On July 4, 2025, the One Big Beautiful Bill Act (OBBB) was officially signed into law, ushering in some of the most comprehensive federal tax reforms in decades. With major implications for real estate professionals, developers, and investors, this legislation promises to reshape how properties are financed, developed, and passed on to future generations.
1. 100% Bonus Depreciation & Section 179 Expansion
What Changed:
The OBBB reinstates 100% bonus depreciation for qualifying assets placed in service between January 20, 2025, and 2030. This includes real estate-related items like equipment, R&D investments, and manufacturing facilities.
In addition, Section 179 deduction limits have been raised. Businesses can now deduct up to $2.5 million (previously $1 million), with a new phase-out threshold at $4 million.
Impact:
These accelerated depreciation rules allow investors to recover costs immediately, often saving tens of thousands of dollars in the first year alone. That means more cash in hand for renovations, new purchases, or business expansion.
2. Permanent Qualified Business Income (QBI) Deduction
What Changed:
The QBI deduction under Section 199A is now permanent, and increased from 20% to 23%. Income thresholds have also been increased, providing more flexibility for small business owners and real estate professionals to benefit.
Impact:
Pass-through entities (like LLCs) and REITs gain predictable, long-term tax savings. This strengthens profitability and encourages reinvestment into rental properties and real estate services.
3. Section 1031 Exchanges & Mortgage Interest Deductibility
What Changed:
The bill solidifies the benefits of 1031 like-kind exchanges, ensuring the continuation of this powerful tool for deferring capital gains tax when exchanging investment properties.
Mortgage interest deductions are also preserved and permanently capped at $750,000 of qualified debt.
Impact:
Homeowners and investors alike retain access to meaningful tax relief, promoting greater housing affordability and increased market mobility.
4. SALT Cap Raised & Estate Tax Relief
What Changed:
The State and Local Tax (SALT) deduction cap has been raised to $40,000, a significant shift for residents in high-tax states like California and New York.
The lifetime estate and gift tax exemption increases to $15 million, adjusted annually for inflation.
Impact:
This change provides immediate relief for high-net-worth individuals and real estate investors, enabling more effective estate planning and intergenerational wealth transfer.
5. Stimulus for Development & Opportunity Zones
What Changed:
The bill introduces accelerated depreciation for non-residential production property and extends the Qualified Opportunity Zone program through 2033. This includes expanded eligibility for rural and underserved communities.
Impact:
By reducing risk and upfront costs, the bill incentivizes new development, potentially expanding housing supply and driving growth in emerging markets.
6. Broader Business Incentives That Benefit Real Estate
What Changed:
Enhanced expensing for research & development and expanded business interest deductions improve cash flow for many firms. These changes, along with depreciation boosts, support cost segregation strategies for real estate owners.
Impact:
Commercial property owners and landlords can maximize their tax positions, reinvest in upgrades, and improve the long-term value of their portfolios.
🔎 Why Real Estate Professionals Should Pay Attention
- Faster Capital Recoupment: Bonus depreciation and Section 179 allow investors to recover costs in year one.
- Stronger Investment Climate: Enhancements to QBI and 1031 exchanges support rental property growth and portfolio scaling.
- Improved Homebuying Affordability: Mortgage interest deductions offer valuable relief for buyers.
- More Housing Supply: Development incentives and Opportunity Zone extensions promote new construction.
- Small Business Support: Independent brokers and developers gain breathing room with permanent deductions and expanded thresholds.
The Bottom Line
The One Big Beautiful Bill Act represents a bold and far-reaching overhaul of federal tax policy, designed to unlock investment, encourage homeownership, and stimulate development. With its broad set of incentives and long-term certainty, the bill offers a powerful new toolkit for real estate professionals navigating today’s dynamic market.
What Should You Be Doing?
✅ Explore cost-segregation studies to maximize depreciation benefits
✅ Investigate Opportunity Zone investments in emerging communities
✅ Reassess estate plans in light of new exemptions and SALT deduction rules
✅ Advise clients on business structures and mortgage interest strategies
Boutique Realty is here to help you make sense of these changes and maximize the opportunities they present.