Tax Windfalls for Real‑Estate Investors in the “One Big Beautiful Bill”
The “One Big Beautiful Bill,” a sweeping reconciliation package championed by President Trump and House Republicans, offers several provisions that could transform real estate cash flows. Most notably, it restores 100% bonus depreciation on qualifying property placed in service between January 20, 2025 and December 31, 2029. For real estate investors, this means much earlier deductions for items like appliances, carpeting, land improvements and certain building components instead of being depreciated over 27.5 or 39 years. The immediate tax deduction can free up significant capital, often 20 to 30 percent of project cost, accelerating ROI and enabling quicker reinvestment into acquisitions or renovations.
In parallel, the bill permanently enhances the Section 179 deduction for pass-through businesses, including many portfolios held in LLCs or partnerships, and increases the qualified business income (QBI) deduction from 20 percent to 23 percent starting in 2026. These changes bolster ongoing cash flow benefits from rental or development activity conducted through flow-through entities.
On the energy efficiency front, key green incentives are extended but with caveats. The 179D commercial building deduction remains at roughly $5.80 per square foot for projects meeting prevailing wage and apprenticeship requirements, while the 45L credit for new energy-efficient homes, ranging from $2,500 to $5,000 per unit, now expires December 31, 2025. Developers should prioritize any qualifying residential projects this year to capture that rebate.
The bill also extends Opportunity Zones through 2033, refines the rural focus of eligible tracts, and preserves the capital gains deferral and step-up benefits that OZ investments enjoy. Savvy investors can remap pipelines to include newly designated zones, locking in tax advantages on future gains.
Where We Are in Congress
As of May 18, 2025, the package is stalled in the House Budget Committee. On May 16, a coalition of five hardline Republicans joined Democrats to reject the bill in committee by a 16 to 21 vote, demanding deeper spending cuts, especially to Medicaid, and sharper rollbacks of green energy credits (AP News, Reuters). Speaker Mike Johnson is pushing to reconvene the Budget Committee quickly and hopes to secure the necessary concessions for a revote before Memorial Day. Meanwhile, proposals like limiting SALT workarounds, tweaking top rate increases, or restoring certain spending offsets (per Rep. Nick LaLota’s suggestion) are on the table to win over holdouts (Business Insider, The Washington Post).
If the Committee approves a revised draft, the next step will be a full House floor vote, followed by reconciliation in the Senate, where a simple majority will suffice. However, with Moody’s recent credit rating downgrade and internal GOP rifts, timing is tight. Many of the bill’s headline tax cuts expire December 31, 2025, so investors should track the legislative calendar closely to ensure these benefits become law in time.
Key Takeaways for Real Estate Investors
Accelerate Cost Segregation: Be prepared to engage engineers now to reclassify assets and capture bonus depreciation on recent and upcoming investments.
Prioritize 45L Eligible Homes: Be prepared to fast track any energy-efficient residential projects to meet the December 31, 2025 deadline if the bill passes.
Revisit OZ Strategies: Overlay your deal pipeline on the updated Opportunity Zone map to target newly extended or rural focused tracts.
By weaving these provisions into acquisition, development, and refinancing strategies and staying tuned to the Committee’s revisions, real estate investors can turn legislative uncertainty into a powerful tool for boosting cash flow and returns. Let me know if you’d like illustrative pro forma scenarios or a deeper dive into cost segregation best practices.
