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- August 1, 2025
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Impact of the One Big Beautiful Bill: Why Real Estate Investors Should Pay Attention Now
The One Big Beautiful Bill (OBBB) isn’t just political theater-it’s one of the most significant tax and housing changes in recent memory, especially for multifamily investors.
If you’re involved in real estate, this bill changes how you invest, renovate, pass down wealth, and structure your deals for tax efficiency. From restoring full bonus depreciation to permanently enhancing estate tax exemptions, OBBB offers substantial advantages that can directly boost your cash flow and reduce long-term tax burdens.
In this article, we break down exactly how the bill affects multifamily investors—and how you can strategically position yourself to benefit.
1. SALT Deduction Changes: Relief for High-Tax State Investors
What Is the SALT Deduction?
The SALT (State and Local Tax) deduction allows taxpayers to reduce their federal taxable income by subtracting state and local property, income, and sales taxes. For real estate investors in high-tax states, this deduction has always been a critical part of tax planning.
OBBB Changes:
- 2025–2029:
Joint filers get a SALT deduction cap of $40,000, while single filers can claim up to $20,000, provided their modified adjusted gross income (MAGI) is below $500,000. - Phase-out Provision:
The full $40,000 deduction is available only for those with a modified adjusted gross income (MAGI) up to $500,000 (joint filers) or $250,000 (married filing separately).
For incomes above these thresholds, the deduction is reduced by 30% of the excess over the limit.
If MAGI reaches $600,000 (joint filers) or $300,000 (separate), the deduction returns to the baseline $10,000
- 2030 and Beyond:
The deduction reverts to the previous $10,000 cap. - Pass-Through Workaround Stays:
Multifamily owners operating as LLCs or partnerships can still deduct SALT at the entity level.
Investor Takeaway:
For multifamily investors under the $500,000 MAGI threshold, this provides a tax break over the next five years. If you’re above the limit, now is the time to plan for a phase-out and adjust your strategies accordingly.
2. Bonus Depreciation Restored: A Major Win for Real Estate Investors
What Is Bonus Depreciation?
Bonus depreciation allows property owners to immediately deduct 100% of the cost of qualifying property improvements—think appliances, HVAC systems, flooring, and landscaping—in the year they’re placed in service, rather than depreciating them over decades.
The Role of Cost Segregation:
A cost segregation study breaks down your property into shorter-life assets, accelerating depreciation and unlocking significant tax savings sooner.
OBBB Changes:
- 100% bonus depreciation is restored and made permanent for assets placed in service between January 19, 2025, and 2029.
- A phase-out begins in 2030, reversing the previous reduction trajectory (which was set to fall to 40% in 2025 and disappear by 2027).
Investor Takeaway:
Whether you’re acquiring new properties or upgrading existing ones, you can now deduct the full cost of eligible improvements immediately, slashing taxable income and improving cash flow. Timing is key: assets must be placed in service after January 19, 2025.
3. Permanent Tax Cuts for Pass-Through Entities and Corporations
OBBB Changes:
- Corporate Tax Rate:
The corporate tax rate remains permanently at 21%, avoiding a feared tax hike. - Pass-Through Income Deduction:
The Qualified Business Income (QBI) deduction for LLCs, partnerships, and S-Corps increases from 20% to 23%, now made permanent. - REIT Dividends:
The 23% deduction also applies to qualified REIT dividends, reinforcing real estate investment trusts as a tax-efficient vehicle. - Limitations Apply:
Deductions phase out for high earners or certain service businesses, based on wages paid and property value held.
Investor Takeaway:
This change lowers the effective tax rate on rental income from 29.6% to around 28.5%. It’s a clear win for both passive and active real estate investors who operate via pass-through structures or REITs.
4. Estate Tax Expansion: Transfer Real Estate Tax-Free
OBBB Changes
- Starting January 1, 2026, the federal estate, gift, and generation-skipping transfer (GST) tax exemption rises to $15 million per person (up from $13.99 million in 2025).
- For married couples, this means you can transfer up to $30 million tax-free.
- The exemption is indexed for inflation and will not sunset under this legislation.
Why It Matters:
Multifamily property owners can now pass down substantial real estate holdings without triggering federal estate tax. If you’ve made significant gifts previously, consult your estate planner to understand how they count against this new limit.
5. Affordable Housing Incentives: LIHTC and Section 8 Adjustments
Section 8 Housing
Section 8 vouchers guarantee partial rent payments directly from the government, creating predictable cash flow for landlords.
OBBB Changes:
While the bill doesn’t explicitly cut Section 8 funding, it reduces federal support, pushing more responsibility to states. Expect voucher caps, work requirements, and potential payment delays.
Low-Income Housing Tax Credit (LIHTC)
OBBB Changes:
- Permanent increase to 12% state allocation
- Bond financing threshold lowered to 25% starting in 2026
- Could result in 1 million new affordable units over the next decade
Investor Takeaway:
If you’re in affordable housing development, this is a golden window. Expect more competition for credits but increased opportunity for developers with the right partnerships and expertise.
6. Opportunity Zones: Permanent, But With Stricter Oversight
What Are Opportunity Zones?
These zones offer tax advantages for investing capital gains into economically distressed areas via Qualified Opportunity Funds (QOFs).
OBBB Changes:
- Program made permanent, eliminating the 2026 expiration
- Governors will designate new zones every 10 years, starting July 1, 2026
- Enhanced benefits for rural zones
- Increased reporting and transparency requirements
Investor Takeaway:
You now have long-term certainty for Opportunity Zone investments, with expanded options and recurring windows for new zones.
7. Energy Efficiency Credits: Use Them Before They’re Gone
Energy Efficiency Credits
Tax credits for green building improvements like solar panels, efficient HVACs, and energy-saving windows.
OBBB Changes:
- No credits for projects started after June 30, 2026
- No credits for projects placed in service after December 31, 2027
Investor Takeaway:
If you’re considering green retrofits, act now to lock in tax benefits before they disappear.
Action Plan for Multifamily Investors
To take full advantage of OBBB’s changes, consider these next steps:
- Diversify your tenant base beyond Section 8
- Use cost segregation for bonus depreciation benefits
- Pursue LIHTC opportunities for affordable housing projects
- Update your estate plan to leverage the new $15M/$30M limits
- Complete green upgrades early to capture final energy credits
- Work with your CPA or tax advisor to tailor your strategy
Final Thoughts
The One Big Beautiful Bill isn’t just another tax law—it’s a generational opportunity for real estate investors to protect wealth, optimize tax strategy, and grow their portfolios.
Whether you’re a seasoned multifamily operator or just starting in syndication, these changes could reshape your approach for years to come. The key? Act strategically, plan ahead, and align with experts who can help you make the most of it.
Because in real estate, having the right tax strategy makes all the difference.
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