Cost Segregation + Fixed Asset Review

Mar 6, 2026

The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, significantly reshapes real estate tax planning by accelerating deductions while narrowing energy incentives. The Act permanently restores 100% bonus depreciation under §168(k), allowing immediate expensing of qualified property, including assets identified through cost segregation studies. New §168(n) enables full expensing of qualifying portions of newly constructed nonresidential buildings used in manufacturing and production, creating major benefits for industrial and logistics projects. OBBBA also permanently restructures the Opportunity Zone program with rolling 10‑year designation cycles and enhanced rural incentives, including a 30% basis step‑up through Qualified Rural Opportunity Funds. §179 expensing limits increase to $2.5 million, further supporting capital investment. At the same time, OBBBA accelerates the sunset of key energy credits, making careful timing and proactive planning between 2025 and 2031 essential to maximize tax benefits and after‑tax cash flow....

Feb 26, 2026

IRS Notice 2026‑16 provides long‑awaited guidance on Qualified Production Property (QPP), allowing eligible manufacturers to claim up to 100% bonus depreciation on qualifying production facilities. The guidance clarifies what buildings and activities qualify, outlines election and timing requirements, and explains how QPP interacts with cost segregation. For manufacturers expanding or reshoring U.S. operations, QPP can significantly accelerate depreciation and reduce the after‑tax cost of new facilities....

Sep 8, 2025

The One Big Beautiful Bill Act (OBBBA) introduced Qualified Production Property (QPP), a new category of real estate eligible for 100% bonus depreciation under IRC §168(n). QPP refers to nonresidential real property that is constructed or acquired after January 19, 2025, placed in service before January 1, 2031, and used directly in a qualified production activity....

Jul 7, 2025

With the passage of the One Big Beautiful Bill Act (OBBBA), 100% bonus depreciation was made permanent for qualified property placed in service after January 19, 2025. This legislative change significantly enhances the value of cost segregation, a proven tax strategy that accelerates depreciation deductions by identifying and reclassifying building components into shorter recovery periods—typically 5, 7, or 15 years—instead of the standard 27.5 or 39 years. By front-loading depreciation, cost segregation can substantially improve cash flow and reduce tax liability in the early years of property ownership....

Mar 28, 2025

When converting personal property to investment use, taxpayers must maintain clear documentation of both the original cost and the fair market value at the time of conversion. This documentation is crucial for supporting depreciation deductions and avoiding IRS challenges. In Sherman Derell Smith v. Commissioner, T.C. Memo. 2025-24 (March 24, 2025), the U.S. Tax Court ruled against the taxpayer, who had disputed the IRS’s denial of a depreciation deduction for a rental property on his 2018 federal income tax return. The court found that Smith failed to establish a proper depreciable basis under IRC §167 and Treas. Reg. §1.167(g)-1. This case underscores the importance of maintaining accurate records when transitioning personal property to investment use....

Mar 6, 2025

President Donald Trump signaled a strong commitment to reinstating full bonus depreciation under the Tax Cuts and Jobs Act (TCJA), a provision currently set to phase out by the end of 2026. The reinstatement, according to Trump, would be made retroactively to January 20, 2025. If implemented, this move would have significant implications for real estate investors, making cost segregation studies even more valuable in maximizing tax benefits....

Mar 3, 2025

A partial disposition occurs when a taxpayer disposes of a portion of an asset rather than the entire asset. This can happen during renovations or improvements when parts of the building are replaced or retired. For example, a taxpayer upgrading to energy-efficient LED lighting, installing a new HVAC system, replacing an aging roof, or demolishing old tenant improvements can elect a partial disposition to write off the remaining value of the removed assets in the year of disposal....

Dec 22, 2023

The short-term rental loophole allows investors in vacation homes and similar properties to offset wage income with accelerated tax deductions generated by cost segregation studies. The article titled "Expanding the Short-Term Rental Loophole with Cost Segregation," co-written by Alex Bagne, President of ICS, details the mechanics of this beneficial tax strategy....