Headline Update
The U.S. Congress has passed—and the President signed—landmark legislation known as the One Big Beautiful Bill Act, bringing significant tax reform for property owners, investors, and the real-estate sector. NAR’s advocacy efforts helped secure numerous real-estate-friendly provisions in the final law.
Key Real Estate Provisions Now Law
- Permanent extension of lower individual tax rates.
- 20% Qualified Business Income (QBI) deduction, which is particularly beneficial for those who own real estate through pass-through entities such as LLC’s or S-corporations.
- Temporary four-fold increase in the SALT deduction cap, from $10,000 to $40,000 effective in 2025 and increasing 1% each year through 2029.
- Mortgage interest deduction preserved permanently to incentivize long term homeownership.
- Protection of 1031 like-kind exchanges, ensuring real estate investors can continue deferring capital-gains taxes.
- Elimination of a discriminatory “phantom income” rule, benefiting condominium developers by correcting unfair tax accounting for pre-sale arrangements.
- Expansion of 529 education accounts to cover costs for acquiring or maintaining professional credentials such as real-estate licenses.
- Permanent 100% bonus expensing for equipment, machinery, leasehold and interior improvements to non-residential real property plus a four-year bonus for new owner-occupied factory construction started after Jan 19, 2025 and completed by end of 2028.
- Increased business interest expense deductibility, aiding larger real-estate operations with financing flexibility.
Additional Real Estate Relevant Highlights
From broader NAR coverage and associated reporting, the law also includes:
- Expanded Low-Income Housing Tax Credit to spur affordable housing development.
- A $2,200 inflation-indexed child tax credit.
- $15 million estate and gift tax exemption, adjusted for inflation.
- Enhanced bonus depreciation, full expensing for R&D, and Opportunity Zone incentives, particularly benefiting rural development.
- A new “baby bonds” program: each child born after the law takes effect receives a one-time $1,000 federal contribution toward wealth-building initiatives like future homeownership.
What This Means for You
Real estate professionals and property owners now enjoy greater tax certainty and stronger incentives:
- Stability from permanent tax rate and deduction extensions.
- Expanded deductions (e.g., SALT, mortgage interest) and continued use of 1031 exchanges build better tax planning predictability.
- New benefits—from professional credential support to property improvement write-offs—enhance investment and business flexibility.
- Broader public policy gains like LIHTC expansion and baby bonds support long-term housing market health and generational equity.
Outreach & Planning Reminder
Talk with your tax advisor today to understand how these provisions apply to your portfolio and strategy. Whether you’re a homeowner, investor, or real estate professional, these reforms unlock new advantages—but aligning them with your situation requires expert guidance.
Resources
National Association of Realtors
Housing Wire
