Here is the direct answer. If you are upgrading a rental you already own and want the deduction on this year’s return, the improvements that can come off 100% in the year are the short-life ones: appliances, carpet, furniture in a furnished rental, fencing, driveways and walkways, patios, and landscaping. The big structural jobs — a new roof, a furnace or AC system, windows, siding, rewiring, replumbing — are 27.5-year building property on a residential rental and do not qualify for bonus depreciation at all. And whichever you choose, it has to be installed and in service by December 31, not merely paid for.
That split matters most in the fourth quarter, when owners start deciding which projects to rush and which to push into spring. Rushing the right ones can be worth thousands. Rushing the wrong ones is worth almost nothing this year.
Which rental improvements qualify for 100% bonus depreciation?
Bonus depreciation only applies to property with a recovery period of 20 years or less. On a residential rental that means two groups. The first is 5-year property: appliances, carpet, and furniture used in the rental (IRS Publication 527 lists all three), plus some removable flooring depending on how it is installed. The second is 15-year land improvements: fences, driveways and other paving, sidewalks, patios, retaining walls, outdoor lighting, and landscaping.
Under the OBBBA rules, 100% bonus depreciation applies to property acquired after January 19, 2025. A refrigerator you order this fall, or a fence you sign a contract for in October, was acquired well after that date, so the full rate is available — provided the item is placed in service this year.
Why doesn’t a new roof or HVAC system get bonus depreciation on a rental?
Because on a residential rental, a structural component is part of the building, and the building is 27.5-year property. A replacement roof, a new furnace, new windows, a water heater, rewiring, and new plumbing all go onto their own 27.5-year schedule starting the month they are placed in service. That is the same clock that governs the building itself, which we walked through in what cost segregation reclassifies into 5-, 7-, and 15-year property.
You may have read that qualified improvement property gets bonus depreciation. It does, but only for interior improvements to nonresidential buildings. It does not help a single-family rental, a duplex, or a small multifamily property.
There is one year-end lever on the structural side, though. When you replace a roof or a system, the partial disposition election lets you write off the remaining basis of the component you tore out, instead of depreciating a roof that no longer exists. To use it you need a supportable number for the old component, which is exactly what a cost segregation study done at purchase provides. The mechanics are in our guide to the partial disposition election.
Do repairs work the same way?
No, and that is good news. Ordinary repairs and maintenance — fixing a leak, patching drywall, repainting between tenants, servicing the furnace — are deducted as expenses in the year you pay for them. There is nothing to depreciate. Separately, if you make the de minimis safe harbor election, items costing $2,500 or less per invoice or per item can usually be expensed outright. The bonus-versus-27.5-year question only matters for improvements you have to capitalize: work that betters, restores, or adapts the property.
A $38,000 year-end upgrade plan, run in dollars
Take a single-family rental bought in 2024 with a cost segregation study done at purchase. The owner plans $38,000 of work this fall: a $16,000 roof replacement, a $7,500 appliance package, $4,500 of new carpet, a $6,000 privacy fence, and a $4,000 driveway replacement. Everything is finished and the unit is back on the market by December 15.
The appliances, carpet, fence, and driveway add up to $22,000 of 5- and 15-year property, all acquired after January 19, 2025 and in service in 2026, so the full $22,000 is deductible on the 2026 return. The $16,000 roof goes onto a 27.5-year schedule; with the mid-month convention and a December in-service date, it produces about $24 of depreciation this year.
Now the partial disposition. The purchase-year study put the original roof at $11,000 of basis, and roughly $1,000 of that has already been depreciated. Electing to dispose of it releases about $10,000 as a loss this year. Total first-year deductions come to roughly $32,024. At a 32% federal marginal rate, that is about $10,250 of federal tax saved on the 2026 return — assuming the losses are usable this year, which turns on the passive loss rules rather than on the calendar.
If the same work finishes on January 8 instead, the $22,000 does not disappear — 100% bonus has no scheduled sunset — but the deduction moves to the 2027 return, a full year later.
What has to be done by December 31?
Placed in service means installed and ready for use, not ordered, paid for, or sitting in the garage. Appliances hooked up. Carpet down. The fence built. The driveway poured and cured. Keep dated invoices that separate each item, because a single “renovation” invoice mixing a roof with appliances makes it harder for your CPA to classify each dollar correctly. Dated photos of the finished work and a record of when the unit went back on the market make the position audit-ready.
If you are planning a larger renovation, or buying another rental before year-end, the free instant estimate will show you what a study is likely to move into year one.