Updated July 21, 2026
Bonus depreciation lets an owner deduct the full cost of qualifying short-life building components identified by a cost segregation study in the year they're placed in service, rather than depreciating them over decades — and 2025's One Big Beautiful Bill Act permanently restored the rate to 100% for property acquired after January 19, 2025, reversing the scheduled phase-down toward zero.
Bonus depreciation applies to property with a MACRS recovery period of 20 years or less — exactly the components a cost segregation study identifies within a multifamily building, such as certain flooring, cabinetry, site improvements, and personal property. Without a cost segregation study to break those components out, they'd otherwise ride the building's full 27.5-year residential depreciation schedule.
For an LA multifamily buyer, the return of 100% bonus depreciation materially changes year-one after-tax cash flow versus the phased-down rates that applied from 2023–2025 — worth flagging to any buyer weighing a cost segregation study on a new LA acquisition.
From the Sterman LA Multifamily Glossary — defined the way a broker actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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