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....
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....
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....
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....
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....
In an interview by Arda Bircan from STR Tax Loophole, Alex Bagne, President of ICS, explains how savvy investors combine cost segregation with the short-term rental loophole to minimize income taxes, grow a real estate portfolio, and build generational wealth. He discusses a real-life scenario in which a successful C-level executive earning $500K annually from his job buys a $1 million-dollar short-term rental property to produce income, and then has a cost segregation performed to generate huge tax deductions that significantly reduce his tax liabilities....
"Maximizing Tax Benefits with Opportunity Zones and Cost Segregation" coauthored by Alex Bagne was recently published by Bloomberg Tax Management Real Estate Journal. Combined, these two tax planning ideas can tremendously increase investment profitability....
Bloomberg Tax published an article written by ICS President, Alex Bagne and two fellow Certified Cost Segregation Professionals titled Maximizing Tax Benefits with Opportunity Zones and Cost Segregation....
The American Society of Cost Segregation Professionals (ASCSP) has recently updated its logo as well as the stamps used by Certified Cost Segregation Professionals (CCSPs)....
The IRS released final regulations providing guidance under IRC Sec. 1031 to implement recent changes for like-kind exchanges. Sec. 1031 allows for the deferral of gain recognition on the sale of business property if the relinquished property is replaced with a similar type of property. Prior to the Tax Cuts and Jobs Act (TCJA), both personal property and real property qualified for like-kind exchange treatment, but now only real property qualifies....