Bonus Depreciation (TCJA): Who Qualifies and What You Get
Learn how property owners can use bonus depreciation to deduct a large portion of improvement costs in the very first year.
Bonus depreciation is a tax incentive that allows you to deduct a significant portion of the cost of certain property improvements immediately rather than spreading the deduction out over many years.
Who it's for
This scheme is designed for property owners who are making capital improvements to their real estate.
What you get
You gain the ability to deduct a large percentage of the total cost of your improvements during the very first year you acquire or complete them.
What it costs you
To claim this benefit, you will likely need to invest in a detailed cost segregation study to properly identify and categorize your assets.
The catch to know
The percentage you are allowed to deduct is not fixed; it follows a phase-out schedule that changes every year. You should consult a tax professional to find out the specific percentage applicable to your current tax year.
How to apply
- Identify the capital improvements made to your property.
- Conduct a professional cost segregation study to document the expenses.
- Work with a tax professional to apply the deduction to your annual filing.