By Jim Wynne, President of WynneCRE
I recently listened to a podcast featuring CPA and tax strategist Kevin Bassett, on the impact of a sweeping tax reform package that has huge implications for commercial real estate investors and business owners. If you're a business owner currently leasing property in South Orange County, there’s a new reason to consider buying:
100% Bonus Depreciation is Back. According to the tax pro, this single tax code change can drastically reduce your taxable income in the same year you buy a commercial property. It will result in more than a long-term wealth builder - it turns ownership into a powerful tax strategy.
What Is Bonus Depreciation? When you buy a commercial building, you’re allowed to deduct its value over time through depreciation. Normally that takes 39 years. But with bonus depreciation, according to the podcast with Kevin Bassett, the IRS lets you accelerate those deductions by identifying components of the building (interior improvements, electrical, HVAC, etc.) that can be written off in year one. Under the new law passed in 2025, 100% of those qualifying items can now be deducted immediately - and that change is permanent.
This Is a Game-Changer for Owner-Users. When you lease, your rent is deductible - but the landlord gets all the long-term benefits. Owners can:
• Deduct bonus depreciation
• Build equity
• Lock in your occupancy costs
• Rent the building to your own business
• Control your long-term real estate destiny
Example of the Math. According to the podcast, when you buy a $1,000,000 building, a cost segregation study will identify 25% of the building as bonus-depreciation-eligible, meaning $250,000 in write-offs. If your business earned $250K in income that year, you could potentially reduce your taxable income to zero. That’s not a loophole. Sounds like smart, legal tax planning to me!
Of Course, Consult Your Tax Pro! Please talk to your tax professional about any investment that you’re considering. I am an experienced commercial real estate professional, helping property buyers in San Clemente, Rancho Santa Margarita, Lake Forest, and Foothill Ranch find well-positioned industrial and commercial properties under 20,000 square feet. This tax change comes at a critical moment, when CRE pricing has stabilized in South Orange County. We’re seeing new inventory and motivated sellers. The math now favors buyers - especially owner-users looking to stop paying rent and start building wealth.
Listen to the Podcast or Read the Summary. To better understand the 2025 tax changes - including the permanent return of 100% bonus depreciation, expanded Section 179 limits, and QBI deductions - I recommend reading this overview by Bo Barron, who interviews CPA Kevin Bassett in the Commercially Speaking podcast: 100% Bonus Depreciation Is Back – and It’s Permanent
Now is a great time to consider buying commercial property in South Orange County.
