The One Big Beautiful Bill Act passed last week and it will take years to find out how it will affect the country. But, you should start looking at it right now. It will affect you, the real estate investor.
Taxes
This is the biggest area of impact for real estate investors. These are by no means exhaustive, rather a first glance and what will happen.
The Qualified Small Business Stock Exclusion will be a big one. Investments into C corporations with assets under $75 million held for 5 years or more can enjoy 0% capital gains tax. For those investing in real estate stock, look into this one.
State and Local Tax Deductions are increased. These will be huge for states with high taxes. Less so for those of us in the Midwest, but still beneficial if your state taxes income. This provision will allow up to $40,000 in taxes paid at the state and local level to be deducted from federal tax.
Bonus depreciation is extended until 2029. This is a big one for those purchasing medium to large multifamily buildings or larger commercial buildings. After doing a cost segregation study, investors can depreciate assets 100% for tax purposes.
Opportunity zones will continue. This gives a tax benefit for those purchasing in certain areas. They generally require a large investment into rehabilitation (more than the cost of the building) so I haven’t benefited from them. But many have.
The Low Income Housing Tax Credit is restored. This will help investors in low-income projects.
As you probably know, with 1,000 pages, this bill does many more things. As I’ve always said, the government wants to incentivize its citizens to do things it feels are beneficial. It’s up to you to take advantage of these incentives. Like the bill or not, it will affect you, and it pays to learn what it does. Start talking with your accountant early to get the details.
