Since 2017, bonus depreciation has been a powerful tool for commercial real estate (CRE) investors looking to offset significant capital gains or passive income. However, this benefit is set to gradually phase out, creating a limited window of opportunity. For investors focused on tax deferral strategies, bonus depreciation offers advantages over traditional methods such as 1031 exchanges or opportunity zones. With the impending sunset of this tax break, now is the time to act — especially for those interested in investing in gas stations and convenience stores.

BONUS DEPRECIATION DEFINED

Bonus depreciation allows investors to accelerate tax deductions by writing off a substantial portion of a property's cost in the year it is placed into service, as opposed to the traditional 39-year depreciation schedule used for most CRE. Initially raised to 100 percent under the Tax Cuts and Jobs Act of 2017, bonus depreciation applies to qualifying assets with a