BiggerPockets Real Estate Podcast

890: 100% Bonus Depreciation Coming Back? (Do NOT File…Yet) w/Brandon Hall

Feb 9, 2024

Brandon Hall, CPA, discusses the upcoming return of 100% bonus depreciation, a significant tax deduction for real estate investors. He explains the benefits of bonus depreciation and the importance of understanding it before filing taxes. The podcast also covers hot housing markets, cost segregation studies, and the proposed tax law's implications for real estate investors.

40:10

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Episode guests

Brandon Hall

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Quick takeaways

The proposed tax bill 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.

Real estate investors are advised to exercise patience and hold off on filing their tax returns until software companies update their systems to reflect the new legislation.

Deep dives

Proposed Tax Bill: Overview

The proposed tax bill is gaining bipartisan support and is likely to pass through the House and Senate. It includes several key provisions that will benefit real estate investors, such as 100% bonus depreciation for 2023, 2024, and 2025. This means that real estate investors can write off a large portion of the purchase price of a property in the first year. The bill also includes indexing the child tax credit for inflation and reversing a change that required R&D costs to be amortized over five years. Additionally, there is a separate bill being proposed for an increase in the cap on state and local tax deductions from $10,000 to $20,000 for married filing joint taxpayers.

Introduction

2min

Depreciation, Bonus Depreciation, and Cost Segregation Studies

7min

Understanding Bonus Depreciation and Proposed Law

3min

Long-term implications of bonus depreciation for real estate investors

10min

Depreciation Law and Marketing Platforms

4min

Proposed Law on Tax Depreciation and Its Impact on Real Estate Investors

12min

The Importance of Tax Knowledge and Making Informed Decisions

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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