On The Market

187: 100% Bonus Depreciation Coming Back? (Do NOT File…Yet) w/Brandon Hall

Feb 8, 2024

CPA Brandon Hall discusses the potential return of 100% bonus depreciation and its massive tax benefits. They cover the hottest housing markets, the significance of bonus depreciation, misconceptions about being a real estate professional, the logistics of proposed legislation, changes in tax laws, and the importance of working with a professional.

39:32

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Brandon Hall

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Quick takeaways

The proposed tax law includes 100% bonus depreciation for real estate investors, allowing them to write off a large portion of the purchase price of a property in the first year, providing a substantial tax deduction.

Investors utilizing bonus depreciation should carefully consider the potential taxes involved, especially depreciation recapture when selling the property before the depreciation period ends, while real estate professionals and short-term rental investors may have more flexibility in offsetting other passive income with bonus depreciation.

Deep dives

The proposed tax law includes 100% bonus depreciation and other benefits for real estate investors

The proposed tax law includes several benefits for real estate investors, including 100% bonus depreciation. Bonus depreciation allows investors to write off a large portion of the purchase price of a property in the first year. The proposed law would delay the phase-out of bonus depreciation, making it 100% for 2023, 2024, and 2025. This is significant as bonus depreciation is a powerful tax benefit that helps investors reduce their taxable income. Additionally, the proposed law indexing the child tax credit for inflation and allowing immediate expensing of R&D costs can also benefit real estate professionals.

Understanding Bonus Depreciation and Its Impact on Property

01:48

Long-Term Implications of Bonus Depreciation Upon Sell

03:43

Introduction

3min

Understanding Depreciation and Bonus Depreciation in Real Estate Investing

4min

The Importance of Bonus Depreciation

8min

Misconceptions and Benefits of Being a Real Estate Professional

7min

Logistics of Depreciation Law and Proposed Legislation

6min

Changes in Tax Laws and Benefits for Real Estate Investors

10min

Understanding the Changing Tax Landscape and the Importance of Professional Help

3min

The biggest real estate tax deduction is coming back. That’s right—100% bonus depreciation is almost cleared for a triumphant return as the House pushed a new tax bill to the Senate, one that includes some massive tax deduction potential for real estate investors and everyday Americans alike. So, why is this SUCH a big deal? We’ve got Brandon Hall, CPA, on to break down why bonus depreciation could save you tens, if not hundreds, of thousands of dollars.

Everyone knows that real estate boasts some of the best tax benefits of any investment in the nation. But, the one tax benefit to rule them all is almost always depreciation. This tax write-off lets you expense a portion of your property every year and can turn your real-life gain into a paper loss, so you keep your cash flow while avoiding taxes. But bonus depreciation is like regular depreciation on steroids. And the tax benefits can be massive.

So, how do you take advantage of this huge tax write-off? What do you need to know BEFORE you take it? And should you hold off on filing before this new bill passes? We’ve got answers to all that and much more in this episode, so stick around!

In This Episode We Cover:

Four of the hottest housing markets in 2024 that we’d flip houses or long-term invest in

The high-priced coastal market that we love…but wouldn’t buy rentals in

A snowy northeast market that has low prices and big rent-by-the-room potential

A sleeper city with a big price tag but solid investing benefits

The not-so-sexy market that made the number-one spot and surprised us all

Unemployment rates, home prices, average rents, and top metrics you MUST check before investing

And So Much More!

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