Mortgage Process in Raleigh: The mortgage process in Raleigh isn’t just about getting approved — it’s about making sure your loan is built to close in real-world conditions. In Raleigh, Wake County, and the Triangle of North Carolina, buyers who succeed understand that execution, documentation, and local expertise matter just as much as interest rate. This guide from Martini Mortgage Group explains how the mortgage process really works, where deals fall apart, and how to prepare with clarity and confidence before going under contract.
Section 168(k) Bonus Depreciation After the One Big Beautiful Bill by Certified Mortgage Advisor Kevin Martini
Section 168(k) Bonus Depreciation After the One Big Beautiful Bill: What Every Real-Estate Investor Needs to Know.
According to Certified Mortgage Advisor Kevin Martini with the Martini Mortgage Group, the single most overlooked wealth-building opportunity for property investors in 2025 isn’t a new loan program or a trendy asset class — it’s an old provision in the tax code that just received a historic upgrade:
Section 168(k) Bonus Depreciation.
When the One Big Beautiful Bill (Public Law 119-21, July 4, 2025) was signed into law, it permanently restored 100 percent bonus depreciation for qualifying property. That one change turned a temporary tax perk into a long-term planning advantage that rewards investors who think strategically about timing, structure, and reinvestment.
Let’s unpack what the new law means, how Section 168(k) now works, and how real-estate investors — especially in markets like Raleigh and across the U.S. — can use it to accelerate wealth creation.
Table of Contents for Section 168(k) Bonus Depreciation and 2025 Tax Updates
What the One Big Beautiful Bill Actually Changed
Before 2025, the federal bonus-depreciation benefit was gradually phased out: 100% → 80% → 60% → 40%.
Each phase-down eroded investor confidence, making multi-year tax planning nearly impossible.
The One Big Beautiful Bill reversed course by:
- Restoring 100 % Bonus Depreciation for qualified property placed in service after January 19, 2025.
- Making it permanent — no more phase-outs or sunset schedules.
- Allowing both new and used property (as long as it’s new to you and used for business or income).
This permanence is critical. It gives investors and their advisors the confidence to build long-term tax-efficient portfolios rather than chasing short-term incentives.
How Section 168(k) Bonus Depreciation Works
At its core, Section 168(k) lets you deduct 100 % of the cost of qualified tangible property in the year you place it in service; instead of depreciating it over years or decades.
For Real-Estate Investors, That Means:
- The building itself (structure, roof, framing) still depreciates over 27.5 years — no bonus allowed.
- But many components within and around the property qualify for immediate write-offs.
Common Eligible Assets
| Category | Examples | Typical Life | Bonus Eligible? |
|---|---|---|---|
| Interior Property | Appliances, lighting, ceiling fans, blinds, flooring | 5 yrs | ✅ Yes |
| Built-ins & Fixtures | Cabinetry, vanities, countertops | 7 yrs | ✅ Yes |
| Land Improvements | Fencing, driveways, landscaping, irrigation, decks | 15 yrs | ✅ Yes |
| Structure | Foundation, roof, walls, plumbing, wiring | 27.5 yrs | ❌ No |
These shorter-life components are often uncovered through a cost-segregation study, which identifies which portions of your purchase or renovation can be written off immediately under Section 168(k).
Why This Matters to North Carolina Real-Estate Investors
Kevin Martini often reminds investors that “tax strategy is part of your financing plan.”
Understanding Section 168(k) isn’t just about saving tax dollars — it’s about creating cash-flow agility.
- Immediate Tax Relief → Lower taxable income = more liquidity to reinvest.
- Permanent Certainty → Plan five or ten years ahead without fear of phase-outs.
- Better Return Metrics → Improved cash-on-cash and IRR through timing efficiency.
- Local Impact → In high-growth markets like Raleigh, reinvested capital builds both personal and regional wealth.
How to Use Section 168(k) Bonus Depreciation Responsibly
Step 1: Perform a Cost-Segregation Analysis
Even a single-family rental can have $50k – $100k of eligible property. A study quantifies what you may be able deduct immediately.
Step 2: Confirm Placed-in-Service Dates
Only assets placed in service in 2025 qualify for the new law’s 100 % treatment.
Step 3: Keep Detailed Records
Invoices and service dates support your deduction if ever audited.
Step 4: Coordinate with Your CPA or Tax Professional
Bonus depreciation affects your taxable income and your reported debt-service coverage. Ensure everyone on your team models the same data.
Step 5: Understand State Conformity
North Carolina may limit bonus depreciation at the state level. A CPA can help you reconcile your federal and state returns.
Short-Term vs. Long-Term Rentals — Who Really Qualifies for Section 168(k)?
A critical but often overlooked detail in applying Section 168(k) Bonus Depreciation is the difference between short-term and long-term rentals.
Under IRS rules, bonus depreciation is most effective when the property activity qualifies as a trade or business, which typically requires material participation. That’s much easier to achieve for short-term rentals (STRs) — such as Airbnbs, VRBOs, and vacation properties — where the average guest stay is 7 days or less and you’re actively involved in management.
Here’s How It Breaks Down
| Type of Rental | Average Stay | Material Participation Possible? | Can Offset Active Income? | Typical Use Case |
|---|---|---|---|---|
| Short-Term Rental (STR) | 7 days or less | ✅ Yes (if self-managed) | ✅ Yes | Airbnb, VRBO, furnished STRs |
| Long-Term Rental (LTR) | More than 7 days | ❌ Usually No | ❌ No | Traditional leases, property managers handle operations |
For most passive long-term landlords, bonus depreciation still reduces rental income taxes, but it cannot offset W-2 or business income unless you qualify as a real-estate professional under IRS Section 469(c)(7).
If, however, you’re an active STR host — setting rates, managing guests, cleaning turnovers, or coordinating bookings — your activity can qualify as a non-passive trade or business, meaning Section 168(k) can dramatically reduce your total taxable income.
Example for Illustration ONLY — A Single-Family Rental in Raleigh
- Purchase Price: $525,000
- Land Value: $60,000 (non-depreciable)
- Building Value: $385,000 (27.5 yrs)
- Qualified Property (5-15 yr life): $80,000
Using Section 168(k), that $80,000 is deducted immediately in 2025.
At a 24 % federal bracket, that’s ≈ $19,200 in tax savings — cash that can fund the next property or strengthen reserves.
Multiply that effect across a portfolio, and you see why so many investors are calling 168(k) “the silent wealth accelerator.”
Common Section 169(k) Bonus Deprication Misunderstandings
Myth 1:
“I can write off the entire house.”
❌ Only assets with a 20-year life or less qualify.
Myth 2:
“It only applies to new construction.”
❌ Used property qualifies if it’s new to you and used for income.
Myth 3:
“This is a temporary loophole.”
✅ The One Big Beautiful Bill made 100 % bonus depreciation permanent.
Myth 4:
“Taking bonus depreciation is always best.”
🤔 Front-loading deductions reduces future write-offs. A fiduciary advisor helps weigh today’s savings versus tomorrow’s benefits.
Takeaway from Certified Mortgage Advisor Kevin Martini About Section 168(k) Bonus Depreciation
In Kevin Martini’s words,
“Section 168(k) is about timing, not tricks. It’s a strategic decision that can turn a rental property into a financial engine when used with clarity and professional guidance.”
The One Big Beautiful Bill solidified bonus depreciation as a permanent pillar of modern wealth strategy. For investors, it’s an invitation to align financing, tax planning, and long-term vision under one fiduciary framework.
Whether you own a single rental or a whole portfolio, understanding how to apply Section 168(k) can help you maximize cash flow, build equity sooner, and accelerate financial freedom.
Clarity creates certainty. Certainty creates power. That’s the Martini Mortgage Group way.
⚠️ Disclosure
This article is for informational and educational purposes only and does not constitute tax, legal, or accounting advice. Tax laws and state rules change frequently. Before acting on any strategy described here, consult a qualified CPA and/or tax advisor.
Frequently Asked Questions About Section 168(k) Bonus Depreciation for Real Estate Investors in Raleigh and North Carolina After the One Big Beautiful Bill Act 2025
What exactly is Section 168(k) Bonus Depreciation?
Section 168(k) allows real-estate investors to deduct 100 % of the cost of qualified tangible property in the year it’s placed in service — instead of depreciating it over time.
After the One Big Beautiful Bill Act 2025, this rule became permanent, meaning investors can now plan multi-year purchases and renovations with confidence.
Who can benefit most from Section 168(k)?
Section 168(k) Bonus Depreciation primarily benefits active real-estate investors who own income-producing property and participate in its operation.
Active participation — supervising repairs, approving tenants, handling bookkeeping — is key to qualifying the activity as a trade or business under IRS rules.
If you’re hands-off and hire a management company for everything, the activity is considered passive, and bonus depreciation may not offset your other income.
Does Section 168(k) work for both short-term and long-term rentals?
No — this is a critical distinction.
In practice, Section 168(k) is most powerful for short-term rental hosts who actively manage their properties — cleaning, scheduling guests, handling maintenance, and marketing the listing.
What does “active” or “material participation” mean?
The IRS defines material participation through tests that measure hours and involvement in management tasks.
To be considered active:
(*)You (or your spouse) must spend at least 100 hours per year on the property and more time than anyone else (e.g., cleaners or managers).
(*) You must make key decisions about operations and guests.
Failing these tests usually classifies the rental as passive, limiting the impact of bonus depreciation.
Can I still use Section 168(k) Bonus Depreciation for a long-term rental?
Yes, but with limitations.
You can claim bonus depreciation on eligible components (appliances, fencing, HVAC, etc.), but the deduction generally applies only against passive rental income — not against your W-2 salary or business income.
If you qualify as a real-estate professional under IRS Section 469(c)(7)**, you may be able to apply those deductions more broadly. Your CPA should verify eligibility.
How do I claim Section 168(k) Bonus Depreciation on my tax return?
Your CPA will report qualified assets on Form 4562 (Depreciation and Amortization).
You’ll need:
(*) A cost-segregation study or detailed asset schedule showing 5-, 7-, and 15-year property.
(*) Proof of placed-in-service date (when the property was ready for use).
(*) Receipts and contracts for eligible items.
What records should I keep for Section 168(k)?
Maintain organized documentation for each qualified asset:
(*)Purchase invoice and vendor details
(*)In-service date (when the item was ready for rental use)
(*)Proof of payment and photos (if available)
(*)Cost-segregation report and CPA work papers
The IRS requires substantiation to validate bonus depreciation claims.
Additional Resources for Raleigh and North Carolina Homebuyers from the Martini Mortgage Group
If you found this guide on Section 168(k) Bonus Depreciation helpful, these additional Martini Mortgage Group resources will help you deepen your understanding, explore financing options, and make confident, well-informed homeownership or investment decisions:
North Carolina Mortgage Guide
What People Say About Martini Mortgage Group
Top Wake County Mortgage Lender
Martini Mortgage Podcast
Related Posts
