The Big, Beautiful Tax Bill: What It Means for Commercial Real Estate
In a rare moment of political unity, Congress passed the “One Big Beautiful Bill” Act — a sweeping piece of legislation that quietly rewrites the tax landscape for commercial real estate investors.
While headlines focused on the $5 trillion debt ceiling lift, the real story is this:
CRE investors just got one of the most investor-friendly tax environments in a generation. Let’s break it down.
💥 100% Bonus Depreciation is Back — And It's Permanent
One of the most powerful incentives in the tax code has returned with full force.
The bill reinstates and makes permanent 100% bonus depreciation. That means commercial real estate investors can once again deduct the entire cost of qualifying property in year one — turbocharging returns, improving IRRs, and making deals pencil that wouldn’t otherwise.
This isn’t just a gift to syndicators. It’s rocket fuel for:
Value-add multifamily
Industrial development
Sale-leaseback strategies
Medical office and retail repositioning
Pair this with an increase in Section 179 expensing to $2.5 million, and you’ve got powerful incentives for mid-market operators looking to enhance asset value without complex tax gymnastics.
🏭 Real Estate for Manufacturing Gets a New Tax Code
New Section 168(n) introduces something we've never seen before:
Full expensing for real estate used in U.S. manufacturing — including factories, R&D campuses, and potentially logistics infrastructure — for projects breaking ground between 2025 and 2028.
Translation:
The U.S. just made it tax-efficient to build the physical backbone of a new industrial economy.
Expect this to catalyze:
Semiconductor and chip plant expansion
Domestic reshoring of advanced manufacturing
Built-to-suit industrial plays with enhanced tax incentives
📊 QBI, 1031, and Carried Interest: The Core Tax Tools Stay Intact
The act extends and enhances several critical provisions from the 2017 Tax Cuts and Jobs Act, including:
Qualified Business Income Deduction (20%): Now permanent. Income thresholds raised to $150,000 (joint) / $75,000 (single).
1031 Exchanges: Survives intact. No cap. No sunset.
Carried Interest Treatment: Preserved.
Estate Tax Exemption: Rises to $15M per person (or $30M per couple) starting 2026.
This combination preserves the legal framework for long-term wealth building via real estate.
🌍 Opportunity Zones Go Permanent — With New Rules
The bill makes Opportunity Zones a permanent fixture of the tax code.
What’s new:
Rolling 10-year designation cycles
Focused eligibility for truly distressed areas
Enhanced step-ups:
10% basis step-up after 5 years
30% for rural zones
100% gain exclusion at 10 years
Extra benefits beyond 30 years
The upshot?
Long-term capital can now confidently deploy into OZs without worrying about policy reversals. Expect a surge in rural fund strategies, industrial OZ development, and creative multi-decade plays.
💸 SALT Deduction Quadruples to $40K
The State and Local Tax deduction cap jumps from $10,000 to $40,000 beginning in 2025 — with income phaseouts starting at $500,000.
This is a game-changer for high-income investors in:
New York
California
New Jersey
And other high-tax states
It also preserves the pass-through entity (PTE) workaround, allowing property owners to continue deducting state taxes at the entity level.
🧠 Final Take: The Best Tax Environment in Years
This bill does more than avoid a fiscal cliff — it cements a golden era for commercial real estate tax strategy. Investors who act now can:
✅ Maximize depreciation
✅ Lock in estate planning advantages
✅ Leverage permanent Opportunity Zones
✅ Push manufacturing projects with immediate tax write-offs
And perhaps most importantly — eliminate tax uncertainty going into the next market cycle.
If you’re sitting on the sidelines, the window to deploy with confidence just opened wide.
Want help modeling bonus depreciation on your next deal?
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