Bonus depreciation was always supposed to phase out. But thanks to the One Big Beautiful Bill Act (OBBBA), signed into law in 2025, it's now permanently back and baked into the tax code.

That means multifamily investors once again have the opportunity to fully expense qualifying property, with no sunset dates. 100% bonus depreciation is here to stay for any qualified property you place in service after January 19, 2025.

Whether you're a general partner planning an acquisition or a limited partner investing in syndications, this change can dramatically shift your after-tax returns.

You can use a Cost Seg Calculator to see how this update affects your depreciation schedule and potential tax savings.

Understanding the 2025 OBBBA Update

Before OBBBA, bonus depreciation was phasing down:

• 80% in 2023
• 60% in 2024
• 40% in 2025

OBBBA scrapped that sliding scale and made 100% bonus depreciation permanent for qualifying assets placed in service after January 19, 2025.

It's important to note one big caveat: if you signed a binding contract to acquire property before January 19, 2025, you do not qualify for 100% bonus, even if you place it in service later. The acquisition contract date is what counts, not the closing date.

What qualifies?

Any property with a MACRS recovery period of 20 years or less, including:

• 5-year property (appliances, carpet, decorative lighting)
• 7-year property (certain office furnishings, fixtures)
• 15-year property (land improvements, QIP)

And yes, used property still counts, as long as you didn't previously use it yourself.

Why Timing Still Matters

Even though there's no longer a phase-out clock ticking, the placed-in-service rules still drive the timing of your deduction. The IRS generally considers property placed in service once it is available and marketed for rent, not simply purchased.

That means you'll want to coordinate construction, lease-up, and marketing to make sure you officially place the property in service after January 19, 2025, to maximize the new rules.

Real-World Example

Say you purchase a $5 million multifamily property with a $4 million depreciable basis.

If it's placed in service before January 19, 2025 — and you signed the purchase contract before that date — you'd only get 40% bonus on eligible assets. That might accelerate around $480,000 of deductions in year one.

But if you place it in service after January 19, 2025 (with a post-Jan 19 contract), under OBBBA, you could get 100% bonus on eligible components. That could drive year-one deductions closer to $1.2 million, a difference of over $700,000 in year-one tax shelter.

For General Partners: Planning Ahead

General partners should think carefully about:

• When the property will be placed in service
• When the acquisition contract is signed
• Timing lease-up or occupancy certificates to align with these rules

Bonus depreciation is now permanently part of the tax code, but the acquisition date restriction means you still want to structure deals carefully.

For Limited Partners: K-1 Expectations

LPs typically get passive losses reported on their K-1. With 100% bonus depreciation back for good, those year-one losses could be dramatically higher, providing more flexibility in offsetting other passive income or carrying forward losses.

When you evaluate a syndication or fund, make sure to ask the sponsor about both the placed-in-service date and the binding contract date so you know what kind of bonus depreciation you're really signing up for.

What to Do Next

• Understand what qualifies: Work with your cost segregation specialist to break down short-life components.
• Review placed-in-service timing: Remember the IRS definition is "available and ready for rent."
• Watch your contract date: Sign after January 19, 2025, if you want to capture the new 100% permanent bonus.
• Model potential savings: Cost Seg Calculators can help you run the numbers.
• Coordinate with your CPA: You want to be sure your year-one deductions line up with your full investment strategy.

Final Thoughts

With 100% bonus depreciation now permanently locked in, multifamily investors have powerful new flexibility to accelerate deductions and build after-tax cash flow.

While there's no rush to beat a phase-out anymore, understanding placed-in-service rules and contract dates is critical to get these benefits. If you're already planning to buy, renovate, or stabilize a multifamily property, OBBBA gives you a permanent green light to maximize your cost segregation strategy.