Bonus depreciation for qualified property placed in service in 2027 is 100% if acquired after January 19, 2025 (self-constructed property: if construction began after that date) and 0% if acquired on or before it (20% for long-production-period property and certain aircraft). In a building, bonus reaches only the 5-, 7- and 15-year property a cost segregation study identifies.
Long-production-period property and certain aircraft acquired on or before January 19, 2025 get 20% for 2027 (long-production-period property only on its basis attributable to construction or production before 2027). Bonus reaches only property with a recovery period of 20 years or less (or certain other categories, such as off-the-shelf computer software), so a cost segregation study is what finds the 5-, 7- and 15-year property inside a building that the 2027 rate can apply to.
This article is educational and is not legal or tax advice; the bonus depreciation rate, and what a cost segregation study can reclassify, turn on each property's own acquired and placed-in-service dates, so confirm them with your tax advisor before you plan a 2027 return around them.
This post is about the 2027 placed-in-service year. The cost segregation mechanics behind it are the same as in Bonus Depreciation in 2026: What Real Estate Owners Need to Know; how the acquired date itself is set is in The January 19, 2025 Line: How the Acquired-Date Test Sets Your Bonus Depreciation Rate; and the 2026 rate for older acquisitions is in Bonus Depreciation Phase-Down in 2026: The Rate for Property Acquired Before Jan. 20, 2025.
What bonus depreciation rate applies to property placed in service in 2027?
The 2027 rate depends on which version of §168(k) governs the property: the One Big Beautiful Bill Act (enacted July 4, 2025) set a 100% rate with no scheduled end date for qualified property acquired after January 19, 2025, while property acquired on or before that date stays under the version enacted by the Tax Cuts and Jobs Act, whose phase-down ends with property placed in service in 2026 (one year later for long-production-period property and certain aircraft).
| Qualified property placed in service in 2027 | Bonus depreciation rate |
|---|---|
| Acquired after January 19, 2025 (for self-constructed property, construction begun after that date) | 100%, with no scheduled end date |
| Acquired on or before January 19, 2025 (for self-constructed property, construction begun on or before that date) | 0% |
| Long-production-period property (a recovery period of at least 10 years or transportation property, subject to §263A, and with an estimated production period over one year and a cost over $1 million) acquired on or before January 19, 2025 | 20% for 2027 under §168(k)(6)(B) as enacted by the Tax Cuts and Jobs Act, but only on the part of its basis attributable to construction or production in 2026 or earlier (§168(k)(2)(B)(ii) as in effect before OBBBA) |
| Certain aircraft described in §168(k)(2)(C), acquired on or before January 19, 2025 | 20% for 2027 under §168(k)(6)(B) as enacted by the Tax Cuts and Jobs Act |
Per IRS Notice 2026-11 the acquired-date test turns on the written binding contract, not the closing date: the acquired date is the latest of the date the contract was signed, the date it became enforceable under state law, the end of any cancellation period, and the date any contingency was satisfied (Treas. Reg. §1.168(k)-2(b)(5)(ii)(B)). This applies to a written binding contract, meaning one enforceable under state law that does not limit damages to a specified amount (for example through a liquidated damages clause); under a contract that is not binding in that sense, the acquired date is generally when the taxpayer has paid or incurred more than 10 percent of the total cost, excluding land and preliminary activities (Treas. Reg. §1.168(k)-2(b)(5)(iii) and (v)). Self-constructed property, including property built for the taxpayer under a written binding contract entered into before construction began, is acquired when physical work of a significant nature begins; paying or incurring more than 10 percent of the total cost (excluding land and preliminary activities) is a safe harbor.
For an existing building bought in 2027, the acquired-date question is usually simple: property bought under a written binding contract signed after January 19, 2025 is acquired after that date, because the acquired date is never earlier than the date the contract was signed. A second condition applies to a purchase of an existing building, because its components are used property: used property qualifies only if the taxpayer had not used it at any time before acquiring it and the acquisition meets the §179(d) purchase rules that §168(k)(2)(E)(ii) applies (for example, it was not acquired from a related party, by gift or inheritance, or with a carryover basis).
Which date decides the 2027 rate: the acquired date or the placed-in-service date?
Both dates matter, for different things: the acquired date decides whether 100% bonus depreciation can apply at all, and the placed-in-service date decides the tax year the deduction is claimed in and, for property acquired on or before January 19, 2025, which phase-down rate applies.
Property is placed in service when it is first in a condition or state of readiness and availability for its specifically assigned function (Treas. Reg. §1.167(a)-11(e)(1)(i)), which for a rental building generally means ready and available to rent. For a calendar-year taxpayer, property placed in service (ready and available for its intended use) during 2027 is first depreciated on the 2027 return, whatever its acquired date.
Three dated cases show how the two dates combine for a building placed in service in 2027:
- Contract signed and binding in 2026, closing and lease-up in 2027: acquired after January 19, 2025, so its 5-, 7- and 15-year property can take 100% bonus depreciation on the 2027 return.
- Contract signed in December 2024 and binding, with any cancellation period over and any contingency satisfied on or before January 19, 2025, closing delayed to 2027: acquired on or before January 19, 2025, so the rate is 0%, even though the closing and everything visible happened after the cutoff.
- Ground-up project where physical work of a significant nature began in 2024, finished in 2027: self-constructed property begun on or before January 19, 2025, so the rate is 0%, except that 15-year property which itself qualifies as long-production-period property can take 20% on its basis attributable to construction in 2026 or earlier (§168(k)(2)(B)(ii) as in effect before OBBBA); 5- and 7-year property cannot be long-production-period property, because that category needs a recovery period of at least 10 years or transportation property. A separate property takes its own acquisition or construction-start date with no election (section 3.03 of IRS Notice 2026-11). The component election in section 3.05 of the Notice is narrower: it covers a component acquired, or whose construction began, after January 19, 2025 of a larger self-constructed property begun on or before that date, if both meet the requirements of Treas. Reg. §1.168(k)-2(c), and it is made with a statement attached to the timely filed return (including extensions) for the year the larger property is placed in service; the acquired-date test explainer covers that election.
Which parts of a building placed in service in 2027 can take bonus depreciation?
Only property with a MACRS recovery period of 20 years or less (or certain other categories, such as off-the-shelf computer software) can take bonus depreciation in 2027, under §168(k)(2)(A)(i): the 5-year and 7-year personal property and the 15-year land improvements that a cost segregation study separates from the building, plus qualified improvement property, the 15-year improvements made by the taxpayer to an interior portion of a nonresidential building and placed in service after the building itself was first placed in service, other than an enlargement, an elevator or escalator, or the internal structural framework (§168(e)(6)).
Land never takes bonus depreciation, and the building structure does not take §168(k) bonus depreciation: it is recovered over 27.5 years for residential rental property and 39 years for nonresidential real property under §168(c). The one route for a structure is a separate allowance, not bonus depreciation: under §168(n) a taxpayer may elect a 100% deduction for qualified production property, the portion of a nonresidential building used as an integral part of a qualified production activity, whose original use begins with the taxpayer, whose construction begins after January 19, 2025 and before January 1, 2029, and which is placed in service before January 1, 2031 (qualified production property, a 100% deduction for the factory structure itself).
Outside that route, a building that sits on the depreciation schedule as one lump of basis has almost nothing the 2027 rate can reach, whichever rate applies. A cost segregation study is the work that breaks that basis into its recovery classes; qualified improvement property, the 15-year asset hiding in a build-out covers the interior-improvement category in detail.
Does placing property in service by December 31, 2026 instead of in 2027 change the bonus rate?
For qualified property acquired after January 19, 2025, the rate does not change: it is 100% whether the property is placed in service (ready and available for its intended use) by December 31, 2026 or in 2027, for a calendar-year taxpayer, so the date only moves the deduction between the 2026 and 2027 returns.
For qualified property acquired on or before January 19, 2025, the date changes the rate: placed in service (ready and available for its intended use) by December 31, 2026, for a calendar-year taxpayer, its 5-, 7- and 15-year property gets 20% bonus depreciation, and placed in service in 2027 or later it gets 0%, except long-production-period property (only on its basis attributable to construction before 2027) and certain aircraft. A placed-in-service date is a fact about when the property is ready and available for use, not an election, and a bonus rate is not by itself a reason to buy, finish or rush a property.
A hypothetical illustration, at the statutory rates: a cost segregation study identifies $1,000,000 of 5-, 7- and 15-year property in a building.
- Acquired after January 19, 2025, placed in service in 2027: $1,000,000 of bonus depreciation on the 2027 return.
- Acquired on or before January 19, 2025, placed in service in 2026: $200,000 of bonus depreciation on the 2026 return, and the remaining $800,000 recovered under MACRS over 5, 7 or 15 years.
- Acquired on or before January 19, 2025, placed in service in 2027: $0 of bonus depreciation, and the full $1,000,000 recovered under MACRS over 5, 7 or 15 years, starting on the 2027 return.
These are deduction amounts, not tax saved, and bonus depreciation changes when the same basis is recovered, not how much. Whether a deduction is usable in its year depends on the owner's passive-activity position and other loss limits; Cost Segregation and the January 19, 2025 Written-Binding-Contract Cutoff on Your 2026 Return runs the 2026 side of this comparison.
Is a cost segregation study still worth doing on 2027 property that gets 0% bonus depreciation?
A cost segregation study still accelerates depreciation on property placed in service in 2027 at a 0% bonus rate, because the 5-, 7- and 15-year property it identifies is recovered over 5, 7 or 15 years under MACRS instead of over 27.5 or 39 years, though the first-year deduction is far smaller than at 100%. A cost segregation study is worth it when three conditions hold together: the basis is large enough for the accelerated deductions to outweigh the cost of the study, the deduction is usable this year given the owner's passive-activity position, and the hold is long enough to survive recapture. All three, or the honest answer is no.
An owner with 2027 property at 100% can also choose regular MACRS for a whole class by electing out under §168(k)(7); Electing Out of Bonus Depreciation After a Cost Segregation Study covers when that fits.
What is not known yet about bonus depreciation and 2027?
Three things about 2027 were not settled when this post was written on October 26, 2026, and this post assumes none of them.
- The 2027 inflation-adjusted figures. The IRS had not published the revenue procedure with its inflation-adjusted amounts for 2027, which include the §179 expensing limits, when this post was written on October 26, 2026, so this post gives no 2027 dollar limit. Check irs.gov for that revenue procedure before relying on any 2027 §179 figure.
- Proposed or final regulations. IRS Notice 2026-11 is interim guidance on §168(k) as amended by OBBBA, including the acquired-date rules; whether proposed or final regulations change any detail before a 2027 return is filed is not known.
- Your state. Whether a state follows federal bonus depreciation is set by that state's conformity rules for its 2027 tax year, which differ from state to state.
What if a building placed in service in 2027 goes on the return without a cost segregation study?
A study done after the original 2027 return is filed is a look-back study, claimed by Form 3115 or an amended return depending on the facts; a study finished before that return is filed goes on it directly, with no Form 3115. Under the automatic change procedures of Rev. Proc. 2015-13 and section 6.01 of Rev. Proc. 2025-23, the missed depreciation is claimed on Form 3115 with no amended returns when the property has been depreciated on two or more filed returns, or on one filed return if the taxpayer placed it in service in the tax year immediately before the year of change (the year of the return the Form 3115 is filed with), and the taxpayer still owned the property at the start of the year of change and meets the other eligibility rules. A prior election out of bonus depreciation cannot be undone through this change (section 6.01(1)(c)(vi) of Rev. Proc. 2025-23).
To see whether a 2027 purchase or completion is a fit for a study, the cost segregation qualifier asks two to four short questions, and how cost segregation companies compare sets out what to look for in a provider.
Frequently Asked Questions
What is the bonus depreciation rate for 2027?
The bonus depreciation rate for qualified property placed in service in 2027 is 100% when the property was acquired after January 19, 2025 (for self-constructed property, when construction began after that date), and 0% when it was acquired on or before that date, except long-production-period property and certain aircraft, which get 20% for 2027 under §168(k)(6)(B) as enacted by the Tax Cuts and Jobs Act (long-production-period property only on its basis attributable to construction or production before 2027). The rate applies only to property with a recovery period of 20 years or less (or certain other categories, such as off-the-shelf computer software), which is what a cost segregation study identifies inside a building.
Is 100% bonus depreciation still available in 2027?
100% bonus depreciation is available for property placed in service in 2027 when the qualified property was acquired after January 19, 2025, or, for self-constructed property, when construction began after that date, under §168(k) as amended by the One Big Beautiful Bill Act (enacted July 4, 2025), which set no end date for that rate. Property acquired on or before January 19, 2025 stays on the TCJA phase-down, which is 0% for a 2027 placed-in-service year except for long-production-period property and certain aircraft.
Can an owner elect out of bonus depreciation for property placed in service in 2027?
An owner can elect out of bonus depreciation for 2027 under §168(k)(7), class by class: the election covers all qualified property in that class (for example, all 15-year property) placed in service during the 2027 tax year, and that property is then recovered under regular MACRS. Once made, the election may be revoked only with the consent of the IRS, so a cost segregation study that finds 5-, 7- and 15-year property gives the owner the class-by-class choice before the 2027 return is filed.
Does a building bought in 2027 qualify for 100% bonus depreciation?
The 5-, 7- and 15-year property in a building bought in 2027 can qualify for 100% bonus depreciation, because property bought under a written binding contract signed in 2026 or 2027 is always acquired after January 19, 2025, while the building shell itself is not bonus property. The components are used property, so used property qualifies only if the taxpayer had not used it at any time before acquiring it and the acquisition meets the §179(d) purchase rules that §168(k)(2)(E)(ii) applies (for example, it was not acquired from a related party, by gift or inheritance, or with a carryover basis).
Is qualified improvement property eligible for bonus depreciation in 2027?
Qualified improvement property placed in service in 2027 can take 100% bonus depreciation when it was acquired after January 19, 2025 (for an improvement built for the taxpayer, when physical work of a significant nature began after that date), because it is 15-year property with a recovery period of 20 years or less. It is an improvement made by the taxpayer to an interior portion of a nonresidential building, placed in service after the building was first placed in service, other than an enlargement, an elevator or escalator, or the internal structural framework (§168(e)(6)); improvements begun on or before January 19, 2025 get 0% for 2027 unless they qualify as long-production-period property.
