Can I take bonus depreciation or do cost segregation on my replacement property?

Bonus follows the split the exchange already made in your basis

The rule turns on whether the replacement is new to the world or merely new to you. Regulations section 1.168(k)-2(g)(5)(iii)(A) grants the deduction on the remaining exchanged basis and the remaining excess basis when the original use requirement is met, and "only the remaining excess basis" when the used property acquisition requirements are met instead.

The Form 4562 instructions restate it in two sentences: if the qualified property acquired through a like-kind exchange is new property, the carryover basis and any excess basis are eligible; if it is used property, only the excess basis is.

So the arithmetic starts from the schedule you already have to build. Exchanged basis and excess basis are defined by Reg. §1.168(i)-6, and bonus is measured against the second of the two.

Publication 946 puts a useful definition on the excess basis: the additional consideration you gave in the exchange, whether that was cash, liabilities, non-like-kind property or other boot paid for the new property. The same publication limits a §179 deduction on a like-kind acquisition to that excess basis as well.

Electing out of Reg. §1.168(i)-6 does not unlock the carried half

A common plan is to elect out, treat the whole basis as newly placed in service, and claim bonus on all of it. Paragraph (g)(5)(iii)(D)(2) closes that route: after the election, where the replacement meets the used property requirements, "only the excess basis … is eligible for the additional first year depreciation deduction."

The election still does useful work on the ordinary schedule, and it is a separate decision made on Form 4562. It simply does not change which dollars bonus can touch.

The one fact pattern that does change the answer is a replacement whose original use begins with you: a newly built property, or a build-to-suit exchange finished inside the 180 days. Both halves of the basis then qualify.

Two gates the replacement has to clear before any of it counts

Section 168(k)(2)(E)(i) sets the used-property test: the property was not used by you at any time before you acquired it, and the acquisition satisfies §179(d)(2)(A) through (C) and (3).

• Not previously yours: a property you once owned, or leased and then bought, fails the first half outright.
• Not from a related party: the §179(d)(2) tests reach your spouse, ancestors, descendants and entities you control, so buying the replacement from a relative usually costs you the deduction as well as raising §1031(f) issues.
• Not a carryover-basis or inherited acquisition, which is the point of §179(d)(2)(C) and (3).
• Recovery period of 20 years or less under §168(k)(2)(A)(i)(I), which is why the shell is out and 5, 7 and 15-year property and qualified improvement property are in.
• Not property on the alternative depreciation system under §168(k)(2)(D), which quietly removes a replacement held by an electing real property trade or business.

The rate is 100% again for property acquired after January 19, 2025

Section 70301 of Public Law 119-21 rewrote §168(k)(1)(A) to read 100 percent and repealed the phase-down paragraphs, and the effective-date note applies the amendments to property acquired after January 19, 2025. The statute as amended is on Cornell.

There is a deliberate step down available. Section 168(k)(10) lets a taxpayer elect, for the first taxable year ending after January 19, 2025, to use 40 percent instead of 100 percent, which matters if a large deduction would be stranded by other limits.

Acquisition date, not closing date, drives it. A replacement under a binding contract signed before January 20, 2025 sits under the older percentages, so the exchange file should hold the signed purchase agreement as well as the settlement statement.

A $2,000,000 replacement with $1,400,000 of basis: $150,000 of first-year bonus

Hypothetical, round figures. You close on a $2,000,000 used building in 2026. Form 8824 line 25 gives a basis of $1,400,000, which the depreciation rules split into $400,000 of exchanged basis and $1,000,000 of excess basis.

A cost segregation study assigns 20 percent of the property to land, 15 percent to 5, 7 and 15-year components and qualified improvement property, and the balance to the 39-year shell. Applied to the excess basis, that is $200,000 of land, $150,000 of short-life property and $650,000 of shell.

The $150,000 is bonus-eligible at 100 percent, a deduction in the year you closed. The same 15 percent of the $400,000 exchanged basis, $60,000, gets no bonus, because the building is used property to you; it keeps depreciating on the schedule the property you sold was already running.

Whether you can use the deduction, and what it costs at the next exchange

A large first-year deduction is worth nothing if §469 suspends it. Rental losses are passive unless you qualify as a real estate professional or fall inside the small active-participation allowance, so the deduction often parks as a suspended loss rather than sheltering wage income.

It also prices your next move. Short-life property carved out of a building is §1245 property, and §1245(b)(4) recognizes that depreciation as ordinary income at the next exchange to the extent the replacement you buy does not carry enough §1245 property of its own. The sequencing of studies and exchanges on larger deals is worked through separately.

Delaware statutory trust investors get the sponsor's study rather than their own, applied pro rata to their share; what flows through and what does not is set out on the trust depreciation page. Where a first-year deduction rather than deferral is the goal, a bonus depreciation fund is the structure built for it. Confirm any of this against your own facts with your CPA before you rely on it.