Bonus Depreciation Is Back. Now What?

Welcome back to On The Ground, your bi-monthly digest of what's really happening in commercial real estate, powered by DealGround.

Unless you've been living under a rock, you know the One Big Beautiful Bill Act passed on July 4. It brought 100% bonus depreciation back permanently, retroactive to January 19, 2025. That's a big deal for CRE.

Here's what you need to know. (2 Min Read)

100% Depreciation Is Back. Everyone's Moving Fast.

This changes everything. Investors can now write off the full cost of qualifying improvements and equipment as long as they own both the land and the building. The phase-down schedule that dropped to 40% in 2025? Gone. Full bonus depreciation is now permanent.

Q4 just became crunch time. Buyers who've been sitting on the sidelines will be jumping back in. Expect a rush to close before year-end to get the maximum write-off. If you're a broker, expect increased demand for qualifying assets - more offer activity, more competition from buyers. We anticipate Cap Rate compression in these assets even as the market is saturated with inventory.

Fee-Simple Assets Are Gold Right Now

To qualify, you need fee-simple ownership. That means owning the building and the land. Ground leases don't count. Expect a rush on express car washes, drive-thru restaurants, gas station/convenience stores (under 5,000 SF), and medical/dental clinics.

Just don’t forget, the fundamentals still matter. Thoughtful advisory will make the difference between your client buying just any deal for tax benefits vs. buying the best deal (the latter should always be the goal).

Ground Leases Will Be Out of Favor

No depreciation benefit here, but there's still money to be made long-term. Along with the rush for assets to bonus depreciate will come a decreased interest in ground leases. There will be amazing opportunities to purchase these “out-of-favor” assets. Some really smart people will find some amazing deals.

Sale-Leasebacks Will Increase

Get ready for a wave of sale-leasebacks but be careful. Market rent still matters. Sellers will push rents as high as possible to boost sale prices and many investors will take the bait. Again, advisory matters. Some very questionable deals will go down before the end of the year. Brokers: understand rent coverage / rent-to-sales, make sure the tenant is financially solid, and know the market area.

Not Every Tax-Advantaged Deal Is a Good Deal

Investors chasing write-offs are going to make mistakes. That's just how it goes. The listings that look amazing (big name tenants, great yields, etc.) could still end in catastrophe if the tenant's credit is shaky or the rent is impossible to maintain (ironically, these usually go hand in hand). Smart brokers focus on the basics: lease terms, quality of location, understand market rents / replaceability, and prioritize residual value.

The market just moved. DealGround helps you anticipate and see more clearly.

If you're advising clients right now, you should have better tools to obtain a clearer picture of what's actually happening.

Be Kind and Win.

DealGround

P.S. Top brokers aren’t guessing anymore. They’re logging into DealGround daily to automate prospecting, save time, and close more deals. Don’t take our word for it, start a free trial and see what others already know. Schedule time with our team.