The One Big Beautiful Bill Act (OBBBA) ensures that real estate investors will have ongoing access to the 100% bonus depreciation provision, which was previously scheduled to be phased out by 2027. The provision, which makes tax savings that previously took decades to claim available in the first year following a real estate purchase, can serve as a powerful tool for maximizing returns on real estate investing.
But while the OBBBA made the provision permanent, it didn’t make it any easier for real estate investors to claim. In most cases, tapping into the tax savings prescribed under the provision requires navigating a complicated and costly process.
Still, there are some innovative property investment strategies emerging in today’s real estate market that make the 100% bonus depreciation more easily accessible. The Box House is one of those. It’s a mass-produced, rapidly deployable home that investors can use to take advantage of tax savings while avoiding many of the challenges typically associated with investment properties.
“By investing $100,000 in a Box House, you can reduce your taxable income by up to $500,000,” explains Lance Morgan, founder of College Funding Secrets. “It’s a unique property type, designed for disaster relief and temporary housing situations, that leverages bonus depreciation to deliver significant tax benefits. For high earners looking for tax savings, the Box House is an investment opportunity that should be considered.”
Morgan is the founder and CEO of Legetty Educational Services, the creator of College Funding Secrets, a Certified Financial Educator™, and a best-selling author. He specializes in helping high-net-worth families use tax and real estate strategies to significantly reduce the cost of college while protecting retirement savings. Through College Funding Secrets, he helps families navigate the complex intersection of tax planning, financial aid, and real estate investment with actionable strategies, plain-English guidance, and real-world examples.
“The 100% depreciation provision can dramatically reduce tax obligations by allowing for sizable paper losses,” Morgan says. “The Box House is an investment option that provides an easy way to take advantage of depreciation deductions to reduce actual taxable income.”
Adding Depreciation Deductions to Your Real Estate Investment Strategy
Bonus depreciation deductions often play a key role in successful real estate investing strategies for those who purchase rental properties and other commercial real estate. But accessing the deductions can be labor-intensive, involving costly and time-consuming steps like cost segregation studies. The Box House, which is not considered a real estate asset for tax purposes, streamlines the process.
“With the Box House, you don’t need to have a cost segregation study like you do with traditional rental property,” Morgan says. “You also don’t need the material participation required to apply the depreciation deduction to your business income or W-2. It’s an investment product that provides a much easier pathway to tax savings than traditional real estate.”
Box House investors can leverage a grantor trust to legally sidestep the material participation requirements the tax code applies to the depreciation deduction provision. The grantor trust structure is combined with a series LLC to shift the participation requirement from the investor to the trustee.
“Adding the series LLC to the structure is an important step because it allows the investor to exit the LLC without facing recapture or clawback on the taxes involved,” Morgan explains. “The total structure opens the door for a W-2 or 1099 income earner to offset their income by the retail price of the Box House.”
Gaining Cash Flow and Tax Advantages with a Box House Rental Property
Several characteristics of Box Houses make them valuable additions to an investment portfolio, starting with their high property value. The three models available are priced at $350,000, $500,000, and $650,000, providing a considerable amount that can be claimed under the depreciation deduction. However, Box House transactions are structured in a unique way that allows investors to access tax benefits without paying the full purchase price.
“Investors only need to make a small down payment to access the full tax benefits of the Box House,” Morgan says. “With a $500,000 model, for example, a $100,000 down payment plus an extra $5,000 to cover the creation of the entity structure and tax filings for the first couple of years establishes ownership.”
To cover the remaining balance on the Box house, the manufacturer issues an interest-only loan that requires a balloon payment of the remaining amount in eight to nine years. When the payment comes due, investors, who have already claimed their full tax benefit, can simply return the house to the manufacturer.
“For high-income earners, the tax savings potential of Box Houses is considerable,” Morgan points out. “Those making $1 million cut their taxable income in half when they invest in a $500,000 Box House. Since they are in the 37% tax bracket, that means saving approximately $180,000 on taxes. Subtract the $100,000 down payment on the Box House, and you still save $80,000.”
In addition to providing tax savings, investing in a Box House can also create cash flow. Deploying a Box House as temporary housing generates income in the form of rent payments. If investors choose to utilize a property manager to oversee the Box House, rent payments can be used to cover those costs.
“A Box House is an efficient vehicle for capitalizing on the depreciation deductions encouraged by the current tax law,” Morgan says. “And the ownership structure it affords allows investors to be completely hands-off. For high-income earners, it’s an opportunity that delivers considerable return with minimal investment.”
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