9 Tax Breaks from the “Big Beautiful Bill” Every Real Estate Investor Should Know
Signed into law on July 4, 2025, the “Big Beautiful Bill” has reshaped the tax landscape for property owners, developers, and investors. These changes are effective immediately and include major incentives that could shift how you structure deals and plan your tax strategy.
Here’s a breakdown of what’s in play:
1. 100% Bonus Depreciation Returns
For qualifying assets purchased after Jan 19, 2025 and placed in service before Jan 1, 2030, owners can fully deduct the cost in year one. This includes HVAC systems, fixtures, and other property components—an immediate boost to cash flow.
2. QBI Deduction Increase
Pass-through entities now receive a 23% Qualified Business Income deduction (up from 20%). This reduction in taxable income particularly benefits real estate professionals and short-term rental operators.
3. Expanded Section 179 Expensing
The cap on Section 179 deductions has been raised to $2.5M, phasing out at $4M. This is especially valuable for equipment purchases and leasehold improvements.
4. EBITDA-Based Interest Deductions
From 2025 through 2029, interest deductions will once again be based on EBITDA instead of EBIT. This change supports higher leverage, making it especially advantageous for value-add and development projects.
5. Qualified Opportunity Zones Extended
QOZ benefits have been extended through 2033, with new incentives including a 30% basis step-up after five years. Rural and tribal areas stand to see major capital inflows under these changes.
6. Low-Income Housing Tax Credit Expansion
9% LIHTC allocation increased by 12.5% (2026–2029)
4% credit threshold reduced to 25%
DDA status now includes rural and tribal zones
7. Higher SALT Deduction Cap
The State and Local Tax (SALT) deduction cap has been raised to $40,000 for incomes under $500K through 2029, with a phase-out above that. This is particularly impactful for investors in high-tax states.
8. Mortgage Insurance Premium Deduction
Mortgage insurance premiums are deductible again, with an average potential savings of $2,364 annually for qualifying owners.
9. Energy Efficiency Credits Extended
A 30% federal tax credit remains available for eligible home and building upgrades—solar, HVAC, insulation—through Dec 31, 2025.
Key Takeaways
This bill changes the game for anyone who owns, operates, or invests in real estate. With 100% bonus depreciation back on the table, Section 179 limits expanded, and QBI deductions increased to 23%, the early-stage cash flow potential for investors just got a meaningful boost.
The bill also rewards long-term planning. Opportunity Zone benefits have been extended through 2033, and rural areas—historically underfunded—are now in focus. Developers targeting affordability can also take advantage of expanded LIHTC allocations and more favorable terms across both 9% and 4% programs.
Meanwhile, high-tax state investors will welcome the raised SALT deduction cap, and the return of the mortgage insurance premium deduction adds up to real annual savings for homeowners and landlords alike. If you're investing in energy upgrades, you’ve got until the end of 2025 to claim the 30% federal credit.
The bottom line: this is a rare window where federal tax policy is aligned with investor incentives. It's worth taking the time now to revisit your deal structure, depreciation schedule, and capital improvement plans—and consult with a tax strategist before year-end.
Legal Disclaimer
This newsletter is for informational purposes only and does not constitute legal, tax, or financial advice. The information provided is based on publicly available sources and is subject to change. Always consult with a qualified tax professional, attorney, or financial advisor before making investment or tax-related decisions. Ownership Theory assumes no liability for any actions taken based on this content.
