Big Win For Real Estate Investors – 100% Bonus Depreciation Is Back 

Big Win For Real Estate Investors – 100% Bonus Depreciation Is Back 

The market continues to look for its footing, with transaction volume down 70-80% year-over-year due to a combination of a lack of sellers, elevated interest rate volatility, and sidelined commercial real estate investors who are consumed with navigating the challenges they created from overly aggressive purchases they made over the past two years. However, with billions of dollars being raised by both small and large funds, it’s clear that sentiment has the potential to shift very quickly and there is perhaps more capital standing by to purchase properties in default than there is actual distressed properties.  According to Brookfield Asset Management, which is raising $150 billion this year, today represents the best opportunities in real estate since 2009.

While we don’t fully agree with their sentiment, at least not with the same exuberance, we do believe the risk-adjusted return profile for commercial real estate has become increasingly enticing. With that said, we are not in an era where investors can indiscriminately purchase assets and expect to ride the beta wave to outsized returns. Nuance is key, and for those with the ability to target well-located, high-quality properties that have traditionally provided greater downside protection, it’s time to stay focused.

We hope that you had a relaxing, enjoyable and safe 4th of July celebration! Over the weekend, Congress passed the hallmark reconciliation bill, dubbed the One Big Beautiful Bill Act (OBBB), which returns 100% bonus depreciation. While there are other positive provisions in the bill, we are highlighting bonus depreciation because it remains one of the most powerful tools available to reduce taxable income, and enhance after-tax returns—making it a cornerstone of our firm’s tax-advantaged investment strategy. 

What Are the Details? 

• This enables real estate investors to pull forward depreciation and generate significant tax losses in the first year of ownership of an asset (NOTE – these losses are paper losses and not actual losses)  

• The bill is retroactive, meaning any property acquired after January 19, 2025, is eligible for bonus depreciation 

• The change is permanent, so will not have a phasing out period like the current law includes (prior to this bill bonus depreciation for 2025 would have been 40%) 

Why Should You Care? 

• Paper losses generated from bonus depreciation can be used to offset passive income from other investments, reducing investors’ net tax liability 

• The estimated size of the Year 1 paper loss for an investment in a multifamily real estate property is now ~50-70% rather than ~25% (assumes you complete a cost segregation study) 

For example, if you invest $100,000 then your tax reporting is projected to show a loss of ~$50,000 to $70,000, which you can use to offset cash flow from the existing property as well as against other qualified income 

Market Impact 

• 100% bonus depreciation was initially signed into law in 2017 and most will agree was a net positive for the real estate market as it encouraged higher transaction volume and attracted additional capital 

• We anticipate the OBBB to have a similarly positive market impact over a multi-year period 

• With transaction volume remaining slow and multifamily valuations still down 20-40% from 2022 levels, this is a welcome sign. Investors that have been prudent over the last 2 years are well-positioned to capitalize on outsized tax benefits and the positive momentum this bill brings 

Despite muted overall transaction volume in the last 4 months, we have successfully acquired two cash flowing assets at a discount to replacement cost that we believe will benefit from the rebounding of this current real estate cycle. Below is an overview of our recent acquisitions. Our team specializes in sourcing compelling opportunities and we are optimistic that we will continue to be active for the remainder of 2025. Please reach out to the team if you are interested in hearing about our existing pipeline of opportunities or have any questions. 

Citrus Run – Acquired in June 2025 

Cleveland Crossing – Acquired in March 2025 

What We Do

We are strategic real estate investors.

At Vanamor, we combine an institutional approach with an often overlooked middle-market focus to employ a flexible and disciplined investment philosophy. Our goal is to provide stable cashflow with above-market total returns. Since inception, Vanamor has averaged a greater than 33% annual return with an average of 8% annual cashflow distribution.