Real Estate Bonus Depreciation Calculator

Bonus depreciation phases down: 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027.

Qualified property amount

Bonus % (current year)

Regular depreciation years

Marginal tax rate %

Year 1 deduction

$260,000

Year 1 tax savings

$96,200

Remaining basis

$300,000

How the math works

Bonus = qualified × bonus %. Y1 deduction = bonus + (remaining / years).

$500k × 40% = $200k bonus + $300k/5 = $260k Y1 deduction × 37% = $96,200 tax savings.

How to Use

Enter qualified property amount.
Enter bonus % (current year).
Enter regular depreciation years.
Enter marginal tax rate %.
Read year 1 deduction.

Frequently Asked Questions

Bonus depreciation rules?

Eligible property: ≤20-year recovery class (5, 7, 15-year). Real estate buildings (27.5/39-year) NOT directly eligible — must use cost seg to reclassify. Qualified Improvement Property (QIP): interior non-structural improvements to nonresidential buildings, 15-year, eligible. Used property eligible (post-TCJA). Phase-down: 80% (2023), 60% (2024), 40% (2025), 20% (2026), 0% (2027+). Sunset extension being debated in Congress; check current law before claiming.

How is this tax impact computed?

Tax outcomes depend on filing status, income bracket, depreciation schedule, basis adjustments, AMT exposure, and state conformity. Real estate tax planning typically involves cost segregation, 1031 exchanges, opportunity zone, depreciation recapture, passive activity rules, and entity structure (LLC vs partnership vs S-corp). This calculator provides directional analysis — final position requires CPA review.

State conformity?

States vary on conformity to federal tax code: California, NY, MA decouple selectively. Bonus depreciation: most states reduce or eliminate. QBI: most states don't conform. Section 1031: federal-only deferral, some states require state-level recapture. Property tax cap: state-specific (CA Prop 13, MI Headlee, FL SOH). Multi-state property requires apportionment analysis.

When to prioritize this strategy?

Tax strategies have setup cost, complexity, and audit risk. Cost segregation: $5–15k study, materially helps high-basis investors. 1031: 45/180 day deadlines, identification rules, qualified intermediary fees. Opportunity Zone: long hold required. Stack strategies: don't double-count benefits. CPA + tax attorney coordination essential for $1M+ strategies.