Do you know that there is a phase out period for the current bonus depreciation law?
Bonus Depreciation Phase Out
Bonus depreciation is a legal tax law that allows for accelerated depreciation. In multifamily purchases, after a cost segregation study is performed, approximately 30% of the purchase price of a multifamily asset can be depreciated in year 1. Each deal will be different based on the cost segregation study. The 30% figure is a quick back of the envelope figure. Please consult your CPA and tax advisors. This law came into existence in 2017 but it does have a sunset or phase out period.
What is the phase out period?
- 2021 – 100%
- 2022 – 100%
- 2023 – 80%
- 2024 – 60%
- 2025 – 40%
- 2026 – 20%
- 2027 – 0%
Why do I share this story with you?
I share this because some people may not know about the impact of bonus depreciation and some may not understand that the tax law will begin to phase out.
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