100% Bonus Depreciation Is Back — Permanently. Here's What OBBBA Means for Cost Segregation.
The One Big Beautiful Bill Act (signed July 2025) permanently restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025. The single biggest tax-strategy reset since the TCJA.
For three years, real estate investors watched bonus depreciation phase down: 80% in 2023, 60% in 2024, and on track for 40% in 2025 — eventually disappearing entirely. Cost segregation studies still made sense, but every year the dollar impact in year one shrank.
On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law. It rewrote that trajectory in a single sentence: 100% bonus depreciation is restored, permanently, for qualified property placed in service after January 19, 2025.
What the law actually says
- ▸100% bonus depreciation applies to qualified short-life property (5, 7, and 15-year) placed in service after January 19, 2025.
- ▸Property under a binding written contract before January 20, 2025 stays on the prior phase-down schedule (40% for 2025 placements).
- ▸Used property still qualifies (TCJA rule preserved) — as long as it wasn't previously used by the taxpayer.
- ▸Section 179 expensing remains available as a parallel option, with a 2025 cap of $2.5M.
Why cost segregation just became 2-3x more valuable
The mechanics of cost segregation didn't change. Engineers still identify the 5-year, 7-year, and 15-year components inside a building — typically 20–35% of the depreciable basis on a commercial property.
What changed is what happens to that reclassified amount in year one.
Same building. Same study. Very different outcome.
- ▸Under 2025 phase-down rules (40%): a $2M depreciable basis with $640K reclassified produces a $256K year-one bonus deduction. At a 42% combined tax rate, that's $107K of cash.
- ▸Under OBBBA (100%): the same $640K reclassified is now a $640K year-one deduction — $268K of cash. 2.5x the impact, same study, same fee.
What about properties placed in service before Jan 19, 2025?
Cost segregation is still highly valuable. For 2023 placements (80% bonus), 2024 placements (60% bonus), and earlier years where you've never done a study, a look-back cost seg with Form 3115 captures the missed depreciation in a single catch-up year — no amended returns needed.
Action items for 2025+
- ▸New acquisitions: order the study in year of placement to lock in 100% bonus.
- ▸Renovations / capital improvements: 100% bonus applies to qualifying improvements placed in service post-1/19/25.
- ▸Look-back studies on older buildings: still capture missed depreciation via Form 3115 — the catch-up year may land in 2025 or beyond at 100%.
- ▸Multifamily and STR investors: combine OBBBA with the short-term rental loophole for maximum offset against active income.
OBBBA is the single biggest reset to specialty tax planning in a decade. If your portfolio has any property placed in service after January 19, 2025, talk to a sales leader on our team about a free preliminary review.
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