Sponsored

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at [email protected].

Question: How has the Arlington single-family housing market performed in the first half of 2025?

Answer: Despite significant headwinds from DOGE cuts to Federal spending and workforce and a sluggish national housing market, prices of Arlington’s detached single-family homes continued their upward climb in the first half of 2025, compared to the first half of 2024, albeit at a slower pace and with much less competition.

Prices Up, Competition Down in the First Half

Let’s look at the performance of Arlington’s detached single-family home (SFH) market in the first half of 2025 compared to the first half of the previous four years (new construction sales not included in the data set):

• The average and median price of a SFH increased by 3.2% and 4% year-over-year, respectively
• Over the past five years, the average and median price of a SFH in the first half of the year increased by 15.5% and 17.9%, respectively
• The average SFH sold for more than $1,435,000, including new construction, and over $1,380,000 without new construction sales
• The median home price is $1.3M, including new construction, and $1,275,000 without new construction sales
• Demand and competition in the first half of 2025 fell to its lowest levels since the first half of 2020 (COVID spring):
  • only 54% of homes selling within the first ten days on market and just 55% of homes selling for at or above the asking prices, dropping from an average of 65% and 69% the previous four years
  • the average home sold for 0.3% below the original asking price, the first time the average home sold for below the original asking price in the first half of the year since 2020
• Homes that went under contract within the first ten days sold for an average of 2.5% over the asking price, down from 3.1% last year
• Just 25% of homes sold for less than $1M

Looking Forward

The rosy picture painted by the strong numbers detailed above hide a less optimistic truth. The dataset above accounts only for the homes that have sold, but inventory is building with homes struggling to sell and many are reducing their asking price. While the average Arlington detached home price increased 3.2% year-over-year, the average Arlington detached home listed for sale in Q2 was listed for 13% less than in 2024.

As these sellers run out of patience or experience financial pressure to sell, they may be forced to accept prices they previously would not have consider and I wouldn’t be surprised if the second half of 2025 tells a different story of home values than the first half.

With the inventory of detached homes in Arlington up 54.5% year-over-year in June and the second half of the year traditionally a better time for buyers than the first half, expect to see buyers with more negotiating leverage than they’ve had in years, through the end of 2025.

How the Data is Organized

For my mid-year reviews, I like to compare the first half of the year to the first half of prior years, rather than comparing the first half of the current year to the full year in prior years. We tend to see a stronger market (higher demand, more competition) in the first half of the year than the second half, so this approach gives us a better apples-to-apples comparison.

The data is organized by homes that went under contract in the first half of the year because it’s more reflective of actual buying activity during that period; as opposed to looking at homes that closed in the first half of the year, but may have gone under contract many months prior during different market conditions. I also use “net sold” price, which factors in any seller credits to a buyer, instead of just the standard sold price.

This year I removed new construction sales from the data (I comment on it separately) because it was incorrectly skewing the outcomes of the data.

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].

Upcoming (pre-market) ERG Listings, Details and Additional Listings Available by Request

• Falls Church City – 4BR/4.5BA/3,000+ sqft – End-unit townhouse (1995) – Rees Pl Falls Church VA 22046
• Highland Park/Overlee Knolls – 6BR/5.5BA/5,000+ sqft – Detached Single Family (2025) – 22^nd Rd N Arlington VA 22205
• Arlington Ridge/Aurora Hills – 3BR/2.5BA/2,450sqft – Detached Single Family (1961) – S Grove St Arlington VA 22202
• Yorktown – 6BR/6.5BA/6,000+ sqft – Detached Single Family (2026) – N Greencastle St Arlington VA 22207

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.

This regularly scheduled sponsored column is written by Eli Tucker, Arlington-based Realtor and Arlington resident. If you would like to work with Eli and his team in Northern Virginia and the greater D.C. Metro area, you can reach him directly at [email protected].

Question: How do I take advantage of the new 100% Bonus Depreciation tax benefit for my rental property?

Answer: You’ve probably heard that the tax provisions in the recent One Big Beautiful Bill Act brings back 100% bonus depreciation and how much this excites investors. Is this a windfall for all investment property owners? Who benefits? Let’s look past the headlines and dig into what 100% bonus depreciation means and who benefits.

I got input from my CPA, who I highly recommend, Matt Bormel of Bormel, Grice, and Huyett on the important details of 100% Bonus Depreciation. If you have questions about how you can take advantage of the new tax policy or would like general tax support, you can reach Matt by email at [email protected].

What is 100% Bonus Depreciation?

Depreciation is a cornerstone tax benefit for real estate investors, allowing the deduction of real estate assets/components over its useful life. For residential investment properties, owners are allowed to depreciate the value of the home in equal amounts over 27.5 years (referred to a straight-line depreciation).

Bonus depreciation turbocharges this by enabling the immediate deduction of qualified assets in the first year, greatly accelerating tax savings.

Qualified assets typically include components within a property that depreciate quicker than the overall structure, such as:

• Appliances
• Flooring
• Cabinets
• HVAC systems
• Landscaping and exterior improvements

What Qualifies for 100% Bonus Depreciation?

Land never qualifies for depreciation and the structure of a home (the “building”) does not qualify for bonus depreciation (depreciates over the aforementioned 27.5 years), but many components of the home do, as noted above.

There are two simple ways of categorizing how you can benefit from 100% bonus depreciation:

1. If you own an investment property and put a qualifying component in-service after January 19 2025, it qualifies for 100% bonus depreciation and will be deducted, like an expense, in year one.
2. If you purchase an investment property after January 19 2025, all qualifying components can receive 100% bonus depreciation treatment, but you need to perform a cost segregation study.

A cost segregation study is performed by professionals who analyze the property, classifying each component into shorter depreciation periods (5, 7, or 15 years) and assigning a value. It is highly detailed and meets specific IRS requirements.

Cost segregation studies cost thousands (or more, for larger properties) and are often too expensive to justify for a residential investment property. Yes, like most things, you can do one yourself or get it done cheaply, but you increase the risk of it being done wrong and running afoul of the IRS.

Don’t Forget about Depreciation Recapture

Depreciation recapture often surprises investors at the point of sale. When selling, the IRS “recaptures” depreciation deductions previously claimed, taxing these at a higher rate (typically 15-25%) than standard long-term capital gains. This can significantly reduce the net proceeds upon sale, making bonus depreciation primarily a tax-deferral strategy rather than permanent tax avoidance.

Who Benefits from Bonus Depreciation?

• High-Income Investors: Investors facing significant tax burdens stand to benefit dramatically, potentially saving tens of thousands of dollars immediately.
• Real Estate Professionals (REPS): Those qualifying under IRS guidelines can use these deductions against active income, creating substantial tax savings.
• Investors Experiencing High Taxable Events: Individuals who have realized large taxable gains (e.g., sale of businesses, large income events) can offset these through strategic bonus depreciation.
• Long-term Investors: Tax benefits improve for longer-term holding periods

Who Might Not Benefit?

• Low-Income Investors: Those without significant tax liabilities may not fully utilize immediate deductions.
• Short-Term Property Owners: Investors planning to sell properties soon may face accelerated recapture taxes, negating immediate savings.
• Smaller Property Owners: The upfront cost and complexity of a segregation study may outweigh the benefits.

Pros of Bonus Depreciation

• Immediate Tax Savings: Accelerating deductions enhances cash flow immediately
• Strategic Flexibility: Ideal for offsetting significant taxable income events
• Enhanced Investment Returns: Increased immediate liquidity can be leveraged into additional investments or debt reduction

Cons of Bonus Depreciation

• Upfront Costs: If needed, cost segregation studies involve high costs
• Recapture Liability: Tax rates change over time. Investors planning for the long-term must consider potential future tax increases, possibly making recapture more costly
• Complexity and Audit Risk: Aggressive strategies may attract IRS scrutiny, necessitating meticulous record-keeping and professional guidance

Bottom Line

100% bonus depreciation is a powerful financial tool in real estate investment tax strategy, but it has limited or no benefit to many casual real estate investors. Each investor must weigh immediate benefits, recapture implications, long-term financial strategies, and up-front costs to determine if it’s the right tax strategy for them.

Before proceeding, consult with a tax professional to assess how this aligns with your investment goals and tax situation. You are welcome to contact my CPA, Matt Bormel at [email protected].

If you’d like to discuss buying, selling, investing, or renting, don’t hesitate to reach out to me at [email protected].

Upcoming (pre-market) ERG Listings, Details and Additional Listings Available by Request

• Falls Church City – 4BR/4.5BA/3,000+ sqft – End-unit townhouse (1995) – Rees Pl Falls Church VA 22046
• Highland Park/Overlee Knolls – 6BR/5.5BA/5,000+ sqft – Detached Single Family (2025) – 22^nd Rd N Arlington VA 22205
• Arlington Ridge/Aurora Hills – 3BR/2.5BA/2,450sqft – Detached Single Family (1961) – S Grove St Arlington VA 22202
• Yorktown – 6BR/6.5BA/6,000+ sqft – Detached Single Family (2026) – N Greencastle St Arlington VA 22207

Eli and his team believe that your real estate needs should be managed by advisors, not salespeople. Their mission is to guide, educate, and advocate for their clients through real advice, hands-on support, and personalized service.