Accelerated Depreciation Funds

Accelerated Depreciation Funds

While real estate is typically viewed as an appreciating asset in the eyes of investors, from a tax perspective, the components of the building are depreciating assets that are eligible for tax write-offs over their useful life.

  • Accelerated or bonus depreciation allows businesses to deduct a large percentage of the cost of eligible purchases the year they acquire them, rather than depreciating them over a period of years.
  • The write-off can be taken against active or passive income.
  • The 2017 Tax Cuts and Jobs Act increased the amount of bonus depreciation and expanded the types of property that qualify.
  • By completing a cost segregation study we plan to utilize accelerated depreciation in all our acquisitions.
  • We plan to take the maximum allowable bonus depreciation on qualifying properties in the first year a property is placed into service.
  • Because the fund is taxed as a partnership for federal income tax purposes, any deductions taken in respect of bonus depreciation will pass-through to its members.
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