The Tax Beat
Cost Segregation & 179D Updates for Real Estate
Why It Matters
Understanding and leveraging these incentives can dramatically improve cash flow for developers, owners, and designers by front‑loading tax deductions, which is especially critical as the 179D benefit expires for projects starting after June 30, 2024. The episode equips listeners with timely guidance to act now and avoid missing out on potentially millions of dollars in tax savings.
Key Takeaways
- •Cost segregation accelerates depreciation, boosting early cash flow
- •Section 179D offers up to $5.94 per square foot deduction
- •2026 deadline ends 179D for projects starting after June 30
- •Permanent 100% bonus depreciation strengthens cost segregation incentives
- •Combined cost seg and 179D analysis maximizes overall tax savings
Pulse Analysis
Cost segregation studies let real‑estate owners and developers reclassify building components to shorter recovery periods, pulling depreciation into the first tax year. The technique applies to both new construction and retrofits, allowing taxpayers to capture 100% bonus depreciation on qualifying assets and, for manufacturers, to tap the new Qualified Production Property (QPP) regime. By accelerating deductions that would otherwise stretch over a 39‑year schedule, cost segregation improves cash flow, supports loan repayment, and reduces overall tax liability.
Section 179D remains a powerful incentive for energy‑efficient commercial buildings, offering up to $5.94 per square foot in federal deductions and an additional $1.16 per square foot when prevailing‑wage and apprenticeship requirements are met. The deduction applies to new projects and to upgrades of HVAC, lighting, and building envelope systems that exceed the 2007 ASHRAE 90.1 baseline by at least 25%. However, the One Big Beautiful Bill imposes a hard cutoff: construction must commence before June 30, 2026, or the deduction expires. Designers—architects, engineers, and design‑build firms—can claim the credit on behalf of owners, and retroactive claims are possible for eligible work dating back to 2006.
The latest tax reforms have made a coordinated approach essential. Permanent 100% bonus depreciation restores certainty for cost‑seg studies, while the QPP addition creates extra layers of benefit for manufacturers. When cost segregation, 179D, and QPP are evaluated together, clients capture the maximum allowable deductions and avoid missed opportunities. Cherry Becker’s full‑service model reviews the entire return, avoids contingent‑fee conflicts, and integrates federal, state, and R&D credits for a holistic tax strategy. Stakeholders should act now to meet the 179D deadline and leverage the renewed bonus depreciation landscape before competition intensifies.
Episode Description
2025 tax law changes are reshaping depreciation, energy incentives and cash‑flow planning
In this episode of the Tax Beat Podcast, Cherry Bekaert tax professionals explore recent developments benefiting cost segregation studies, the Section 179D Energy Efficient Commercial Buildings deduction (Section 179D), and bonus depreciation. Their discussion explains how these incentives help commercial real estate owners and capital‑intensive businesses accelerate deductions by shifting depreciation into earlier tax years — improving cash flow and supporting expansion, renovation and new construction projects.
Key Topics Discussed
Cost segregation fundamentals and accelerated depreciation
Permanent 100% bonus depreciation and planning considerations
QPP for manufacturers
Section 179D basics and eligibility
Section 179D opportunities for designers and tax‑exempt buildings
Retroactive planning opportunities
Construction timing and upcoming Section 179D deadlines
Coordinating multiple tax incentives for maximum benefit
The panel covers how the return of permanent, 100% bonus depreciation has renewed interest in cost segregation studies, and how manufacturers may benefit from the newly enhanced Qualified Production Property (QPP) rules. The conversation ends with an emphasis on the value of a coordinated, full‑service approach to identifying and stacking multiple tax incentives while managing compliance and risk.
Listen now to learn how cost segregation and Section 179D can work together to accelerate deductions, improve cash flow and help businesses adapt their tax strategies amid evolving legislation.
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