If you own apartments in Southern California — from Pasadena and the San Gabriel Valley to the Inland Empire — the rules just changed.
The recently passed “Big, Beautiful Tax Bill” includes provisions that could significantly impact how you manage, grow, and protect your portfolio. From 100% bonus depreciation to expanded opportunity zone benefits, these changes open new doors for tax savings and cash flow — but only if you understand how to use them.
We sat down with CPA Stephen Hall, my personal tax advisor, to break down exactly what landlords need to know. Below, I’ll outline the key changes, why they matter for your investments, and how you can position yourself to take advantage of them before the next tax cycle.
What Is the “Big, Beautiful Tax Bill”?
This newly passed legislation makes substantial updates to federal tax law — many of which are landlord-friendly. Key features include:
- The return (and permanence) of 100% bonus depreciation
- Expanded childcare credits and deductions for seniors
- Increased state and local tax deduction caps
- Permanent designation for certain Opportunity Zones
- New deductions for vehicle loan interest on qualifying U.S.-assembled cars
- Changes to how casualty losses from disasters can be deducted
For multi-family property owners, these changes represent potential six-figure savings — but only if you align your tax strategy to the new rules.
How It Works / Why It Matters
100% Bonus Depreciation
Under previous rules, many landlords could only deduct 3–4% of a property’s value annually through standard depreciation. With a cost segregation study, certain components could be depreciated faster — but the bonus depreciation rate had been dropping.
Now, 100% bonus depreciation is back — permanently — meaning you can deduct the full value of qualifying improvements and components in the first year. Example:
- $1M purchase with standard depreciation = $29K deduction/year
- $1M purchase with cost segregation & 100% bonus depreciation = $318K first-year deduction
That’s over $100K in immediate tax savings.
Opportunity Zones
The bill permanently extends the program and allows more areas to qualify. You can invest just the capital gains portion from a sale — keeping the original equity — and defer taxes while building long-term value.
Disaster Loss Deductions
Losses from state-declared disasters (like wildfires) can now be deducted in full the year they occur — even if the federal government doesn’t declare the area a disaster zone.
Why Multi-Family Investors Should Pay Attention
Ignoring these changes could mean leaving tens or hundreds of thousands of dollars on the table. Consider:
- Accelerated deductions could free up capital to reinvest in higher-income properties.
- Opportunity zone investments can reduce your tax burden while growing your portfolio.
- Updated insurance replacement coverage can prevent six-figure out-of-pocket losses.
In competitive Southern California markets, every dollar counts — and these strategies could be the edge that keeps your properties profitable despite rising costs and tighter regulations.
Key Takeaways for Apartment Owners
- 100% Bonus Depreciation is now permanent — act before the next election cycle changes it.
- Cost Segregation Studies can multiply your deductions in year one.
- Opportunity Zones allow partial reinvestment while keeping some sale proceeds tax-free.
- Insurance Coverage Reviews are essential as replacement costs have surged 30–40% since 2019.
- California does not follow federal bonus depreciation rules — your state return will differ.
How to Capitalize
- Order a Portfolio Review – Identify which properties are best candidates for cost segregation or 1031 exchanges.
- Consult Your CPA Now – Don’t wait until tax season; strategic moves must be made before year-end.
- Audit Your Insurance Policies – Ensure replacement coverage reflects today’s rebuild costs.
Conclusion
Tax laws will continue to evolve, but right now Southern California landlords have an opportunity to reduce taxes, preserve capital, and reinvest for higher returns. The window may not stay open forever.
If you own multi-family property and want a custom strategy to leverage these tax law changes, contact The Apartment Dealer today. We’ve helped hundreds of investors navigate complex market and legal shifts — and we can help you protect your financial legacy.
FAQs
What is bonus depreciation and why does it matter?
It allows you to deduct the full cost of certain property improvements in the year they’re made, significantly reducing taxable income.
Does California follow the federal bonus depreciation rules?
No. California still requires standard 27.5-year depreciation for residential rental properties.
What is a cost segregation study?
An engineering-based analysis that breaks your property into components with shorter depreciation schedules, unlocking larger deductions sooner.
How do I know if my property is in an opportunity zone?
The U.S. Treasury and your CPA can confirm eligibility based on zip code and updated maps.
Why review insurance coverage now?
Construction and materials costs have risen sharply, leaving many landlords underinsured and exposed to large rebuild costs after disasters.