Bonus Depreciation in 2026: What Property Investors Need to Know Now
General educational information. Your tax advisor determines how the rules apply to your property and return.
In this guide
The Current Bonus Depreciation RatesWhy Cost Segregation Still Matters at Reduced RatesWhat This Means for STR InvestorsWhat This Means for Long-Term Rental OwnersThe bonus depreciation landscape has changed significantly. With 100% bonus depreciation restored for property acquired after January 19, 2025, investors placing new properties in service now have access to the full first-year deduction on qualifying components. But the rules differ depending on when you acquired your property.
The Current Bonus Depreciation Rates
Both acquisition and service dates matter. These general rates apply to qualifying assets, subject to elections, contract-date rules, and other requirements:
| Acquisition Timing | Bonus Rate |
|---|---|
| Qualifying assets acquired and in service after Jan 19, 2025 | 100% |
| Placed in service 2025 (acquired before Jan 20, 2025) | 40% |
| Placed in service 2026 (acquired before Jan 20, 2025) | 20% |
| Placed in service 2024 | 60% |
| Placed in service 2023 | 80% |
| Eligible post-Sept 27, 2017 acquisitions, in service by 2022 | 100% |
The restoration of 100% bonus applies to qualifying property acquired and placed in service after January 19, 2025. The original TCJA phase-down schedule still applies to property acquired before that date.
Why Cost Segregation Still Matters at Reduced Rates
Even for property subject to the phase-down rates (40% or 20%), a cost segregation study delivers meaningful acceleration. This is because bonus depreciation is only one part of the benefit. The other part is the MACRS reclassification itself.
Shorter-life assets keep their applicable MACRS schedules even when bonus depreciation is unavailable. For example, a five-year asset using the half-year convention is generally depreciated across six tax years, not five equal annual deductions.
Bonus depreciation affects deduction timing. Its value depends on the taxpayer’s ability to use the deductions and the economics of the investment.
What This Means for STR Investors
For short-term rentals, bonus eligibility and the ability to deduct a loss against wages are separate questions. Review the average-stay rules, a complete material-participation test, and other deduction limits with your tax advisor.
What This Means for Long-Term Rental Owners
Qualifying long-term rental components can receive the same bonus rate. Passive-loss rules may defer the benefit; real estate professional status requires a separate analysis and does not remove the material-participation requirement.
Regardless of rental type, the restored 100% rate makes 2025 and 2026 acquisitions particularly favorable for cost segregation. Use the free calculator to estimate the benefit for your property, and review the full details in our savings breakdown.
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