The Hidden Power of Federal Tax Incentives in Commercial Real Estate
Stop giving Washington an interest‑free loan. With the right mix of cost segregation, 100% bonus depreciation, §179/§179D, and GreenZip™ reusable walls, you can unlock seven‑figure first‑year deductions and recycle capital into more projects.
Patriotic Capital Recycling™
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1) The Foundation: Depreciation (MACRS)
Nonresidential real property is depreciated over 39 years (27.5 years for residential rental). That’s the default—useful, but slow. Our work begins by reclassifying components to shorter lives wherever the tax law permits.
Proof‑Stacking Insight: Reclassifying building components into 5‑, 7‑, and 15‑year property via a quality cost segregation study is the on‑ramp to acceleration.
2) 100% Bonus Depreciation + Section 179
100% bonus depreciation (for eligible 5‑, 7‑, 15‑year assets) allows immediate year‑one deductions on qualified property placed in service under current law. Pair it with Section 179 expensing—up to $2.5M with a $4M phase‑out (2025)—to supercharge first‑year savings, especially for renovations and PIPs.
Eligible examples
- Interior finishes, millwork, FF&E
- Lighting, specialty electrical, select mechanical
- Site and land improvements (parking, landscaping)
- Roofs, HVAC, fire protection, and security (Section 179 categories)
3) Section 179D: Energy‑Efficient Buildings Deduction
Earn up to $5.81 per square foot for qualifying energy‑efficient improvements (lighting, HVAC, envelope) when prevailing wage and apprenticeship rules are met. This incentive can stack with bonus depreciation and cost segregation.
$5.81per SF potential deduction
25%–50%energy savings vs. ASHRAE baseline
Stackablewith cost seg + bonus
4) Additional Federal Credits That Move the Needle
- §45L Energy‑Efficient Home Credit — Up to $5,000 per unit (multifamily, senior living) for ENERGY STAR / DOE ZER.
- Historic Tax Credit (HTC) — 20% credit on certified rehabilitation expenses; ideal for adaptive reuse.
- New Markets Tax Credit (NMTC) — 39% credit over 7 years for projects in low‑income communities.
- Renewable Energy ITC/PTC — Solar, storage, and more; pair with on‑site generation strategies.
- §45Q Carbon Capture — Up to $85/ton for qualifying capture and storage projects (industrial contexts).
Proof in the Numbers
Consider a $25M hotel or healthcare development.
- Standard 39‑year depreciation: ≈ $641,000 per year in deductions.
- Tax Logic™ stack (Cost Seg + 100% Bonus + §179 + §179D + GreenZip™): $7M+ in year one deductions.
- At a 37% rate, that’s $2.5M+ of immediate cash flow to recycle into your next project.
FAQs: State Conformity & Compliance
Do states follow federal bonus depreciation?
Many states decouple from federal bonus and §179 limits, requiring add‑backs and slower deductions. We provide a state‑by‑state cheat sheet with each engagement.
Can these incentives stack?
Yes. Cost seg and bonus apply to personal‑property components; §179 can cover certain improvements; §179D sits on top for qualifying energy savings—subject to technical studies and documentation.
Is GreenZip™ actually 5‑year property?
Reusable non‑load‑bearing partitions are generally classified as personal property (shorter lives) when they meet criteria for removability and non‑structural function. We document this in the cost seg study.
Ready to See Your After‑Tax ROI Jump?
We’ll model your project, generate a proof‑stacked report, and coordinate with your CPA. If you’re a broker, we’ll embed the numbers in your OM to help your listing stand out.
