Cost Segregation - How Savvy Investors Preserve Wealth
💰 100% Bonus Depreciation Is Back — Here’s What It Means for Real-Estate Investors
If you’ve been following my market updates, you know I’m a big believer that the smartest investors don’t just buy property — they buy the math behind it.
One of the biggest wealth-building tax tools in real estate just made a comeback: 100% bonus depreciation.
Thanks to the One Big Beautiful Bill (OBBBA) passed in mid-2025, investors can again write off 100% of qualifying property in the first year — a complete reversal of the phase-down that was supposed to shrink to 40% next year.
🏡 Quick Refresher: What Is Cost Segregation?
When you buy a property, the IRS normally makes you depreciate it over 27.5 years for residential or 39 years for commercial property.
A cost segregation study breaks down that property into its individual components — flooring, lighting, cabinetry, landscaping, etc.
Many of those assets qualify for faster depreciation (5, 7, or 15 years).
Now, with 100% bonus depreciation restored, you can write off the full value of those accelerated components in the first year — instead of waiting decades.
đź“Š Real Example
Say you purchase a $1,000,000 property in the Keys.
A cost-seg study might identify $250,000–$300,000 of components eligible for bonus depreciation.
That’s an immediate $250K+ deduction in year one.
At a 35% tax bracket, that’s roughly $87,500–$105,000 in potential tax savings.
đź•’ The Update That Changes Everything
The 2017 tax law’s bonus depreciation was phasing out (dropping from 100% → 80% → 60% → 40%), but Congress reinstated 100% expensing effective January 19, 2025.
That means:
Properties acquired and placed into service after that date once again qualify for a full first-year deduction on eligible components.
The phase-out is gone for the foreseeable future.
This applies to new or used tangible property with a useful life of 20 years or less — which often includes improvements identified through cost-segregation studies.
In short: the tax advantage that powered the last real-estate investment boom is back.
đź‘Ą Who Should Pay Attention
This update is a game-changer for:
Investors purchasing rental or vacation properties in 2025–2026.
Short-term rental owners who materially participate (and can use the losses against active income).
High-income earners planning to diversify into real estate for tax efficiency.
Developers and fix-and-hold investors preparing new projects this year.
A professional cost-segregation study usually costs between $4,000–$10,000, but can easily produce six-figure deductions when executed correctly.
⚠️ A Few Fine-Print Details
Property must be placed in service after Jan 19 2025.
It must meet the IRS definition of “qualified property.”
Always coordinate with a CPA or tax advisor who understands cost segregation — the documentation matters.
🧠Bottom Line
Real estate remains one of the few investments where you can earn cash flow, build equity, and capture paper losses that reduce your tax bill — all at once.
With 100% bonus depreciation back on the table, it’s worth revisiting your 2025 investment or refinance plans now.
If you’d like to understand how this could apply to your situation — or connect with specialists who perform cost-seg studies on Florida Keys properties — reply to this email and I’ll point you in the right direction.
