Aja

100% bonus depreciation baby! It’s done. Signed and executed. What does this mean? Instead of waiting 27.5 years to depreciation an apartment building, you can take a large majority of it up front in year 1! Why do this? You can use the depreciation as a paper loss against your passive income (stocks, real estate cashflow, etc.) lowering your taxable income, allowing to keep more cash in your pocket and pay less taxes and doing it much faster with 100% bonus deprecation. BUT If you are a QREP (qualified real estate professional) you can use this paper loss against your earned income, not just passive income. Note a few things: this is state dependent as some states do not recognize 100% bonus deprecation. So if you’re in a state like NY like myself, they do not recognize it, I can only use it primarily against my Federal tax bill. In addition to this, your tax bill doesn’t just disappear. You are kicking the can down the road. Once you sell, if you don’t 1031 then you will owe the tax back in deprecation recapture (and will still owe it if you stop 1031 exchanging). Why take advantage of 100% bonus depreciation if you have to pay it back? Velocity of money. Do you want the money today or years from today? I’ll take it now so I have more money in my pocket to buy more property today to grow the portfolio! 100% bonus deprecation being back also may spur up more buying activity!