Full Definition
Bonus depreciation allows investors to immediately deduct a percentage of qualifying property costs (typically 5-year and 15-year property) in the acquisition year, rather than over the MACRS schedule. Under the 2017 TCJA, bonus depreciation is phasing out: 100% (2022), 80% (2023), 60% (2024), 40% (2025), 20% (2026), 0% (2027+).
Related Terms
Cost Segregation
IRS-approved tax strategy that reclassifies portions of a building into accelerated depreciation schedules (5 or 15 years) instead of 39 years.
Depreciation
Tax deduction allowing investors to write off the cost of an income-producing building over its useful life — 39 years for commercial, 27.5 for residential.