We all know that tunnel car washes get 100% bonus depreciation meaning that the entire cost basis can be deducted in Year 1 provided the other criteria is met with year placed into service, purchase date or construction starting date. But let’s assume these car washes were purchased late in 2025. Even the self-serve car washes can qualify for 100% bonus depreciation for the entire cost basis.
Car washes are considered land improvements and not real property per se when it comes to depreciation. All of the improvements can be identified as 15 year class life – land improvements. Certainly much of the machinery would be 5 year life if you did a cost segregation study, but you don’t need to do one to claim all of this as 15 year life.
Let’s say you buy a car was for $700,000. Maybe the land is worth $300,000. That leaves you with $400,000 in cost basis. That can all be taken as a depreciation deduction in Year 1. You can deduct the entire thing. You can fully depreciate the property in one year. Pretty amazing.
Feel free to reach out if you have questions. I’d be happy to discuss. Here’s a short video I did on the topic.