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.
