100% bonus depreciation: what it means for your rental

What changed: 100% is back for qualifying property

The 2025 law restored 100% federal bonus depreciation for eligible property acquired and placed in service after January 19, 2025, subject to the applicable requirements and elections. Under current law, that restored rate has no scheduled phase-down.

The IRS issued interim guidance in Notice 2026-11. A property’s acquisition date, when it was ready and available for its intended use, and any applicable election all deserve attention before choosing a rate.

Sources for this section: [1][2]

100% of which costs?

Qualifying MACRS property with a recovery period of 20 years or less can be eligible. For a rental, that may include properly classified appliances, furniture, and certain land improvements. Both new and some used property can qualify, but used-property acquisition requirements still apply.

Land is not depreciable. The ordinary rental building itself does not become bonus-eligible simply because you obtain a cost segregation study. The study helps distinguish eligible components from the remaining building basis; it does not turn every renovation or fixture into short-life property.

Sources for this section: [3][4]

Buying in 2024 is different from buying in 2026

For ordinary eligible property placed in service during 2024, the bonus rate was generally 60%, with exceptions. The restored 100% rule does not automatically apply to earlier acquisitions.

An acquisition date is not always just the closing date. Binding-contract rules, enforceability, cancellation periods, and contingencies can matter. Review contracts rather than relying on a calendar shortcut.

Converting a property purchased in 2024 to an Airbnb, or ordering a study later, does not by itself reset its acquisition date. Furnishings or improvements acquired separately later need their own analysis. A personal-to-rental conversion also requires checking depreciable basis, generally the lower of adjusted basis or fair market value at conversion.

Sources for this section: [5][2][3]

A deduction is not a refund

Imagine an eligible asset with $10,000 of depreciable basis. A 100% allowance means potentially deducting that $10,000 in the applicable year. It does not mean receiving a $10,000 payment from the IRS, or recovering the property’s down payment.

Whether that deduction reduces your current tax bill depends on your circumstances. Passive-activity and other loss limits can delay the benefit. The result also needs to be considered alongside future depreciation recapture when property is sold.

Sources for this section: [6][7]

Five questions to bring to your tax professional

A practical review starts with the underlying facts:

• Which assets qualify, and what records support their costs and classifications?
• When was each asset acquired and placed in service, including any binding-contract considerations?
• Can the resulting deduction be used this year, or will loss limitations defer it?
• Does an available election better fit my situation, and how will my state treat the federal deduction?
• What happens if I sell the property or change its use?

Sources for this section: [2][6][7]

Turn the research into an organized starting point

You do not need to memorize depreciation terminology to start gathering your property information. Deductify’s guided workflow helps you organize rooms, photos, descriptions, and suggested components, with an analysis preview before purchase.

The AI-assisted preliminary review is a starting point for discussing the property with your tax professional—not a determination that you qualify for 100% bonus depreciation or can deduct a particular amount this year.