On July 4th, President Trump signed the “One Big Beautiful Bill Act” into law, marking a significant shift in tax policy that will benefit commercial real estate investors. Among its key provisions is the permanent restoration of 100% bonus depreciation for qualifying properties purchased after January 19, 2025—a powerful tool for those acquiring gas station and car wash assets.

Bonus depreciation allows investors to deduct the full value of qualifying property in the year of acquisition, rather than depreciating the asset over its useful life. This accelerates tax savings and enhances after-tax returns. Under previous law, bonus depreciation was phasing out—declining from 100% in 2022 to 40% in 2025—but this legislation reverses that trend and locks in the full deduction permanently.

In net lease real estate, this incentive applies to car washes and gas stations that meet IRS criteria. For gas stations, a property qualifies if it satisfies any of the following:

  • 50% or more of revenue from petroleum sales
  • 50% or more of floor space devoted to petroleum operations
  • A total building size of 1,400 SF or less

Example:

  • Purchase Price: $5,000,000
  • Land Allocation: $1,000,000 (non-depreciable)
  • Depreciable Basis: $4,000,000
  • Tax Savings @ 37%: ~$1,480,000 (Year One)

Additionally, investors utilizing 1031 exchanges can take advantage of this policy by trading into larger gas station assets. While basis carries over in the exchange, the new depreciation schedule on the gain portion of the purchase can still be fully written off—potentially eliminating income taxes on that gain in 2025 and beyond.

This legislative change is expected to drive increased investor demand for net leased gas stations and car washes, with particularly strong implications for those involved in 1031 exchanges, portfolio sales, and year-end tax strategy.

If you would like to discuss how this update may impact your acquisition or disposition strategy, please reach out to the Knipp Wolf Net Lease Group.

The information contained in this article has been obtained from sources we believe to be reliable. However, Marcus & Millichap and Knipp Wolf Net Lease has not and will not verify any of this information, nor has Marcus & Millichap or Knipp Wolf Net Lease conducted any investigation regarding these matters. Marcus & Millichap and Knipp Wolf Net Lease make no guarantee, warranty or representation whatsoever about the accuracy or completeness of any information provided.

Buyer and Buyer’s tax, financial, legal, and construction advisors should conduct a careful, independent investigation of any single tenant property to determine to your satisfaction with the suitability of the property for your needs. Like all real estate investments, this investment carries significant risks. Buyer and Buyer’s legal and financial advisors must request and carefully review all legal and financial documents related to the property and tenant.