CSSI will be hosting these webinars once per month in 2025 so if you can’t make this, there will be others. Just let me know if you’d like to be on my mailing list. Also, let me know if you’d like a copy of the presentation slides and video recording. While these tend to be geared toward CPAs as this one will be a continuing education course for CPAs, CRE brokers and commercial property investors are welcome to attend if you’d like to learn more. There is now cost.
CSSI Webinar: Applying 100% Bonus Depreciation Retroactively for Commercial Property and Short-term Rentals (Airbnbs, VRBOs).
Wednesday, February 19, 2025 at 11:30am to 1pm Eastern
I study a lot of mobile home and RV parks across the country as they produce phenomenal results when it comes to cost segregation. There are few asset classes that perform better. But these things are also massive cash generators and while there are some people starting to accumulated them, it’s a disjointed, fragmented and undercapitalized asset class that is ripe for disruption, consolidation and massive improvements. Many parks that I have seen have been operated by the same guy for the past 20-30 years and usually see rents substantially under market. New owners are coming in are often making improvements and boosting cash flow – i.e. better returns.
I’d like to share a LinkedIn post from Dylan Kidd whom I’ve worked with before on a number of studies. He is a specialist in RV Parks and Campgrounds and believes in it so much that he left a well estiblished and well regarded firm here in Greenville, SC to launch his own brokerage called Campfire Capital Group that will focus on Outdoor Hospitality in the southeast U.S. I thought his post on LinkedIn nailed so many great points about outdoor hospitality, RV parks and campgrounds.
Renfrow Industrial, Spartanburg, SC – Craig Gaulden Davis Architecture
Consolidation continues in the world of architecture as South Carolina-based Craig Gaulden Davis Architecture merges with Maryland-based PBK. The new firm is called Craig Gaulden Davis | PBK.
I’m not familiar with PBK, but Craig Gaulden Davis Architects play a prominent role in design and architecture on big projects in South Carolina. Here’s some of their portfolio.
PBK has this story posted on their site about the partnership or merger.
No doubt this newly merged firm is only going to have a bigger impact on large projects across the states they serve.
Just a reminder that bonus depreciation is still available on buildings. I do expect we’ll see 100% come back soon for 2025. If you put a building into service back in late 2017 through the end of 2022, you can still grab 100% bonus depreciation on assets with class lives 20 years or less. No need to amend your tax return. You can take it on your current tax return. We can draft the required 3115 Change of Accounting form for you. Easy peasy.
Let’s say you are self renting – i.e. you are running a business out of a building you own…if you grouped that entity with the real estate in the first year you put the building into service, you can go back and grab that remaining bonus depreciation to help reduce your operating income for your business. (There may be some nuances so check with your tax advisor).
And for those who say cost segregation might not be worth it if it’s only 40%, I just completed one where the owner will get $450,000 in a depreciation expense because he did cost segregation vs. $60,000 which is what straight line depreciation was going to provide. But hey, it’s your money. If you want to leave $10k, $20k, $50k, $100k of tax savings just sitting in your building and not your bank account, that is your perogative. I’m just the messenger here letting you know of an amazing opportunity many owners still are not taking advantage of.
Don’t let your tax advisor tell you your building is not worth studying unless you have an estimate in your hands that you and your tax advisor can discuss. Get the facts.
If you’re unsure whether your property qualifies, let’s run the numbers. Message me, and I’ll get something back to you in a day or two so you can at least know if you are leaving money in your building.
Sale-leasebacks have surged in popularity over the past few years, offering building owners a way to maximize their sale price while securing a long-term lease that enhances the property’s value. A well-structured sale-leaseback often results in a desirable cap rate, making the transaction attractive to investors.
But there’s another major financial advantage many overlook—cost segregation.
For buildings involved in a sale-leaseback, a cost segregation study is a must. These are often income-producing properties with long-term owners (typically 3+ years), making them ideal candidates for accelerated depreciation. Instead of keeping the entire asset on a 39-year depreciation schedule, 20-30% (or more) of the building can often be reclassified into shorter depreciation lives, leading to:
✅ Increased cash flow ✅ Higher investment returns ✅ Lower tax liability (even if it’s just a deferral, the time value of money matters!)
In short, cost segregation is a no-brainer for sale-leaseback transactions. Running the numbers costs nothing—and it gives property owners and investors a valuable opportunity to discuss tax-saving strategies with their CPA.
CRE brokers, take note: Getting cost segregation estimates for your clients not only adds tremendous value but also positions you as a well-prepared, knowledgeable advisor. In a competitive market, small insights like these can set you apart.
Want to see what cost segregation can do for your next sale-leaseback deal? Let’s run the numbers—at no cost to you.
Drywall is a phenomenal creation but we end up with WAY too much of it in landfills. It’s a problem. By using Green Zip Tape you can help your community by keeping drywall out of your local land fills. It makes for a FANTASTIC pitch by the way to city and county councils as you are seeking your approvals. There are also fantastic tax benefits to be had.
If you are building a hotel, multi-family, office or medical facility and you are not using Green Zip Tape, you are missing out on many opportunities to improve your project from all facets…construction, environmental, tax, cash flow and value.
$10MM+ construction projects
Let’s talk about it. Give me a call anywhere in the U.S.
Take a listen to Trinity Partners Greenville Managing Broker, Partner, Edward Wilson and Senior Broker, Grayson Burgess and they discuss the market outlook for commercial real estate in South Carolina. Edward and Grayson work across the state and are based in Greenville, SC. I’ve worked with both of these gentlemen and they are tremendous resources for commercial real estate in the Upstate of South Carolina.
GE Vernova just announced a $600 million commitment to expand and improve it’s business in several locations across the U.S. Greenville will see $160 million investment that will lead to 550 new jobs.
The Greenville facility is massive spanning 413 acres with plenty of manufacturing space. They are not planning to expand the footprint of the facilities. According to the Upstate Business Journal, “the investment will be improving infrastructure and adding machinery and equipment to push production from an average of about 50 turbines per year to between 70 and 80 annually.”
Yahoo Finance has some excellent details on the capital commitment. Fuel Cell Works also has a lot more information about the innovative, technological advancements and research that is planned with this investment.
The demand for energy and data centers to power the growth of AI is exploding. There will be lots of investment in data centers despite the scare this past week from China-based DeepSeek.
For those who have a lot of income and tax liability who are building multi-family and hospitality properties, consider the following. It’s unlikely your tax, financial and construction advisors are taking all of these strategies into account.
Build with Green Zip Tape. By doing so, about 10% of your construction costs will move from 39 year life to 5 year life allowing you to take bigger depreciation deductions earlier. This is above and beyond what you would normally get with cost segregation. $10MM project might see an additional $1MM in 5 year life. At a 35% tax rate that’s $350,000 in income tax savings or deferral. No brainer.
Utilize 263(A) if you qualify. This allows you to EXPENSE indirect costs associated with the construction of your building. This works for self constructed assets. Must be a small business and fall under the government requirements (about $30MM in revenue or less). Can’t be a syndication. If you are building this for your own investment or own use, look into it. $10MM project could see 10-15% written off as EXPENSE and not capitalized. Also can be utilized in a tax year prior to your building going into service – say you started construction in 2024 but won’t finish and go into service until 2025…you an write off some of this on your 2024.
179D – Energy Efficiency Tax Deductions….this is for buildings with 40,000 SF or more (our requirement – not the government’s). We say 40,000 because there’s a cost vs the deduction analysis. At 40,000 it definitely makes sense. It might work at 30-35,000 SF. Might see a deduction of $.88/SF to $1.16/SF…could go all the way to $5/SF but many hurdles for that. Let’s call it $1/SF…that’s a $40,000 deduction for a 40,000 SF building. Nice thing is this deduction essentially comes out of the 39 year class life. It is not subject to potential limitations of bonus depreciation. If you’re going to hold the building, it’s also a no-brainer if you need to maximized deductions.
Cost segregation – of course this is the BIG tax deduction. Many building owners will see 20, 25, 30% of their building reclassified to 5 and 15 year life giving them a massive up front deduction. Without cost segregating your building, you will deduct 2.5% per year of the building cost (1/39). $10MM building cost could see $2-$3MM in depreciation expense moved to 5/15 year life. Depending upon the bonus depreciation rules at the time they might be able to take part or all of that either in year one or early on in their ownership.
As with all of this, please consult with your tax advisor before proceeding. If you’d like to discuss your project or any of these items noted above, please let me know. Connected with me on LinkedIn.
It what will go down as an historic week in U.S. history with the inauguration of Donald J. Trump to his second term as President of the United States, he made news at Davos at least for the commercial real estate industry.
Many have speculated that Trump would bring back 100% bonus depreciation in 2025 as he extends his 2017 Tax Cuts and Jobs Act. He confirmed this yesterday during his video presentation to the 3,000 attendess at Davos Switzerland where the WEF and global elites were meeting to plan our futures.
During the Q&A, Brian Moynihan ask President Trump a very broad economic question. As Trump was answering it, he made mention that he will be bringing back 100% deductibility in the first year – i.e. 100% bonus depreciation. You can hear his comments at the 30:35 mark of the video presentation. This will be great news for the commercial real estate industry. Of course he has to negoatiate this with the Democrats but this nearly got extended a year ago when Biden was President. It never made it to his desk for his signature as the Senate killed the bill. It’s different this time though. The Trump Tax Cuts are set to expire in 2025 and no one wants to be on the hook for a big tax increase. Additionally of course you have the leadership of Trump at the helm driving this instead of the much weaker Republican Congressmen and Senators. I’d be shocked if this doesn’t get approved. Not sure of the timing but I think from what I’ve heard it will be April perhaps before they get something done.
If you’re doing cost segregation studies right now for 2025 taxes, there’s no worries. When we do our studies, the results are the results and your tax advisor will apply them appropriately whether it’s 100% bonus depreciation or if it remains at 40% depreciation which is what the 2025 law current states.
It might be just a bit too early to fully assume that this will be the case for 2025 but you might want to start to run 2 scenarios with your pro-formas…one for 40% and the other at 100% bonus depreciation.
My hope is President Trump pushes to make bonus depreciation permanent. He wants America to get back to growth. The 100% bonus depreciation affects a lot more than just owners of commercial real estate. It would seem to me to be a no brainer that if you want to make American the growth engine of the world and have Trillions of dollars of capital investment find their way here, make this incentive permanent. No more 4-5 year shots for it to be renegotiated.
If you’d like to watch President Trump’s address to the attendees at Davos, the recording is below. He mentions 100% deductibilty at the 30:35 mark.
