How to Use 100% Bonus Depreciation to Slash Taxes and Build Wealth

Are you leaving thousands of dollars in tax savings on the table? With Trump’s new tax bill bringing back 100% bonus depreciation—this time making it permanent—real estate investors and business owners have a massive opportunity to cut taxes and accelerate wealth.

If you’d rather watch a breakdown with my CPAs, Brandon Hall and Thomas Castelli from Hall CPA, click here to watch the full YouTube video now.

When the bill passed, I sat down with Brandon and Thomas during a live webinar for my private Passive Investor Circle.

We covered exactly how this tax strategy works, why it’s such a big deal for real estate investors, and how to use it to offset income while keeping more of your cash.

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What is 100% Bonus Depreciation?

At its core, bonus depreciation lets you write off the cost of certain property improvements and equipment immediately instead of spreading it out over decades.

In 2017, 100% bonus depreciation was introduced, allowing investors to fully depreciate qualified assets in the first year.

For real estate, this means you can deduct the value of specific components like:

• 5-year property (tangible personal property such as appliances and fixtures)

• 15-year property (land improvements such as parking lots, roads, and concrete pads)

The building itself is still depreciated over 27.5 years for residential or 39 years for commercial property.

Cost Segregation Study

However, with a cost segregation study, you can identify 20–30% of a property that qualifies for 100% bonus depreciation and deduct it all in year one.

How Does It Work?

Here’s a simple example:

• Purchase a rental property for $500,000

• Land value = $100,000 (not depreciated)

• Building = $400,000

A cost segregation study finds that 25% of the building qualifies as 5-year and 15-year property. That means you can deduct $100,000 immediately in year one on top of your standard depreciation.

The kicker? These are paper losses, meaning you can show the IRS a loss while still putting positive cash flow in your pocket. That loss can offset rental income and, depending on your tax status, potentially offset other income as well.

Why It’s a Game-Changer for Real Estate Investors

For high-income earners, 100% bonus depreciation is one of the most powerful tax tools available. Not only can it reduce your taxable income today, but it can also create suspended passive losses you can use later.

For limited partners in real estate syndications, those losses typically offset other passive income from rentals or distributions.

If you qualify as a real estate professional or use strategies like the short-term rental loophole, those losses can even offset active W-2 or business income.

Join the Passive Investors Circle

How Much Can You Really Deduct?

The percentage of the purchase price you can deduct in year one depends on the asset class:

• Single-family rentals: 15–20%

• Multifamily apartments: 20–30%

• RV parks and mobile home parks: Up to 70% thanks to concrete pads and land improvements

For example, if you buy a $1 million mobile home park, you could deduct as much as $700,000 in the first year.

What About Depreciation Recapture?

A common concern is paying it back when you sell. Depreciation recapture happens when you sell a property for more than its adjusted basis.

While it’s true you’ll pay tax on recaptured depreciation, the time value of money and the ability to reinvest your tax savings today almost always outweighs the future tax hit.

Plus, there are strategies to mitigate or defer recapture:

• The “lazy 1031 exchange” by buying another property with a cost seg in the same year

• Investing in Opportunity Zone funds

• Long-term real estate investing to use suspended losses against future gains

Key Dates to Know

The 100% bonus depreciation applies only to properties purchased and placed in service after January 19, 2025.

Properties bought before that date follow the old phased-down percentages (60% in 2024, 40% for early January 2025).

Final Thoughts

With 100% bonus depreciation now permanent, this is the time to review your portfolio and future deals.

Whether you own rental properties, invest in syndications, or run a business, this tool can help you dramatically cut taxes and accelerate your wealth-building timeline.