BREAKING: Senate Passes "Big Beautiful Bill" with PERMANENT Bonus Depreciation

Senate Delivers Major Tax Win for Real Estate Investors in 51-50 Vote

After a grueling 24+ hour session, the Senate passed the "Big Beautiful Bill" Tuesday morning with Vice President JD Vance casting the tie-breaking vote in a dramatic 51-50 finish.

For real estate investors and property owners, this bill contains a game-changing provision: PERMANENT 100% bonus depreciation.

The marathon session featured 45 votes over 24 hours as senators bundled in blankets through the night, setting a record that surpassed the previous 2008 vote-a-rama.

Three Republican senators - Rand Paul, Thom Tillis, and Susan Collins - broke ranks to vote against the bill, creating the tie that required VP Vance's intervention.

The House must now approve the Senate's version by July 4th, but significant differences between chambers have created uncertainty.

What Real Estate Investors Need to Know:

PERMANENT 100% Bonus Depreciation - The Cost Segregation Game-Changer

The Senate version makes 100% bonus depreciation permanent - not just a temporary extension. This is substantially better than the House version that had it phasing out by 2029.

For property owners, this means every dollar of 5, 7, and 15-year property identified in cost segregation studies becomes immediately deductible - forever. The impact on real estate investment ROI cannot be overstated.

Critical Timing Detail: This would apply to properties placed in service after January 19, 2025. The timing of when you conduct a cost segregation study doesn't matter - what matters is when you placed (or will place) the property in service.

Why This Changes Everything:

• Under current law, properties placed in service in 2025 get 40% bonus depreciation
• Under the new proposal, those same properties would get 100% bonus depreciation
• For a $10M property, that's the difference between a $1.5M and a $3.7M tax deduction
• That's $2.2M in additional deductions (or about $800K in cash at 37% tax rate)

But here's what nobody's calculating: The compound effect of permanent bonus depreciation on property values.

The Hidden Manufacturing Bombshell

Buried in Section 168(k)(3) is this beauty:

"100% deduction for qualified production property placed in service before January 1, 2033"

Translation: Every wall, roof, and slab in a manufacturing facility becomes immediately deductible.

Real Example:

• $20M manufacturing facility purchase
• Traditional depreciation: 39 years
• With this provision: 100% Year One
• Tax savings at 37%: $7.4M

You're essentially buying property at a 37% discount.

Business Interest Deduction Returns to EBITDA

Both chambers agreed to revert the business interest limitation to EBITDA instead of EBIT. For leveraged real estate investors, this means depreciation and amortization are excluded from the calculation, allowing significantly more interest deductions - especially crucial for high-debt commercial properties.

QBI Deduction Made Permanent

The Senate keeps the 20% QBI deduction but makes it permanent with improved phase-in thresholds ($75k/$150k for joint filers). While the House wanted to boost it to 23%, permanence provides much-needed certainty for real estate professionals and property owners utilizing pass-through entities.

SALT Cap Remains the Battleground

The biggest point of contention:

• Senate: Maintains the $10,000 SALT cap
• House: Negotiated a $40,000 cap for couples earning under $500,000

For investors in high-tax states like California, New York, and New Jersey, this discrepancy could significantly impact state property tax deductibility.

State Conformity: The $1M Detail Everyone's Missing

Not all states will follow federal bonus depreciation rules. Here's what you need to know:

Full Conformity States (You win big):

• Texas, Florida, Tennessee, Nevada
• No state tax = pure federal benefit

Partial Conformity (Still winning):

• Most states follow federal with modifications
• Check your specific state TODAY

Non-Conformity States (You're screwed):

• California: Adds 5-7% to federal rate
• New York: Adds 6-9%
• New Jersey: Kiss that benefit goodbye

A California investor needs 150% bonus depreciation to match what a Texas investor gets at 100%.

Three Deals That Make Sense ONLY With 100% Bonus

Deal 1: The Negative Tax Property

• $5M RV park purchase after January 19, 2025
• 70% qualifies for acceleration
• 100% bonus = $3.5M deduction
• Tax savings: $1.3M
• Effective purchase price: $3.7M

Deal 2: The Manufacturing Arbitrage

• $15M facility in Ohio placed in service in 2025
• 100% building depreciation
• Plus equipment depreciation
• Total Year 1 deduction: $18M
• You make money buying it

Deal 3: The Portfolio Play

• Five $2M car washes acquired in 2025
• 65% average acceleration
• $6.5M total deduction
• Tax savings: $2.4M
• 24% cash-on-cash return from tax savings alone

Your Tax Planning Strategy

For Properties Already Owned:

• Continue with your cost segregation studies as planned
• For 2024 acquisitions, you'll still get 60% bonus depreciation
• Pre-2025 properties aren't affected by this change

For 2025 Acquisitions:

• Understand the potential bonus increase from 40% to 100%
• Run the numbers both ways when planning purchases
• The law is the law - whatever passes will apply to properties placed in service after January 19, 2025
• Consider delaying closing until after January 19, 2025 if you're in contract now

For Future Investment Strategy:

• Manufacturing properties become significantly more attractive
• Properties with high percentage of shorter-life components (car washes, hotels) are gold
• Focus on states with full tax conformity for maximum benefit

The Questions No One's Asking (But Should)

"What if I already did cost seg on a property placed in service after January 19, 2025?"
Nothing changes with your study - you'll automatically get the benefit of whatever bonus rate applies based on when your property was placed in service.

"Can I cost seg my house hack?"
If you rent any portion and it's on your tax return, yes.

"What about properties I'm building now?"
In-service date matters, not purchase date. If completion extends beyond January 19, 2025, you could benefit from the new rules.

"Should I wait for House-Senate reconciliation before making investment decisions?"
Understanding both scenarios is prudent, but if you're considering property acquisitions in 2025, this vote dramatically changes the potential tax benefits.

What Happens Next?

The House could vote as early as Wednesday, but Speaker Johnson can only lose 3 votes. Multiple factions are already signaling opposition:

• SALT-state Republicans demanding their $40k cap
• Fiscal hawks concerned about the $3.3 trillion deficit impact
• At least 6 moderates reportedly planning to vote NO

If the House changes anything, it goes back to the Senate – which is already on recess.

If the Senate version passes:

• Final passage by July 4th
• Retroactive to January 19, 2025
• The entire real estate investment landscape changes overnight

If it fails or gets modified:

• Back to negotiations
• Likely stripped-down version
• Temporary extension at best
• We stay with the current bonus depreciation phase-out schedule

Bottom Line for Real Estate Investors

The Senate passing permanent 100% bonus depreciation isn't just a tax bill. It's the largest wealth transfer to real estate investors in history.

While everyone's debating politics, smart money is understanding the implications.

The difference between 40% and 100% bonus depreciation for 2025 acquisitions? Potentially hundreds of thousands or even millions in immediate tax benefits.

Need Clarity? Calculate your potential savings under both scenarios with our depreciation calculator.

Strategic Consultation: Schedule a planning session to review your 2025 acquisition strategy

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Note: This is breaking news. Tax legislation is fluid. The law that ultimately passes will determine whether properties placed in service after January 19, 2025 receive 40% or 100% bonus depreciation.