The recently passed One Big Beautiful Bill Act contains several tax and development provisions that affect how real estate is owned, transferred, and developed in the United States. Below are key takeaways for real estate investors, developers, and owners.
Link to Estate Planning Opportunities Estate Planning Opportunities
The estate and gift tax exemption threshold has been permanently increased from $10 million per individual to $15 million per individual. Now is a strategic time for individuals and family-owned property groups to consider transferring income-producing real estate to trusts or heirs without triggering federal estate or gift tax.
Link to Bonus Depreciation Bonus Depreciation
The bill revives 100% first-year bonus depreciation for qualified property acquired and placed into service after January 19, 2025 and before January 1, 2030. A new elective 100% depreciation allowance is also available for Qualified Production Property (“QPP”) if construction commenced between January 20, 2025 and December 31, 2028 and if placed into service before January 1, 2033. QPP includes newly constructed and certain existing non-residential real estate used in the manufacturing, production, or refining of specified tangible personal property within the United States. With higher and more stable expensing limits in place, investors and developers can confidently launch new projects without the risk of midyear phaseouts.
Link to Opportunity Zone Reform & Rural Incentives Opportunity Zone Reform & Rural Incentives
The bill expands and extends the Opportunity Zone (OZ) program, offering enhanced benefits for a second round of OZ designations and additional incentives for rural and underserved markets. Rural OZs may also qualify for stacked credits with renewable energy or workforce housing incentives.
Link to Mortgage Interest/SALT Cap Mortgage Interest/SALT Cap
The state and local tax cap has been increased to $40,000 ($20,000 for married filing separately), with phase outs for those with modified adjusted gross income over $500,000 ($250,000 married filing separately). The SALT cap will increase by 1% each year starting in 2026 through 2029 and will then revert to $10,000 in 2030 unless extended. Mortgage interest deductions remain capped at $750,000. These provisions allow owners and residential landlords to continue offsetting borrowing costs, especially in high-tax jurisdictions or high-interest environments.
Link to 1031 Exchanges 1031 Exchanges
The deferred tax treatment of 1031 like-kind exchanges remains untouched in the bill.
Link to Changes to Energy Efficiency Credits Changes to Energy Efficiency Credits
Tax credits for many energy-efficient home improvements will expire on December 31, 2025, which may affect project economics.
Link to Qualified Business Income (QBI) Deduction Qualified Business Income (QBI) Deduction
The 20% QBI deduction for pass-through entities, including LLCs, partnerships and s-corporations, is now permanent.
To better understand how these provisions may apply to your real estate assets or transactions, reach out to Ryan Christiansen and visit our Real Estate Practice page for additional guidance.