For owners of office and medical properties, the One Big Beautiful Bill Act rewrote the math on acquisitions. Signed into law on July 4, 2025, it permanently restored 100% bonus depreciation for qualifying property placed in service after January 19, 2025, reversing a phase-down that had cut the first-year deduction to just 40%. That change turns cost segregation from a nice-to-have into a central underwriting input. A study reclassifies building components such as specialized medical HVAC and plumbing, casework, lighting, flooring, and site improvements out of the standard 39-year schedule and into 5-, 7-, and 15-year asset classes, so every dollar reclassified into short-life property can be fully expensed in year one.
The impact is greatest in medical and specialized office space, where much of the build-out qualifies for accelerated treatment. On a multimillion-dollar acquisition, that can mean hundreds of thousands in first-year deductions, cash that owners can redeploy into tenant improvements, debt reduction, or their next purchase. And because the provision is now permanent, it removes the deadline-driven guesswork of the prior phase-out. One caution is worth naming: accelerated depreciation raises recapture exposure at sale, so it should be modeled against the hold plan rather than treated as a reflexive year-one grab. For buyers weighing office and medical assets today, cost segregation has moved from afterthought to a factor that can move the deal.
Economos DeWolf, headquartered in Orange County offers a valuable, on-the-ground perspective on how buyers are responding. With more than 50 years and over 400 transactions across Orange County, the Inland Empire, and Southern California, the firm is seeing cost segregation become a more prominent part of acquisition strategy and financial underwriting. As investors adjust to the new tax landscape, the conversation is no longer simply about location, cap rates or financing, it is increasingly about how tax strategy can influence returns from day one.
To contact Economos DeWolf please contact Geoff DeWolf, LEED AP at (949) 576-2751 or visit www.economosdewolf.com