This article is educational and is not tax advice. The acquired-date determination is fact-specific — confirm your property's dates with your CPA.
One Month, Two Very Different Rates
Consider two owners who each placed a $10 million commercial building in service in June 2026, and each ran a cost segregation study that identified $2.5 million of 5-, 7-, and 15-year property.
- Owner A signed a binding purchase contract in December 2024. Bonus rate: 20%. Year 1 bonus deduction: $500,000.
- Owner B signed a binding purchase contract in June 2025. Bonus rate: 100%. Year 1 bonus deduction: $2,500,000.
Same placed-in-service month. Same study. A $2 million difference in Year 1 deductions — roughly $740,000 of federal tax at a 37% marginal rate — determined entirely by when the property was acquired relative to one date: Jan. 19, 2025.
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Why Jan. 19, 2025?
The One Big Beautiful Bill Act (OBBBA), enacted in July 2025, restored permanent 100% bonus depreciation under IRC §168(k) — but only for qualified property acquired after Jan. 19, 2025 (and placed in service after that date). Property acquired on or before that date stays on the old TCJA phase-down schedule, keyed to the placed-in-service year:
- Placed in service 2022 or earlier: 100%
- 2023: 80%
- 2024: 60%
- 2025: 40%
- 2026: 20%
- 2027 and later: 0%
So the first question for any property placed in service in 2025 or later is no longer "what year did it go into service?" It is: "was it acquired — or did construction begin — after Jan. 19, 2025?" If yes, the rate is 100%, permanently. If no, the phase-down still applies, and for a 2026 placed-in-service year that means 20%.
What "Acquired" Actually Means: The Written Binding Contract Rule
In January 2026 the IRS issued Notice 2026-11, interim guidance confirming that the acquired-date determination follows the written binding contract rules carried over from the TCJA bonus depreciation regulations. The practical rules:
- Property purchased under a contract is treated as acquired on the date the written contract becomes binding — enforceable under state law without a cap on damages — not on the closing date and not on the placed-in-service date.
- The acquisition date is the latest of: the signing date, the date the contract becomes enforceable, the expiration of any cancellation period, and the date remaining contingencies are satisfied.
- A property that closed in mid-2025 but was under a binding contract signed in 2024 is a pre-Jan. 19, 2025 acquisition — phase-down rates apply even though everything visible (closing, renovation, lease-up) happened after the cutoff.
Notice 2026-11 also states that taxpayers may rely on the interim guidance for property placed in service before final regulations are published, provided it is applied consistently across all eligible property.
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Self-Constructed Property: Construction Start Controls
For property a taxpayer builds rather than buys, IRC §168(k)(2)(E)(i) treats the property as acquired when construction begins. This cuts both ways:
- Land purchased in 2022 with vertical construction starting in March 2025: the construction-start date controls, and the project qualifies for permanent 100% bonus on its short-life property.
- A development that broke ground in 2024 and delivered in 2026: construction began before the line, so the 20% 2026 phase-down rate applies.
For phased projects, commentators including Grant Thornton and BDO have noted that component-level elections may allow 100% treatment for identifiable components whose own construction began after the cutoff, even where the larger project started earlier — a fact-intensive analysis where a component-level cost breakdown becomes essential.
Why This Multiplies the Value of Cost Segregation
Bonus depreciation — at any rate — applies only to property with a MACRS recovery period of 20 years or less. The 27.5-year residential or 39-year nonresidential structure never qualifies. A cost segregation study is what identifies the 5-, 7-, and 15-year property inside the building, and every dollar it identifies is a dollar the bonus rate applies to.
At 100%, the stakes are the entire identified amount in Year 1. On the $10 million building above, the difference between running a study (identifying $2.5M of short-life property, fully expensed) and not running one (a few percent of straight-line depreciation) is most of a million dollars of first-year federal tax. Firms across the industry, including CBIZ, have made the same observation: permanent 100% bonus makes the study the gating item, because unidentified short-life basis earns nothing.
Practical Checklist
- Pull the contract, not just the closing statement. The binding-contract date is the acquired date. Check for contingencies and cancellation periods that push the date later — sometimes across the Jan. 19, 2025 line in your favor.
- For self-constructed property, document construction start. Site work, first vertical, or the more-than-10%-of-cost safe harbor from the existing regulations — your CPA will want the support.
- Do not assume the placed-in-service year sets the rate. For post-cutoff acquisitions it does not; the rate is 100% regardless of the PIS year. For pre-cutoff acquisitions, the PIS year still controls the phase-down rate.
- Placed-in-service timing still matters for when you claim. The deduction lands in the tax year the property is ready and available for its intended use (Treas. Reg. §1.167(a)-11(e)(1)).
- Prior-year properties are not shut out. A study on a property placed in service years ago captures missed depreciation through a Form 3115 accounting-method change, at the bonus rate that applied to that property's own dates.
How We Handle This
ClickDrag's intake now asks for the acquired date and, for self-constructed property, the construction start date — and the estimate you see applies the same acquired-date test your final study will use. A property acquired after Jan. 19, 2025 is modeled at permanent 100% bonus; a pre-cutoff acquisition is modeled at its statutory phase-down rate. Start with your property's dates or model scenarios on the calculator.
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Frequently Asked Questions
Is 100% bonus depreciation available for every property in 2026?
No. Permanent 100% bonus applies to qualified property acquired — or, for self-constructed property, begun — after Jan. 19, 2025. Property acquired on or before that date remains on the TCJA phase-down: 20% for a 2026 placed-in-service year, 0% for 2027 and later.
My deal closed in 2025 — do I get 100%?
Not necessarily. The acquired date is the date the written contract became binding, not the closing date. A binding contract signed before Jan. 19, 2025 keeps the property on the phase-down even if closing, renovation, and placed-in-service all happened after.
I bought the land years ago but started building in 2025. Which date controls?
Construction start. Under IRC §168(k)(2)(E)(i), self-constructed property is treated as acquired when construction begins, so a post-Jan. 19, 2025 construction start qualifies the project's short-life property for permanent 100% bonus regardless of when the land was acquired.
What did IRS Notice 2026-11 change?
It is interim guidance, not a change in the statute. It confirms the written-binding-contract framework from the TCJA regulations carries over to the OBBBA acquired-date test with minor adjustments, and it authorizes taxpayers to rely on the guidance for property placed in service before final regulations are published, applied consistently.
Does the building structure get bonus depreciation at 100%?
No. Bonus depreciation applies only to property with a recovery period of 20 years or less. The 27.5-year or 39-year structure depreciates straight-line. A cost segregation study identifies the 5-, 7-, and 15-year property inside the building that the bonus rate applies to.
