Bonus Depreciation and Cost Segregation
Unlock More Capital Than Ever Before
The Tax Cuts and Jobs Act (TCJA), signed into law by President Trump in December of 2017, has had an effect on a variety of taxpayers, and has made widespread changes to the Internal Revenue Service. One of the main groups of people that benefit from TCJA are commercial real estate owners and investors, who are now able to qualify for significant tax benefits including bonus depreciation and cost segregation studies.
Benefiting from The Tax Cuts and Jobs Act
Increase Bonus Depreciation
One of the main benefits of the TCJA is the increase of bonus depreciation from 50% to 100%. Prior to the new bill, bonus depreciation only applied to newly constructed or original property. Real estate owners and investors are now able to benefit from bonus depreciation. Used property that has been acquired after September 27th, 2017, and properties under $1 million can also benefit from bonus depreciation. A cost segregation study will establish what costs qualify for 100% bonus depreciation.
Expansion of Qualifying Properties
Maximize Cash flow With Additional Property write-offs
The TCJA has also expanded the list of qualifying properties to include roofs, HVAC systems, fire protection, alarm systems, and security systems. The allowable expense of these properties has been increased from $500,000 to $1,000,000, and the phase-out deduction has increased to $2.5M. Properties now include personal property that has been acquired for rental properties, furniture, and appliances.
The TCJA has opened the door for any owner or investor of a new or used property to maximize savings. A cost segregation study will identify all qualifying assets, and determine the ability to use the new bonus depreciation provisions.
100% Immediate Bonus on First Year Deductions
Immediate First Year Deduction
Bonus depreciation allows a business to take an immediate first-year deduction on the purchase of an eligible business property. Under the new law, bonus depreciation has increased from 50% to 100% for assets with a modified accelerated cost recovery system life of 20 years or less. Our team of tax experts and engineers are able to immediately write-off assets depreciated under 20 years, thus increasing cash flow.