Let’s not even talk about the county - that’s a whole different animal
As for the city - it’s plenty - very expensive and all contain the same - taqueria, washateria, vape and maybe a phone store (total wireless), liquor store or brand fast food
And we then see who owns them - how are they obtaining that type of capital?
You are partially correct on the historical baseline, but you’re missing how IRC § 168(k) modifies standard 15-year MACRS property.
You are completely right that a 15-year property defaults to standard MACRS straight-line or 150% declining balance depreciation if an investor explicitly chooses to opt-out of bonus structures.
However, they are absolutely allowed to deduct a massive portion in Year One. Under the Tax Cuts and Jobs Act (TCJA), any asset with a recovery period under 20 years automatically qualifies for federal Bonus Depreciation unless the taxpayer manually elects out of it on IRS Form 4562.
The confusion usually comes from the phase-down schedule:
So if you buy a fueling facility, you instantly drop the 20% bonus amount into Year One. Then, the remaining 80% of the asset’s basis doesn’t sit around, it is immediately depreciated over the accelerated 15-year MACRS schedule (instead of standard 39-year commercial real estate).
When you combine that 20% immediate bonus with the first year of the 15-year MACRS calculation, an investor is still generating a massive, front-loaded write-off on day one.
This isn’t a bankruptcy; it is an eminent domain setup:
Developers buy cheap land directly in the path of proposed state highway expansions (like the Grand Parkway or I-45 expansion routes).
They quickly build a gas station infrastructure to massively inflate the “improved value” of the commercial property.
When TxDOT eventually uses eminent domain to force a purchase of the land in 2030, they can’t just buy it for cheap raw dirt prices. They are legally forced to pay the owner for the total value of a functioning commercial business, plus lost future revenue. It’s a high-stakes real estate game.
We are saying the same thing.
Bonus isn’t a permanent thing. That’s what I’m saying. Everyone can do that with 15 year property but that’s not forever. It’s for people buying now (or past when it was available).
The “loophole” is only in making buildings 15 year property from what I can tell. I’d expect a lot of the gas station assets would have been subject to bonus anyway.
It’s a real benefit though.
There are two gas/convenience stores being built IN downtown as we speak.
Where? I haven’t seen them, but I’m not everywhere, so I might have missed it.
There’s always too many until you need one
One is two blocks from the Toyota Center on Jefferson. Across the street from the site where Camden has/had plans for a phase two. It’s already got tanks in the ground now but the building hasn’t started to rise.
The second location is going to be north of MMP but apparently isn’t under construction yet but the site is under contract.
Good to know. I’m fine with basically anything that replaces a parking lot.
I suspect that’s true in regards to eminent domain for some of these. The Telge one
was located far enough back so that they will survive even when the 2 lane road is converted to a wide boulevard. So it’s an
oddity.
Some of these investments just seem to
be bad decisions. Guess that’s to be expected in a market driven system sometimes. But I don’t fully discount either the idea that some of these investments are ways to shelter income by using the tax code and right of way strategy. It doesn’t seem “fair” if that’s truly the case.
My buddy owns several gas stations and it is all about the food and products inside.
Except the phase down schedule went away with the OBB for property acquired after January 19, 2025.
As far as the gas station getting a shorter depreciation life, it has to pass one of two tests: 50% or more of the gross revenues from the property are from petroleum sales, or 50% or more of the floor space is devoted to petroleum marketing sales.
There is also an IRS-recognized exception where property of 1,400 square feet or less may qualify without applying the 50% test.
I don’t know the square feet of the places being built but several of them have been large buildings that also include a laundromat or other retail type items separate from the gas station (but maybe the same owners) so they would still have to meet the 50% tests.
I haven’t actually dealt with this rule myself so I could be a bit off in the application.
Well, that only works if either they have significant passive income to offset (assuming they buy this as a passive investment) or they are running the station as an active business themselves. Even still, it requires a significant cash investment.
The issue though, it is really just a tax deferral because when they do sell the property, they get hit with the depreciation recapture at ordinary income tax rates.
You’re paying for convenience, unlike inconvenience stores like HEB or Randall’s.
In the early 2000s HEB experimented with charging 10 to 25% more for items at their gas station kiosks. It did not go over well.
Interesting, don’t remember that but then they also don’t have ones that you can go inside, although they may have all the sodas/cigarettes/lottery/auto supplies.
I was surprised when I went into a Walmart store and saw the prices were the same as in the store. I expected them to be higher.
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