Short answer

Two dates control depreciation, and they are often different. The acquisition date is when you acquired the property: for bonus depreciation purposes, generally when you paid or incurred the cost, or, for property bought under a written binding contract, no later than the date the contract was signed. The placed-in-service date is when the property was ready and available for its intended use, which for a rental means ready and available for rent, whether or not a tenant has moved in. Depreciation begins at the placed-in-service date. The acquisition date decides which bonus depreciation regime applies: the permanent 100 percent rate for qualified property acquired after January 19, 2025, or the old phase-down for property acquired before. A renovation between purchase and first rental moves the placed-in-service date of the building and creates separate assets with their own dates. This article explains each date, the evidence that fixes it, and the situations that trip people up. It is general education, not tax advice.

The two dates side by side

Acquisition datePlaced-in-service date
What it meansWhen you acquired the property: cost paid or incurred; for a written binding contract, no later than the contract date; for self-constructed property, when construction beginsWhen the property is ready and available for its specific use
What it controlsWhich bonus depreciation rules apply (permanent 100 percent after January 19, 2025, or the earlier phase-down)When depreciation starts; the year of the deduction; the convention
Typical evidencePurchase agreement date, closing statement, construction contractsCertificate of occupancy, completion of work, listing for rent, first lease, utility connection
For a rental bought ready to rentClosingUsually the same day, or the day it was listed or available for rent
For a rental renovated before rentingClosing (for the building); each renovation asset has its own dateWhen the renovation is complete and the unit is available for rent

Placed in service: ready and available

Publication 946 defines placed in service as ready and available for a specific use. Publication 527 gives the rental example: a house bought and readied for rent is placed in service when it is available for rent, even if it is not rented until later. The test is availability, not occupancy, and not the closing.

Three consequences follow.

  1. A vacant, ready unit is in service. Depreciation begins when the unit could be rented, not when it is.
  2. A unit under renovation is not in service. If the building cannot be rented while the work is done, depreciation of the building waits until the work is complete and the unit is available. The renovation costs are capitalized into separate assets, each with its own placed-in-service date.
  3. Conventions apply to the placed-in-service month. Real property uses the mid-month convention, treating property as placed in service at the midpoint of the month. Other property uses the half-year convention, unless more than 40 percent of the depreciable basis of such property was placed in service in the last three months of the year, in which case the mid-quarter convention applies. Which convention applies changes the first-year deduction, and a study's asset list has to record the month for each asset.

Acquisition date: when the bonus rules attach

The 2025 tax law made the bonus depreciation rate a permanent 100 percent for qualified property acquired after January 19, 2025, and left property acquired on or before that date on the earlier phase-down keyed to the placed-in-service year. That makes the acquisition date, not the closing date alone, the question.

For bonus depreciation, property is generally acquired when its cost is paid or incurred. Property acquired under a written binding contract is treated as acquired no later than the date the contract is entered into, and self-constructed property is treated as acquired when construction begins. The IRS's Notice 2026-11 provides interim guidance on these rules under the new law. The practical effect is that a purchase under a contract signed before January 20, 2025 and closed after it may fall under the old phase-down for the building and its components, while renovation assets bought and installed later have their own, later acquisition dates.

This is the area where a study can go wrong quietly: the practitioner's asset list applies 100 percent bonus to everything because the closing was in 2025, when the contract predated the cut-off. The file has to contain the contract, and the adviser has to make the call.

Renovations and the "unit of property"

Amounts paid to improve a building, whether a betterment, a restoration or an adaptation to a new use, are capitalized as separate assets from the original building under the tangible property regulations. Each improvement has its own acquisition date, its own placed-in-service date and its own class. A new roof, a kitchen renovation, a parking lot resurfacing and a set of appliances bought during a renovation are four assets, not one, and they are not part of a look-back on the original building.

For a study this means two lists: the building and site as acquired, with the acquisition and placed-in-service dates of the purchase, and each subsequent improvement with its own dates. Mixing them produces the wrong bonus rate and the wrong start date for at least one of them.

Evidence that fixes each date

  • Acquisition: the purchase agreement with its signature date, the closing statement, construction contracts and their dates, invoices for purchased components.
  • Placed in service: certificates of occupancy, contractor completion documents, permit final inspections, the date the unit was listed or advertised for rent, the first lease, utility connections and photographs dated at completion.
  • Both, for improvements: invoices, contracts and completion records for each improvement.

A study that states dates without pointing to the documents leaves the adviser to defend them alone.

Situations that cause errors

  • Closing date used as placed-in-service date on a renovated property. Depreciation of the building starts too early and the renovation assets are swallowed into the building line.
  • Contract date ignored. Bonus depreciation applied at 100 percent to property acquired under a pre-January 20, 2025 contract.
  • Personal use before rental. A property used personally and later converted to rental is placed in service for rental when it becomes available for rent; its depreciable basis is the lower of adjusted basis or fair market value at conversion, a matter for the adviser.
  • Mid-quarter convention overlooked. A large amount of personal property placed in service late in the year can trigger the mid-quarter convention for all such property that year.
  • Phased projects. A multi-building or multi-unit renovation completed in phases has phase-by-phase placed-in-service dates, not one date at the end.

Why a study cares

The study's asset list is not complete with a description, a class and a cost. Each line needs the month and year placed in service, because the convention and the first-year deduction depend on it, and it needs an acquisition date where the bonus rate turns on it. The reconciliation ties costs to basis; the dates tie the deductions to the right years. A practitioner who cannot say when each asset was placed in service has not finished.

What people ask on Reddit and other forums

The searches that lead people to these threads are usually phrased "placed in service date rental property", "acquisition date bonus depreciation", "binding contract bonus depreciation".

Date questions appear constantly in "bonus depreciation reddit" and "cost segregation reddit" threads on r/tax. From the sources below:

"I closed in 2025 but rented it in 2026. When does depreciation start?" When the property was ready and available for rent. If it needed work before it could be rented, depreciation of the building waits for completion; the renovation assets have their own dates.

"Contract signed before January 20, 2025, closed after. 100 percent bonus?" Property acquired under a written binding contract is treated as acquired no later than the contract date, so the phase-down may apply. Ask your adviser with the contract in hand.

"Does a vacant unit count as in service?" Yes, if it is ready and available for rent. Occupancy is not the test.

"Do improvements share the building's dates?" No. Each capitalized improvement is a separate asset with its own acquisition and placed-in-service dates.

Questions people also ask

Is the placed-in-service date the closing date?

Only if the property was ready and available for its use at closing. A property that needed work before it could be rented is placed in service when the work is done and it is available for rent.

Does the property have to be rented to be in service?

No. Ready and available for rent is the test. A vacant unit that could be rented is in service.

Which date decides my bonus depreciation rate?

The acquisition date decides whether the permanent 100 percent rate or the earlier phase-down applies; for the phase-down, the placed-in-service year fixes the percentage. Contract date rules can make the acquisition date earlier than the closing.

What if I signed the contract in December 2024 and closed in March 2025?

Property acquired under a written binding contract is treated as acquired no later than the contract date. That is a question for your adviser with the contract in hand, and Notice 2026-11 is the interim guidance.

Do improvements share the building's dates?

No. Each capitalized improvement is a separate asset with its own acquisition and placed-in-service dates.

Sources