Section 168(n) Qualified Production Property Under OBBBA
Section 168(n), added by OBBBA, allows 100% bonus depreciation on nonresidential real property used in qualified production. Construction must begin after January 19, 2025 and before January 1, 2029. The property must be placed in service before January 1, 2031. QPP creates a real-property bonus depreciation pathway that did not previously exist. IRS Notice 2026-16 provides QPP-specific implementation guidance.
What qualifies as QPP
Nonresidential real property used in qualified production. The statute targets manufacturing facilities, certain agricultural production property, and other production-related nonresidential real property. The specific eligible categories are detailed in IRS Notice 2026-16.
The real property itself qualifies for 100% bonus depreciation, not just the equipment inside it. This is the key innovation: real property bonus depreciation outside the cost-seg-reclassified components.
Timing requirements
Construction must begin after January 19, 2025 (the OBBBA cliff). Construction must begin before January 1, 2029. The property must be placed in service before January 1, 2031.
The construction-begin requirement is the gating test. Properties under existing construction contracts as of January 19, 2025 do not qualify. The provision is forward-looking for new builds.
How QPP interacts with cost seg
QPP makes the building shell bonus-eligible, which is a categorical change from prior law. Combined with cost segregation of the personal property and land improvements, the entire property can effectively receive bonus depreciation.
Coordinate with the cost seg engineer and the CPA. QPP eligibility requires confirmation that the property meets the qualified production use definition under IRS Notice 2026-16.
Frequently asked questions
- How does WeCostSeg coordinate with my CPA?
- Every engagement follows the three-touch CPA Coordination Protocol. Preliminary analysis CC'd to your CPA on intake, draft report shared five business days before final delivery, and Form 3115 filing coordinated when a Section 481(a) adjustment applies.
- Does OBBBA's 100% bonus apply to my acquisition?
- 100% applies to property under a binding contract on or after January 20, 2025 per Public Law 119-21. Property under a binding contract on or before January 19, 2025 stays on the legacy phase-down: 40% in 2025, 20% in 2026, 0% in 2027 and after.
- Is audit defense included?
- Yes. Every WeCostSeg engagement includes five years of written audit defense at no extra charge, aligned to the 13 Principal Elements of a Quality Cost Segregation Study under IRS Publication 5653 Chapter 4.
- Can I get a free preliminary analysis?
- Yes. Submit property details via the free proposal form or WhatsApp. Engineer-reviewed estimate returned within four business hours during US Eastern hours.
Zawwad Ul Sami, Founder
Zawwad Ul Sami is the founder of WeCostSeg, a founder-led cost segregation firm serving real estate investors across the US. He focuses on strategy, pricing, and the firm's overall direction.