Buyer’s guide
Gas Stations & Bonus Depreciation
Written for a buyer who does not do this for a living.
Mechanics
Why a gas station depreciates differently
Most commercial buildings are written off over 39 years. Bonus depreciation lets property with a useful life under twenty years be deducted in full the year it is placed in service. A gas station is mostly equipment and site work rather than building — dispensers, tanks, canopies and site improvements — which is why a large share of the purchase price can fall into the shorter-life classes.
Eligibility
Qualification
Qualification turns on the retail motor fuels outlet tests. The qualifying basis depends on the property, land allocation, cost-segregation analysis and applicable tax rules. Whether a specific site qualifies — and how much of its basis does — is a determination for the buyer’s CPA, not the broker.
Example
The arithmetic
On a $5,000,000 purchase with land at 15%, roughly $4,250,000 is deductible in year one. At the 37% top federal rate that is an estimated $1,572,500 of tax savings. At 60–70% leverage, that figure is roughly 79% to 105% of the equity invested — which is why the deduction can approach or exceed the check written at closing.
Illustrative example; actual deductions depend on the specific asset and tax position.
The rest of the guide
What income the deduction offsets, how operator credit changes the yield, what to weigh before buying, and how the exit works — plus the PDF.
Educational only. This is not tax advice and no client relationship is created by this page. Every figure is an estimate and depends on the specific asset, lease, lender, entity and tax position. Work through your own facts with your CPA.
Want to evaluate a deal?