Does bonus depreciation apply to DSCR loan properties?

Yes. Bonus depreciation applies to qualifying short-life components regardless of how the property is financed. Cost segregation studies unlock the biggest benefit.

Bonus depreciation applies to investment real estate based on the property and your tax situation, not the financing. DSCR financing does not affect depreciation eligibility - what matters is the property's asset class and your active vs. passive investor status. Bonus depreciation rules (2024): 60% of qualifying short-life property (5-year, 7-year, 15-year class life) can be deducted in the year placed in service. Bonus phases down: 80% in 2023, 60% in 2024, 40% in 2025, 20% in 2026, 0% in 2027 (subject to legislation changes). Cost segregation studies are the unlock - they break a building purchase into component asset classes: 5-year (carpet, appliances, removable equipment), 7-year (specific commercial use items), 15-year (parking lots, landscape, fences), and 27.5-year (the building shell). Without cost seg, the entire building depreciates over 27.5 years. With cost seg, 15-25% of basis typically moves into 5-15 year classes, eligible for bonus. Example: $400K residential rental, $320K depreciable basis, 20% reclassified to short-life ($64K). 60% bonus = $38K front-loaded deduction in year one. Cost of cost seg study: typically $5-10K for residential, $15-30K+ for commercial. Worth it once basis exceeds ~$300K.