If you own real estate—or your business owns the building it operates in— you may have opportunities for significant tax savings.

With the passage of the 2025 One Big Beautiful Bill, cost segregation has become as become a significant tax strategy for real-estate investors and business owners.

So let’s break this down.

Cost segregation is a strategic tax-planning technique that accelerates depreciation by identifying and reclassifying components of a building—such as electrical, plumbing, flooring, lighting, cabinetry, millwork, and certain HVAC systems—from the standard 27.5-year or 39-year depreciation schedule into the shorter schedule.

Why does that matter?

Because under the new 2025 tax law, 100% bonus depreciation is now permanent for qualifying property placed in service after January 19, 2025. That means eligible assets identified in a cost-segregation study may be fully deducted in the first year, with no phase-down.

The law also expanded what qualifies.

Interior, non-structural improvements—classified as Qualified Improvement Property, or QIP—now clearly qualify for immediate expensing. Section 179 expensing limits were also increased to $2.5 million, with phase-outs beginning at $4 million, providing owners with more flexibility.

The goal of this strategy is larger upfront deductions, potentially lower taxable income, and improved cash flow.

Here’s a hypothetical example.

A business purchases a commercial building for $1 million.A cost-segregation study identifies $350,000 <br>that qualifies for cost segregation. Because 100% bonus depreciation is permanent, the owner can deduct that entire $350,000 in year one—potentially educing taxable income and freeing up capital for reinvestment.

This strategy may be ffective for:

  • Commercial and multifamily property owners
  • Business owners who own their facilities
  • Short-term rental owners structured properly
  • Developers, manufacturers, and R&D-intensive businesses

Beyond tax savings, cost segregation seeks to improve fter-tax cash flow, strengthens return on investment, and enhances property valuation and financing metrics.

Timing is a key factor,

The law is fully in effect now, and timing matters.

One important clarification: even if your property was placed in service years ago, you may till benefit from cost segregation today. The IRS allows owners to perform a cost-segregation study retroactively and take certain missed depreciation in the current year through a permitted accounting method change, without amending prior returns. While the new law’s permanent 100% bonus depreciation applies only to qualifying property placed in service after January 19, 2025, retroactive cost segregation can still unlock significant immediate deductions based on the depreciation rules in effect when the property was originally placed in service.

Cost segregation is significant tax savings available under the 2025 tax law—and its effectiveness depends on proper evaluation and implementation,

If you own real estate, recently purchased or renovated property, or plan to in the future, it may be the right time to evaluate your options in a combination of permanent 100% bonus depreciation and expanded expensing rules creates an opportunity to reduce taxes and improve cash flow.

Schedule a no-obligation 15-minute strategy session to determine whether cost segregation applies to your properties.

See how cost segregation may help you make your real estate work harder for you.

Investment advisory and financial planning services are offered through Simplicity Wealth, LLC, an SEC-registered investment adviser. SEC registration does not constitute an endorsement of the firm nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves the risk of loss. Insurance, Consulting and Education services offered through Heart Financial Group. Heart Financial Group is a separate and unaffiliated entity from Simplicity Wealth. This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives. The source(s) used to prepare this material is/are believed to be true, accurate and reliable, but is/are not guaranteed.