Bonus Depreciation, 1031 Exchanges, and Portfolio Planning Considerations

Quick Summary

• Accelerated Tax Timing: Recent U.S. tax legislation restoring 100% first-year bonus depreciation significantly enhances the ability of real estate investors to accelerate deductions and improve early after-tax cash flow.
• Preservation of Core Real Estate Tools: The continuation of Section 1031 like-kind exchanges, improved interest deductibility, and permanent treatment of several incentive programs reinforce real estate’s long-standing tax advantages.
• Planning Over Promotion: These provisions primarily affect the timing of taxation rather than its elimination, increasing the importance of coordinated tax, financing, and exit planning for long-term investors.