Real Estate Professionals and Bonus Depreciation Offer Tax Relief for Investors

Real‑estate investors can mitigate the passive‑loss limitations that normally restrict rental losses by qualifying as a Real Estate Professional. To meet the status, an investor must spend at least 750 hours per year on real‑estate activities and more than half of their personal services must be in that sector. Those who qualify can treat rental income and losses as non‑passive, eliminating the $25,000 active‑participation deduction cap.

Separately, bonus depreciation allows investors to immediately deduct the cost of qualifying property components such as flooring, cabinetry, landscaping and certain building systems. A cost‑segregation study identifies these short‑life assets, and the One Big Beautiful Bill Act (OBBBA) permanently restores a 100% bonus depreciation rate for qualifying property placed in service after 19 January 2025. Proper documentation and awareness of depreciation recapture rules are essential.