Can I claim bonus depreciation on used property purchased in 2025?
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Yes, you can generally claim bonus depreciation on used property purchased in 2025, provided certain requirements are met.
1. Legal Framework
Bonus depreciation is governed by IRC §168(k). The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, made significant changes to bonus depreciation, including the permanent restoration of 100% bonus depreciation for qualified property acquired and placed in service after January 19, 2025.
Qualified Property
To be eligible for bonus depreciation under §168(k), property must meet the following criteria:
- It must be MACRS property with a recovery period of 20 years or less, certain computer software, water utility property, or certain qualified improvement property.
- The property can be either new or used, as long as it meets the acquisition requirements.
- The property must be acquired and placed in service after January 19, 2025, to qualify for the permanent 100% bonus depreciation rate.
Used Property Requirements
For used property to qualify for bonus depreciation:
- The property must not have been used by the taxpayer (or a predecessor) at any time prior to its acquisition.
- The acquisition must not be from a related party, and the basis of the property must not be determined by reference to the transferor’s adjusted basis (i.e., not acquired in a nontaxable exchange such as a like-kind exchange or inheritance).
- The property must not be required to be depreciated under the Alternative Depreciation System (ADS).
Acquisition Date
- The acquisition date is generally the date a written binding contract is entered into. For property acquired after January 19, 2025, and placed in service after that date, the 100% bonus depreciation rate applies.
Exclusions
- Property acquired from a related party (as defined in §179(d)(2)) does not qualify.
- Property acquired in a nontaxable transaction (such as a like-kind exchange, inheritance, or gift) does not qualify.
- Property required to be depreciated under ADS (such as property used predominantly outside the U.S., tax-exempt use property, or property held by an electing real property trade or business) does not qualify.
Election Out
- Taxpayers may elect out of bonus depreciation for any class of property for any taxable year.
2. Summary
If you purchase used property in 2025, you may claim 100% bonus depreciation if:
- The property is eligible MACRS property with a recovery period of 20 years or less (or other qualifying property under §168(k)).
- The property was not previously used by you or a predecessor.
- The property was not acquired from a related party or in a nontaxable transaction.
- The property is not required to be depreciated under ADS.
- The property is acquired and placed in service after January 19, 2025.
If all these requirements are met, you may claim 100% bonus depreciation on the used property in 2025.
Note: State conformity to federal bonus depreciation rules varies, so you should also consider state tax implications.
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