BREAKING: "Big Beautiful Bill" Passes with PERMANENT 100% Bonus Depreciation — What Real Estate Investors Need to Know

After months of speculation, it's official. The House passed the "Big Beautiful Bill" last night with a narrow 216-213 vote, following the Senate's dramatic 51-50 passage earlier this week. President Trump is scheduled to sign the legislation today, July 4th, at 5pm ET.

For real estate investors and property owners, this represents the most significant tax opportunity in decades, with permanent 100% bonus depreciation as the centerpiece.

The Game-Changer: Permanent 100% Bonus Depreciation

The headline for cost segregation clients couldn't be clearer: 100% bonus depreciation becomes permanent for property acquired and placed in service after January 19, 2025.

This isn't a temporary extension or a phase-out. It's permanent. Every dollar of qualified property identified in a cost segregation study becomes immediately deductible in year one – forever.

What this means for property owners:

• At current 60% bonus depreciation, a $5M property might generate $1.2M in first-year deductions
• Under permanent 100% bonus, that same property will generate $2M in first-year deductions
• That's an additional $800,000 in deductions, or $296,000 in cash at a 37% tax rate

The bill eliminates the scheduled phase-down that would have reduced bonus depreciation to 40% in 2025, 20% in 2026, and 0% in 2027. No more rushed year-end acquisitions to beat depreciation deadlines.

Key Real Estate Provisions That Made the Final Bill

1. Business Interest Limitations Return to EBITDA

What Passed: Depreciation and amortization expenses will no longer count against business interest deduction limits.

Why It Matters: Highly leveraged real estate investors can now deduct more interest while still taking advantage of cost segregation. This creates a powerful double benefit – accelerated depreciation plus expanded interest deductions.

For a $10M property with 65% debt and significant depreciation deductions, this could mean an additional $150,000-$250,000 in deductible interest annually.

2. SALT Cap Increased to $40,000

What Passed: The state and local tax (SALT) deduction cap increases from $10,000 to $40,000 for 2025, with small annual increases through 2029 before reverting to $10,000 in 2030.

Why It Matters: Real estate investors in high-tax states like California, New York, and New Jersey can now deduct significantly more property tax – a major victory for commercial property owners in these regions.

3. Estate Tax Exemption Raised to $15 Million

What Passed: Estate tax exemption increases to $15 million (up from the current $13.61 million).

Why It Matters: For real estate dynasty planning, this provides additional protection for passing property portfolios to the next generation without triggering estate taxes.

How Different Property Types Will Benefit

Manufacturing Facilities: The Hidden Jackpot

The bill includes special provisions for "qualified production property" placed in service before January 1, 2033. This creates an extraordinary opportunity for manufacturing facility owners:

Previous Law: Building shell depreciated over 39 years

New Law: Potentially 100% deductible in year one

A $15M manufacturing facility acquisition could generate immediate deductions approaching the full building value – an unprecedented tax benefit that essentially discounts the purchase price by 37% for taxpayers in the highest bracket.

Short-Term Rentals: Double Benefit

STR owners already benefit from material participation rules that allow them to take active losses against ordinary income. Adding permanent 100% bonus depreciation supercharges this strategy:

• A $750,000 vacation rental with $150,000 in 5-year property
• Under 60% bonus: $90,000 first-year deduction
• Under 100% bonus: $150,000 first-year deduction
• Additional tax savings: $22,200 at 37% tax rate

Multi-Family, Self-Storage, and Retail: Substantial Gains

Properties with significant short-life components will see immediate benefit from the jump from 60% to 100% bonus:

Multi-Family Example:

• $5M apartment complex with 35% qualifying property
• Current law (60%): $1.05M first-year deduction
• New law (100%): $1.75M first-year deduction
• Additional tax savings: $259,000 at 37% tax rate

Your Action Plan: What to Do Now

1. For Properties You Already Own:

• Complete planned cost segregation studies now for properties placed in service in 2024 (still subject to 60% bonus)
• Consider "look-back" studies for properties acquired in recent years that never had cost segregation performed
• Review your debt structure in preparation for the EBITDA interest limitation change

2. For Future Acquisitions:

• Plan major acquisitions for after January 19, 2025 to benefit from 100% bonus depreciation
• Consider closing date timing carefully for properties currently under contract
• Target properties with high acceleration potential (hotels, medical facilities, manufacturing) for maximum benefit
• Run projections with both 40% and 100% bonus to understand the impact on your 2025 acquisitions

3. For Property Improvements:

• Evaluate the timing of planned renovations - those completed after January 19, 2025 will qualify for 100% bonus
• Document improvement costs carefully to maximize qualifying property

The Bottom Line for Real Estate Investors

The permanent 100% bonus depreciation provision creates certainty that real estate investors haven't had in years. Instead of racing against phase-out deadlines, investors can now make decisions based on business fundamentals while knowing the tax benefits will be there permanently.

For cost segregation, this means every study becomes more valuable. The ROI on cost segregation studies will effectively increase by 66% for properties acquired and placed in service after January 19, 2025 (compared to the 60% bonus rate in 2024).

This bill represents the most significant tax victory for real estate investors in recent memory. While the broader economic implications of adding $3.9 trillion to the deficit will be debated for years, the immediate impact for property owners is clear: accelerated depreciation just became permanently more valuable.

At RE Cost Seg, we're already analyzing how these changes will impact our clients' current and future properties. Contact us today to understand exactly how this historic legislation will benefit your specific real estate portfolio.

Note: President Trump is scheduled to sign the bill today (July 4th) at 5pm ET. While passage is virtually assured, we will update with final confirmation once the bill becomes law.

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