BIRT, U&O, and Bonus Depreciation: What Investors Need to Know Now
Philadelphia’s tax landscape is undergoing a significant “reset” in 2026 that will directly impact your cash flow and bottom line. Most notably, the city has rescinded two long-standing exemptions: the $100,000 Business Income and Receipts Tax (BIRT) exemption and the $2,000 Use and Occupancy (U&O) annual exemption. These changes mean that investors who previously fell under these thresholds must now file BIRT returns and account for monthly U&O liabilities starting January 25, 2026.
On a federal level, however, the “One Big Beautiful Bill Act” has introduced massive silver linings, including the permanent restoration of 100% bonus depreciation. For real estate owners, this is a powerful lever; by utilizing a cost segregation study, you can reclassify and immediately deduct the cost of certain components of your property rather than waiting 27.5 years. In a market where every dollar of ROI counts, matching these new local tax filing duties with aggressive federal depreciation strategies is the key to maintaining a high-yield portfolio.
By John Kuester III
