The David Greene Show: Episode 75 - "Mortgage Monday-Bonus Depreciation is Back!"

Release Date: July 21, 2025

Introduction to Bonus Depreciation

In Episode 75 of "The David Greene Show," titled "Mortgage Monday-Bonus Depreciation is Back!," hosts David Green and Christian Bashelder delve into the resurgence of bonus depreciation and its significant implications for real estate investors. The episode unpacks the complexities of bonus depreciation, offering listeners clear insights into how this tax provision can be leveraged to build wealth and reduce tax liabilities through strategic real estate investments.

Understanding Bonus Depreciation and Its Revival

David Green opens the discussion by highlighting the return of bonus depreciation, describing it as "big, beautiful and it's a bill" (00:21). He emphasizes the importance of understanding this provision to maximize tax benefits. Christian Bashelder elaborates on the objective benefits of the new bill, noting that it "further incentivizes investing in real estate" by enhancing existing tax advantages (01:04). The hosts explain that bonus depreciation allows investors to accelerate the depreciation of their rental properties, thereby increasing their tax deductions in the initial years of property ownership.

Impact on Mortgage Industry and Real Estate Investing

Christian shifts the focus to the mortgage industry's role, explaining how the restored bonus depreciation acts as a catalyst for real estate investment. He states, "most people do not fit that requirement with one major exception" (05:37), referring to the tax definition of a "real estate professional." This designation is crucial for investors aiming to convert passive income into active income, thereby enabling them to offset their active income with property-related losses.

Active vs. Passive Income: Bridging the Gap

A significant portion of the episode is dedicated to differentiating between active and passive income. David Green clarifies that active income involves trading time for money, such as salaries or business earnings, while passive income stems from investments like real estate (09:51). The hosts emphasize that without bonus depreciation, passive income losses cannot offset active income, rendering the tax benefits of real estate investments limited for most investors.

Strategies for Maximizing Tax Benefits

The conversation progresses to practical strategies for utilizing bonus depreciation effectively. Christian explains that bonus depreciation allows investors to "convert your passive losses to active losses" (08:51), enabling significant tax savings. David further illustrates this by detailing the difference between traditional depreciation methods and accelerated bonus depreciation. He notes, "Instead of spreading it out in straight line depreciation... you take that depreciation now as a way to write off against all the income that I just made actively working" (12:33). This approach can substantially reduce taxable income, especially for high earners.

Pros and Cons of the Big Beautiful Bill

While the hosts largely advocate for the benefits of bonus depreciation, they also address potential drawbacks. Christian mentions the issue of tax recapture, stating, "if you sell it in year 10... there will actually be a tax recapture" (18:00). This means that the accelerated depreciation taken must be accounted for when the property is sold, potentially increasing tax liabilities in the future. Despite this, they argue that the immediate tax savings and ability to reinvest those savings make bonus depreciation a powerful tool for long-term wealth building.

Practical Advice for Aspiring Investors

Towards the end of the episode, David and Christian offer actionable advice for listeners looking to incorporate bonus depreciation into their investment strategies. Christian recommends starting with multifamily properties, such as triplexes, which allow owners to offset mortgage payments with rental income (24:32). He encourages investors to "start somewhere" and gradually build their portfolios by reinvesting tax savings into additional properties (31:25). David reinforces the importance of maintaining an active income stream alongside real estate investments to fully utilize bonus depreciation benefits.

Conclusion and Key Takeaways

David concludes the episode by reiterating the significance of integrating real estate investments with active income to maximize tax benefits. He emphasizes that bonus depreciation is not a loophole but a strategic tool that, when used correctly, can "supercharge your wealth" (22:24). Christian echoes this sentiment, highlighting the power of compound growth through reinvestment and disciplined financial planning (32:38). The hosts encourage listeners to consult with financial professionals and CPAs to tailor bonus depreciation strategies to their individual circumstances.

Notable Quotes:

• David Green (00:21): "Bonus depreciation is back. That's right, folks. It's big, it's beautiful and it's a bill."

• Christian Bashelder (05:37): "Most people do not fit that requirement [of a real estate professional] with one major exception."

• David Green (09:51): "If you're able to generate a loss in your passive income section... the whole point of this game is to take your passive income losses and count it against your active income."

• Christian Bashelder (18:00): "The main con is that you lose some flexibility going forward."

• David Green (22:24): "Real estate wealth building... when it is a part of a holistic plan to build wealth and it is not a one trick pony."

• Christian Bashelder (32:38): "If you're a heavy earner... that's saving us money is so powerful."

Conclusion

Episode 75 of "The David Greene Show" offers a comprehensive exploration of the reinstated bonus depreciation and its strategic applications in real estate investing. By demystifying complex tax concepts and providing actionable strategies, David Green and Christian Bashelder equip listeners with the knowledge to enhance their wealth-building endeavors through informed real estate investments. Whether you're a seasoned investor or just starting, this episode serves as an invaluable guide to navigating the evolving landscape of real estate finance.