, if you’ve already placed a property in service and haven’t done a cost segregation study, you may still have options through a lookback analysis. This allows you to catch up on missed depreciation with a Form 3115 — without amending prior returns.
Again, it’s all about timing, documentation, and a strategy that matches your portfolio.
So, what should you do now?
Here’s what we recommend for owners and investors who want to take advantage of this opportunity:
- Review any properties placed in service or improved in 2025
- Talk to your CPA about planning around bonus depreciation
- Schedule a cost segregation study early to get the most value while deadlines are still flexible
- Don’t assume you missed your chance if the property is already in service — a lookback may still be an option
Final thoughts
Cost segregation is what makes that strategy possible
It’s not just about checking a box. It’s about turning your building into a tax-saving tool — and making sure your timing, documentation, and classification all work in your favor.
If you have a property placed in service in 2025, or if you’re planning improvements, now is the time to act.
Let’s run the numbers and build a plan that works for you.