Recap of Part 1: Federal Tax Savings Opportunity

In our last post, we laid out a scenario on the acquisition of 701 E. Ball Road in Anaheim utilizing the combination of cost segregation and bonus depreciation. Click here to review. Our model yielded a staggering federal tax savings in year 1 of $3,277,188, allowing a potential buyer to recover over a third of his down payment. This approach is made possible by recent legislation passed by Congress known as the One Big Beautiful Bill Act of 2025 (OBBBA).

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A Look Back at Game-Changing Tax Legislation

Those of us who were in the commercial real estate business in the Reagan era remember landmark legislation that allowed 15-year straight-line depreciation with a 175% declining-bonus component. This game-changing modification to the tax code was passed to jump-start an economy mired in high unemployment, high inflation, and stratospheric interest rates.

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Understanding the Tax Impact of Selling Highly Appreciated Industrial Real Estate

Making the decision to sell a highly appreciated asset can be agonizing. The very thought of writing huge checks to the IRS and the Franchise Tax Board is enough for most property owners to dismiss the idea of cashing out. Some opt for a hold-forever approach instead, while others exchange into other real estate assets to upgrade their portfolios and defer taxable events.

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Why Economics Matter in Commercial Real Estate

As commercial real estate professionals, we interact with business decision makers every day. In doing so, we learn so much about what drives decision-making. Each of you faces unique daily challenges created by a variety of economic variables. 

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Each year, we reach out around this time to weigh in on how changes in our economy and the local commercial real estate market could play into, or work against, your current investment strategy. While it doesn’t seem possible, here we are again, another year gone by, wondering why time seems to move faster every year.

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