Podcast Summary: Bonus Depreciation 2025: Is the 100% Tax Break Dead?
In this episode of the 5-Minute PRIME Podcast, host Martin Maxwell breaks down the latest on bonus depreciation, helping you navigate the uncertainty and maximize your tax savings.
We’ll cover:
- What bonus depreciation is and why it’s so powerful for real estate.
- The history of bonus depreciation (from 100% down to 40%…and maybe back up?).
- The current status of bonus depreciation in 2025 (as of March 2025).
- Actionable strategies for planning your investments, regardless of potential legislative changes.
- Other key tax proposals that could impact real estate investors.
Don’t let tax uncertainty derail your plans! Subscribe now and get the clarity you need to make smart investment decisions in 2025.
Listen to 5-Minute PRIME podcast Now!
Play on your Favorite Podcast Platform
Show Notes
Key Takeaways
- Understanding Bonus Depreciation: Bonus depreciation allows real estate investors to deduct a significant percentage of the cost of qualifying assets (like property improvements) in the year they’re placed in service. In 2025, that percentage is currently at 40%, down from 100% back in 2017. This tax break is critical for improving cash flow and reducing taxable income.
- Phase-Out Schedule and Legislative Uncertainty: The original 100% bonus depreciation from Trump’s 2017 Tax Cuts and Jobs Act is being phased out. The schedule is as follows:
2023: 80%
2024: 60%
2025: 40% (current rate)
2026: 20%
2027: 0% (unless extended or revised by new legislation)
A bill to restore 100% bonus depreciation stalled in the Senate in 2024, making future changes uncertain. - Strategies for Investors in 2025:
- Don’t Delay Essential Improvements: If you need repairs or renovations, don’t wait for potential tax changes. The 40% deduction is still valuable.
- Strategic Timing for Discretionary Improvements: If feasible, consider timing improvements in case of retroactive changes to the tax code.
- Consult a Tax Advisor: Work with a professional to maximize your deductions and adapt to changing laws.
- Focus on Qualifying Assets: Ensure you’re investing in assets eligible for bonus depreciation, generally tangible personal property with a recovery period of 20 years or less.
- Other Tax Proposals to Watch:
- Opportunity Zones: Potential expiration at the end of 2026 unless extended.
- Tax Changes Affecting Tips, Overtime, and Social Security Income: Could indirectly impact investors’ overall tax burden.
Staying informed about legislative changes is essential for adapting your investment strategy.
Action Step
- Talk to Your Tax Advisor: If you’re planning property improvements this year, make sure you understand how bonus depreciation applies to your specific situation.
- Stay Informed: Track news on potential tax legislation and adjust your investment strategies as needed.
Challenge for Today
Review your upcoming property improvements and consult your tax advisor about bonus depreciation. Identify qualifying assets and maximize your deductions under the current rules.
