Does the New 100% Bonus Depreciation Apply to Your Rental? One Date Decides

You've probably heard you can now write off a big slice of a property in a single year instead of spreading it over decades. That part is true, and it's permanent now rather than phasing out.

Whether it applies to your rental is a different question, and it turns on a date most people don't check.

Why anyone cares

Bonus depreciation lets you deduct the cost of qualifying property in the year it goes into service rather than over its useful life. It's back at 100%, and IRS Notice 2026-11, issued in January 2026, is the guidance setting out how it works in practice.

For the right owner that's a large deduction pulled forward by years. For plenty of others it changes nothing at all — which is the part that rarely gets said.

What it depends on

When the property went into service — and when you committed to buying it. Both dates need to fall after 19 January 2025. If a written binding contract predates that, the property stays on the older, smaller schedule even if it went into service much later. Signed in late 2024, completed in 2025, reading about the new rule now? That's the trap.

What kind of property it is. This is the one that catches landlords. Residential rental property is depreciated over 27.5 years, and that long-life building doesn't qualify. What qualifies are the shorter-life pieces inside and around it — appliances, flooring, fencing, paving. Own a house and change nothing, and this rule does very little for you.

Getting at those pieces means a cost segregation study, which costs money and doesn't always pay for itself.

Whether you could actually use the deduction. A large paper loss is worth nothing this year if the rules stop you setting it against your income. For a lot of owners with a day job, that's exactly what happens — the deduction waits. That single question decides whether a study is worth commissioning, and it's the one you'll rarely hear from someone selling them.

Worth knowing before you spend anything

There's a tail: what you deduct now reduces what you own on paper, so more comes back when you eventually sell. For many owners this is a timing play rather than a saving — valuable, but not the same thing as free money.

States don't all follow the federal rule either, and some make you add the deduction back. We haven't modelled state conformity yet, so treat everything here as the federal position.

Find out whether it pencils

Our cost segregation calculator takes your numbers and tells you plainly whether a study would pay for itself — including when it wouldn't, which for a mid-bracket owner of one long-term rental is often the answer. Free, no sign-up.

If it looks worth pursuing, it's worth an hour with someone who does this properly. You can ask to be introduced to a specialist in your state — no commitment or fee required.