Commercial Real Estate Depreciation Acceleration & Tax Savings Analysis
| Implementation Step & IRC Reference | Completion Date | Documentation Checklist | Verified | Notes / Status |
|---|---|---|---|---|
| Engineering Study Commissioned IRC §167, §168 |
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| Detailed Study Report Received IRC §168(e) |
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| Form 3115 Filed (Change in Accounting Method) IRC §446, Rev. Proc. 2015-13 |
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| Bonus Depreciation Applied IRC §168(k) |
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| Depreciation Schedules Updated IRC §167 |
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| Look-Back Study (if applicable) IRC §481(a) |
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| Asset Category | Recovery Period | Total Amount | % of Building | Bonus Depreciation Eligible | Year 1 Deduction | Verified |
|---|---|---|---|---|---|---|
| 5-Year Property Carpets, decorative fixtures, landscaping |
5 years | |||||
| 7-Year Property Furniture, fixtures, equipment |
7 years | |||||
| 15-Year Property Land improvements, parking, fencing |
15 years | |||||
| 27.5/39-Year Property Building structure, roof, HVAC |
27.5/39 years | N/A | ||||
| TOTALS | - | $0 | 100% | $0 | $0 | - |
| Description | Amount | Tax Rate | Tax Savings |
|---|---|---|---|
| Year 1 Accelerated Depreciation | $0 | $0 | |
| Look-Back Catch-Up (if applicable) | 37% | $0 | |
| 5-Year Total Benefit vs. Straight-Line | 37% | $0 | |
| TOTAL TAX SAVINGS (Year 1 + Look-Back) | - | $0 | |
One Big Beautiful Bill Act (OBBB) - Signed July 4, 2025
100% Bonus Depreciation Permanently Reinstated!
The OBBB permanently restores 100% first-year bonus depreciation for qualified property acquired and placed in service after January 19, 2025. This is a dramatic change from the phase-out schedule that was in effect.
Before OBBB (Phase-Out Schedule):
After OBBB: 100% PERMANENTLY (for property acquired/placed in service after 1/19/25)
Critical Dates:
Section 179 Enhancement:
NEW: Qualified Production Property (QPP) - 100% Depreciation
The OBBB creates a special 100% depreciation allowance for newly constructed commercial real estate used in manufacturing, production, or refining activities:
This is huge for manufacturing facilities! You can now expense the entire building cost, not just equipment.
Cost Segregation Strategy Impact:
With 100% bonus depreciation permanently restored, cost segregation studies are MORE VALUABLE THAN EVER. Every dollar reclassified from 39-year property to 5, 7, or 15-year property now gets a 100% first-year deduction instead of being spread over decades. For a $2 million building with typical 30% reclassification, that's $600,000 in immediate deductions vs. ~$15,000/year under straight-line.
⚡ Action Item: Properties acquired after January 19, 2025 should be immediately evaluated for cost segregation to maximize 100% bonus depreciation benefits!
This workpaper documents cost segregation study results and implementation for Eiduk Tax & Wealth clients. Cost segregation studies must be performed by qualified engineering firms using IRS-compliant methodologies. Form 3115 (Application for Change in Accounting Method) is required for look-back studies. All study reports and supporting documentation must be maintained for IRS audit defense. The One Big Beautiful Bill Act (OBBB) signed July 4, 2025 permanently restored 100% bonus depreciation for property acquired and placed in service after January 19, 2025.