The Hidden Trap in 2025 100% Bonus Depreciation: Who Really Qualifies Under the OBBB Rules
- Carina Luo
- 6 hours ago
- 3 min read
As many real estate investors celebrate the return of 100% bonus depreciation under OBBB for 2025, it’s important to understand that the IRS quietly introduced new rules that may limit who actually qualifies. Many taxpayers may think they are eligible for 100% bonus when they are, in fact, subject to a lower bonus rate.
Before engaging a cost segregation study or projecting first-year tax benefits, every investor should confirm the following:
To qualify for 100% bonus depreciation in 2025, the property must be BOTH:
✔ Acquired after 1/19/2025, AND
✔ Placed in service after 1/19/2025
The IRS added the word “acquired” to the qualified property definition in late 2025 — a major departure from the original TCJA rules. This is the single biggest pitfall for 2025 investors.
If a property was purchased before 1/19/2025, it generally does not qualify for 100% bonus depreciation, even if:
it is renovated in 2025,
it is converted to a short-term rental in 2025, or
it is placed in service for the first time in 2025.
These properties may instead fall under the 40% bonus rate applicable under the prior TCJA phase-down rules — a point where many investors are caught off guard.
Cost Segregation Still Works — But Apply the Correct Bonus Percentage
Cost segregation remains a powerful tax strategy in 2025. Even at reduced bonus rates, investors can still benefit from:
accelerated first-year deductions from shorter-life assets,
multi-year tax savings, and
improved cash flow and ROI.
However, it is essential to begin the project with accurate expectations about which bonus rate applies.
Common Scenarios Where Investors Expect 100% Bonus… But Don’t Qualify
🚫 Purchased in 2024, placed in service in 2025
Acquisition occurred before the eligible period — not 100%.
🚫 Purchased years ago, but converted to STR in 2025
A change in use does not reset the acquisition date.
🚫 Purchased between 1/1/2025 and 1/19/2025, with improvements after 1/19/2025
The building does not qualify for 100%, although certain post-1/19 improvements may.
✔ Purchased AND placed in service after 1/19/2025
Likely qualifies for full 100% bonus, assuming all other requirements are met.
What Investors Should Do Before Counting on 100% Bonus
Step 1 — Confirm your acquisition date
If you purchased the property before 1/19/2025, do not assume 100% bonus applies.
Step 2 — Identify which assets may still qualify
Even if the building itself does not qualify for 100%, certain new improvements or personal property may.
Step 3 — Verify placed-in-service timing
The property must be ready and available for rent after 1/19/2025 to qualify under the new rule.
Step 4 — Coordinate early with your tax advisor
Taxpayers generally have until their tax filing deadline to complete a cost segregation study for the tax year, but clarifying eligibility early leads to better project your tax deduction and smoother execution.
Bottom Line
2025 presents significant tax opportunities, but only for investors who understand the updated rules. The new “acquired” requirement is the most critical change — and misinterpreting it can lead to overstated projections and inaccurate tax planning.
Cost segregation remains an excellent long-term strategy, but qualifying for 100% bonus depreciation now requires careful verification, not assumptions.
If you would like help analyzing whether your property qualifies for 100% bonus depreciation in 2025 — or optimizing your depreciation strategy even under a reduced rate — our team is here to support you. Smart tax planning starts before you file. Let LightUp Tax guide you through 2025 with clarity and confidence.
Book a free discovery call with our CPA here.
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