Facts
Which rate applies
The acquisition and placed-in-service facts that decide the bonus rate for each property.
Bonus depreciation is back and permanent.
Qualifying property acquired after January 19, 2025 is eligible for 100% first-year bonus depreciation, and the 2025 law made that rate permanent. An engineered study is what puts more of a commercial building inside its reach.
Bonus reaches the short-life property. The study creates it.
Bonus depreciation lets you deduct the full cost of qualifying property in the year it is placed in service. It applies to property with a recovery period of 20 years or less, which is exactly the 5-, 7- and 15-year population an engineered study identifies, and never the 27.5- or 39-year structure.
The two only work together. Without a study, most of a commercial building sits in a life bonus cannot reach. With one, every component moved into a short life is property bonus applies to.
Which property bonus reachesRecovery period of 20 years or less
| Property | Life | Bonus |
|---|---|---|
| 5-year personal property | 5-year | eligible |
| 7-year property | 7-year | eligible |
| 15-year land improvements and QIP | 15-year | eligible |
| Residential rental structure | 27.5-year | not eligible |
| Nonresidential structure | 39-year | not eligible |
Qualified production property under §168(n) is a separate provision that can reach the production portion of a qualifying building. QPP studies
The acquisition date test
Bonus depreciation stepped down after 2022. The 2025 law restored 100% bonus depreciation for qualifying property acquired after January 19, 2025, and made it permanent rather than scheduling another phase-down.
The date is an acquisition test, not just a placed-in-service test. Property acquired under a written binding contract entered into before January 20, 2025 is generally treated as acquired before the cutoff, and properties acquired around that boundary need their facts checked rather than assumed.
A look-back study applies the rules that governed the property when it was acquired and placed in service. It still delivers every missed year of depreciation in the current year.
General information, not tax advice. Bonus depreciation rules contain acquisition date, binding contract and related-party tests that turn on specific facts. Confirm treatment with your CPA.
What we look at with you
Population
What bonus can reach
The 5-, 7- and 15-year property identified in the engineered study, component by component.
Elections
Class-by-class choices
The component detail your CPA needs to claim bonus, or elect out of it, class by class.
Bonus depreciation questions
Still have a question? Ask Engineering.
What does acquired after January 19, 2025 mean?
It is an acquisition-date test. Property acquired after that date is eligible for 100% bonus depreciation. Property acquired under a written binding contract entered into before that date is generally treated as acquired before it, so the facts around the contract matter.
Does bonus depreciation apply to the building itself?
No. The 39-year structure, and the 27.5-year structure of residential rental property, are not bonus eligible. Bonus applies to property with a recovery period of 20 years or less, which is exactly the 5-, 7- and 15-year population a cost segregation study identifies.
Is qualified improvement property bonus eligible?
QIP has a 15-year recovery period, which places it inside the 20-year threshold. Identifying QIP correctly inside a renovation is worth doing even when the spend is not 5-year personal property.
Can I take bonus on a look-back study?
The bonus rate is set by the property's acquisition and placed-in-service facts, not the year you commission the study. A look-back applies the rules that governed the property, and still delivers every missed year of depreciation in the current year.
Should we elect out of bonus?
Sometimes. Electing out can make sense where you would otherwise create losses you cannot use. It is a class-by-class, return-level decision for your CPA; our job is to make sure the component detail exists so either choice is available.
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