With the passage of the One Big Beautiful Bill bringing back 100% bonus depreciation and making it part of the tax code permanently, commercial real estate brokers need to be talking about cost segregation with every client and prospect. This will create more opportunities for you to close more deals and earn more commissions.
BTW, check our our new cost segregation calculator. Go to www.CostSegCalc.com, scroll down and plug in your asset. It will generate a very accurate estimate for you to see what your tax benefits might be if you do cost segregation.
Editor’s Note: This article was originally published March 28, 2023 and has been fully updated in August 2025 to reflect new bonus depreciation rules and cost segregation strategies for mobile home and RV park owners based upon the One Big Beautiful Bill that has brought back 100% bonus depreciation. The strategies outlined below remain highly relevant and can lead to significant tax savings in 2025 and beyond. As always, please consult with your own tax advisor to see if you can benefit from the strategies discussed here.
We all know that mobile home parks and RV parks kick off tremendous cash flow for the owners. It’s a phenomenal real estate investment. There are many different groups of investors who have been trying to buy as many of these parks as they can get funds to do so. In part what they do is they buy these and then immediately cost seg them for massive income tax savings. Now with 100% bonus deprecation back due to the OBBB, new acquisitions of mobile home and RV parks will provide a tremendous depreciation expense. Often times we see between 60-80% being depreciable in year 1 with these parks (net after backing out the land value since land cannot be depreciated).
If you’re reading this blog post you probably already have a pretty good idea about cost segregation, but in case you don’t, cost segregation is a tax planning strategy where the owner segregates or reclassifies real property into shorter class lives. This allows the owner to take a bigger tax deduction earlier in the ownership of the property.
Mobile home parks and RV parks are some of the best assets for cost segregation. I will often get asked…”how might a specific property do with cost segregation?” I can usually give them a ballpark figure and then have our team run an estimate but other than C-stores and tunnel car washes, there isn’t another asset class that performs as well with cost segregation as does a mobile home park or RV park.
It’s very common for us to see 50-80% of the overall cost be able to be accelerated – i.e. depreciated in the first year of ownership. Let’s say you buy a mobile home park for $2.5 million and maybe the land is estimated to be worth $500,000. That leaves $2 million in cost basis. We would run an estimate for you and note that you could expect $900,000 – $1,500,000 in increase accumulated depreciation expense. But the actual results might reach as high as $1.7 – $1.8 million. Of course we would not know that until we completed the study. So what happens in these situations is many times these owners have other parks that kick off massive cash. They have big tax liabilities because of that. But now they buy this new park, cost seg it and get a $1 million tax deduction in that first year of buying the new mobile home park. They may not need that $1 million depreciation expense to offset the income from this newly acquired park but they do need it to offset the other income from their other parks and properties. And if you end up with more depreciation than you can use, it does just stay on your books as a loss carryforward. You will just eat into that depreciation in the next year and maybe even the following year as needed until the loss is exhausted. A cost segregation study like this might cost somewhere in the neighborhood of $5,000 – $7,000 depending upon the complexity of the property.
What kinds of property can be accelerated? Below is an example of what you might see in a cost segregation study for a mobile home park. If owners have trailer park units that they own, those usually are identified as 5 year class life property. Some owners have us calculate that value while others will put their own values on their trailers and keep them out of the study. In the study noted below, the owner would be able to accelerate $2,141,369.70. At a 37% federal income tax rate, that would be an income tax savings of $792,306. 83% of the cost of the property was able to be reclassified into shorter lives of 5 and 15 years. With 100% bonus depreciation, he was able to take all of this in year 1. I don’t know what this study cost but let’s say it was $6,500 which is an expense – not capitalized cost. That $6,500 after tax is $4,095 making the ROI 193:1….that’s 19000% return on investment. Crazy but it’s legit.
If you’d like to learn more about cost segregation or would like us to run an estimate for you, please reach out. We are happy to run numbers for anyone no matter where you are. There is no charge and no obligation. I can study properties anywhere in the United States and am happy to help.
Be sure to check out the new cost segregation calculator that we recently launched. Scroll down on this page at www.CostSegCalc.com and plug in the information for your asset. You do not need to give us an email to see the results. You will have to reach out to get an official quoted price.
If you’re involved in commercial real estate in any way from being a broker, banker, investor, owner, dealmaker, CPA, tax advisor, financial advisor, General Contractor or property manager, you are going to want to have a decent understanding of the BBB. I do not believe this is hyperbolic to say this is the biggest bill to ever hit commercial real estate. We have been digging into the bill and are looking forward to presenting the findings tomorrow, Wed. July 23rd at 11am Eastern. Please consider joining us. There is no cost. This will be a continuing education course for CPAs and they MUST register in advance in order to get credit for the course.
Breaking Open the One Big Beautiful Bill: Important Changes and a Deep Dive into Accelerating and Expensing Strategies
Topics include:
100% Bonus Depreciation: what qualifies and what does not
Bonus Depreciation – understanding the binding contract date, acquisition date and in-service date as 100% bonus is affected by these dates
179 Expensing strategies and new limits
Qualified Production Property
Research & Development Tax Credits are back
179D Energy Efficiency Tax Deductions are phasing out in 2026
Potential update on Partial Asset Disposition changes and improvements
This webinar is designed for CPAs to get continuing education credit but this will be valuable for CRE brokers, investors and of course owners of commercial property.
100% bonus depreciation is now part of the permanent tax code. Cost segregation will play a bigger role in every deal you do going forward. CRE brokers and owners don’t need to be experts, but it will be good to know a bit more about it as you incorporate it into your every day practice.
Wednesday, July 23rd, 2025 11:00am – 12pm Eastern
Breaking Open the One Big Beautiful Bill: Important Changes and a Deep Dive into Accelerating and Expensing Strategies – Registration Link
CSSI is one of the leading providers of engineering-based cost segregation studies in the U.S. We have completed more than 55,000 studies across all building types and classes. This has worked every single time it’s been done.
If you own a commercial building, a cost segregation study could significantly reduce what you owe for income taxes. We offer free estimates so you can see the potential savings / deferral and have something inhand to review with your tax advisor.
There’s still time to complete a study before the tax deadlines, but that window is closing fast. I work nationwide and can help you take full advantage of accelerated depreciation strategies.
“Since we founded VanRock Holdings nine years ago, we’ve utilized our industry expertise and local knowledge to provide strong financial results for our investors,” said Brian DeBruin, co-founder of VanRock Holdings. “Now under the Red Cedar Capital Partners umbrella, we’ll continue to provide best-in-class acquisition, construction and disposition of for-sale and build-to-rent communities.”
We are a month away from the July quarterly tax payments being due for business owners and building owners. If you own a building and have not done cost segregation yet, you could get an estimate on your building and use those estimated taxes benefits to help you calculate and lower your quarterly tax payments throughout 2025 (or a future year if you’re reading this after 2025).
We always recommend you strategize and consult with your own tax advisor on this. But let’s say you currently owe $15,000 per quarterly tax payment. You’ve owned a building for a few years and can benefit from the accelerated depreciation or bonus depreciation but you just haven’t done cost segregation on your property. So you reach out and get an estimate or a preliminary analysis. Let’s say that estimate shows we’ll save you $50,000 in income taxes for this coming year. You’re currently paying $15,000 per quarter for your taxes….with this estimate, maybe you decide to cut that number in half or more and keep that money in your bank account to use as you see fit. But this is how you can use a cost segregation estimate to help lower your quarterlies. Consult with your tax advisor.
Consolidation continues within the accounting industry as the big firms continue to get bigger. Atlanta-based Mauldin & Jenkins has announced that Greenville-based Bradshaw, Gordon & Clinkscales is merging into the company.
There are many reasons for the mergers and acquisitions to happen as firms look to expand their reach, offer more services and engage with more clients. Greenville, SC is a fast growing area in the Southeast. We have a number of small and midsized firms along with big regionals like Cherry Bekaert and Elliott Davis. It makes sense that Mauldin & Jenkins wanted a footprint here in the Upstate. That seems like a natural expansion for them from Atlanta.
Here is the release that was published about the merger. Peter Tiffany is the Managing Director Bradshaw, Gordon & Clinkscales. He is quoted as saying, “We are thrilled to join forces with a firm that shares our commitment to client service, integrity, and long-term relationships. This merger represents a strong cultural fit and an exciting opportunity to expand our capabilities while continuing to put our clients’ needs at the forefront of everything we do,” says BGC Managing Partner Peter Tiffany.
Image Credit: Crexi – Industrial Sales over $499k Jan. 1 – May 29, 2025 – South Carolina
Per the web site, Crexi, there were 205 Industrial properties over $499,000 that have sold so far in 2025 through May 29, 2025. In the image above, you can see the distribution of the industrial properties. The Upstate of South Carolina which includes Greenville, Spartanburg and Anderson had 77 sales. The Midlands area which is Columbia, had 57. Charleston had 38 closed sales.
Crexi lists industrial properties as:
Flex
Warehouse
Distribution
R&D
Manufacturing
Refrigerated / Cold Storage
If you need an estimate for cost segregation, I’m based in Greenville and work all over the state of South Carolina as well as across the U.S. Here’s a link to some of the industrial properties I’ve studied.
Oil Change Buildings have special status in the IRS tax code – kind of like C-stores but not completely. Often times these entire buildings are classified as 15 year class life as long as they meet the IRS guidelines on 50% of their revenue coming from oil (check with your own tax advisor on this). We do study a lot of these because many operators don’t get 50% of their revenue from sales of oil.
This building was placed into service in 2024 when bonus depreciation was 60%. The owner’s CPA was on the ball and had us run some numbers to see if it might make sense to do a cost segregation study on the building to see what we might squeeze out especially with the 5 year class life property. If the 5 year class life property comes in anything north of 5%, it will be a win for the owner as they will be able to take the balance of the depreciation not taken as bonus over the next 4 years. So in 2025, 2026, 2027 and 2028, they will get an increased depreciation deduction above what they would have gotten had they not done the study and just taken 60% bonus depreciation.
No doubt there have been many of these oil service buildings that have gone into service at some point in 2024…many of them could also be taking advantage of these smart tax strategy but most won’t. Either they won’t be aware of it or their CPA won’t be. It’s nice to see CPAs who are paying attention to these details.
Brands that we often see as oil change or oil service buildings include: Jiffy Lube, Take 5, Valvoline and Strickland Brothers.
Congress is debating the Trump 2025 Tax Bill for the fiscal year 2025 – 2026. The House has passed a bill and it sits in the Senate. What will happen with 100% bonus depreciation? When will it apply?
If you’re trying to follow along, I believe the House bill is called, “One Big Beautiful Bill” or “H.R. 1.” The bill will extend the 2017 Tax Cuts and Jobs Act (TCJA) provisions so many in the commercial real estate world loved!
I had some conversations recently with commercial real estate brokers and commercial building owners. Some where thinking that they might make 100% bonus depreciation retroactive to 2024. That is HIGHLY unlikely and I have not heard that discussed. It is not in the House bill. What they plan to do is to make 100% bonus depreciation available to properties placed into service as of 1/20/25 – Trump’s Innauguration Day. So you an do your studies now and apply the 100% bonus depreciation on your 2025 taxes when you file them at some point in 2026. You do not need to wait to do the cost segregation study until Congress passes the bill and the President signs it. Get your studies done to know what your tax liabilities look like.
