The Tax Law Change Most Investors Still Don’t Know About

If you own a rental property, or you’re advising clients who do, there’s a tax law change from last year that’s still flying under the radar. It’s a big one.

What Changed and What it Means for Tax Savings

Bonus depreciation lets property owners write off a large chunk of a building’s value in year one instead of spreading it over decades. It used to be phasing out fast, down to 40% by early 2025 and headed to zero.

The One Big Beautiful Bill made it permanent at 100% for anything placed in service after January 19, 2025. The IRS put out guidance on it this January clearing up how it applies.

Property placed in service after Jan 19, 2025 gets 100% back, permanently.

What It Looks Like in Real Numbers

Paired with a cost segregation study, which breaks a property into components that qualify for faster write offs, this can mean a dramatically bigger deduction in year one.

On a $600,000 short term rental, that’s the difference between roughly $17,500 in standard depreciation and $120,000 when it’s paired with cost segregation and the new bonus rate.

Who This Actually Matters For

If you own investment property, some version of this already applies to you. Buy after January 19, 2025, and you get the full 100 percent.

If you bought before that, you still qualify for bonus depreciation, just at that year’s lower rate. You can even go back and capture what you missed on a property you already own, through a cost segregation study done now.

If you’re a Realtor, this is worth mentioning to any buyer client weighing an investment purchase, since a bigger year one deduction can change the math on a deal.

If you’re a financial planner, this is a real planning lever for clients with rental income or ones considering adding property to their portfolio.

The Bottom Line
Tax law doesn’t often hand out permanent wins. This one’s real, and it’s worth ten minutes to find out if it applies to you.

I work alongside one of the top specialized tax services teams in the country on exactly this kind of analysis, so if you want to know what this means for a property you already own or one you’re considering, reach out and let’s look at the numbers together.