Real Estate Bonus Depreciation ROI Calculator 2026
2026 bonus depreciation: 40% under TCJA phaseout, restored to 100% under OBBB legislation for qualifying property acquired post-Jan 19, 2025. Combined with cost segregation, year-one losses can shelter 100K+ of W-2 income for real estate professionals.
| Depreciable basis (price − land) | — |
| 5-year accelerated allocation | — |
| 15-year accelerated allocation | — |
| Total accelerated basis | — |
| Year-1 bonus depreciation deduction | — |
| Year-1 federal+state tax savings | — |
| Effective % of purchase recovered year 1 | — |
Bonus depreciation accelerates real estate deductions into year one. Combined with a cost segregation study (which reclassifies 15-30% of property basis into 5-year and 15-year buckets), high-bracket investors can recover 5-10% of purchase price as year-one tax savings. 2026 status: TCJA phaseout schedule was 40%, but OBBB legislation restored 100% bonus for property acquired after Jan 19, 2025. Real Estate Professional status unlocks W-2 offset.
Cost Segregation Unlocks Bonus Depreciation
Standard residential real estate is depreciated over 27.5 years (commercial 39 years). A cost segregation study identifies components that qualify for 5-year (carpet, appliances, removable fixtures) or 15-year (landscaping, parking lot, fencing) recovery periods. These shorter-life assets qualify for bonus depreciation. Typical reclassification: 15-30% of building basis. Cost: $5K-$15K. ROI: $30K-$200K+ in year-one deductions depending on property size.
Real Estate Professional Status Is the Multiplier
Without Real Estate Professional (REP) status, rental losses are passive — they only offset other passive income, with excess carried forward. With REP status (IRC §469(c)(7): 750+ hours per year in real property trades AND more than 50% of personal services in real estate), losses become non-passive and offset W-2, business, and portfolio income. For a doctor or executive earning $500K W-2, REP status combined with bonus depreciation can eliminate federal tax in years of large property purchases. Spousal REP qualification also works.
Last updated May 2026. Sources: IRS Publication 946 Depreciation.