The Big Picture on How The One Big Beautiful Bill Affects Real Estate Investors:
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Real estate investors can now permanently write off 100% of eligible property depreciation in the first year—greatly enhancing passive investing tax benefits.
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The act allows states to establish new QOZs every 10 years. Holding investments here can lead to major capital gains tax reductions or exemptions.
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Investors from countries the U.S. deems “discriminatory”—like Canada, UK, South Korea—will face additional real estate taxes under the new law.
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On Friday, President Trump signed into law the One Big Beautiful Bill Act (OBBBA). It’s a goliath of a bill at 940 pages long, and includes sweeping changes to taxes, Medicaid, SNAP food stamp benefits, and more.
When you need help falling asleep, you can read all 940 pages in their entirety, but since we’re here to talk real estate investing, let’s cut to the chase. Here are four ways the OBBBA affects real estate investors.
100% Bonus Depreciation Made Permanent
The Tax Cuts and Jobs Act of 2017 allowed real estate investors to take 100% of eligible depreciation in the first year of ownership, including for passive real estate syndications like we often invest in together through the Co-Investing Club.
That had been phasing out, with investors allowed to take 40% for 2025 and 20% for 2026, then it would have expired.
The OBBBA makes 100% bonus depreciation permanent. It retroactively applies to properties bought or put in service after January 19, 2025.
For passive real estate investors, that makes the “lazy 1031 exchange” even more powerful as a way to keep deferring capital gains taxes indefinitely.
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Renewal of Qualified Opportunity Zones (QOZs)
Over 10-year cycles, states will be able to set new Qualified Opportunity Zones in low-income areas to spur investment there.
Investors who hold for at least 10 years can avoid capital gains taxes, and those who hold for at least 5 years get a 10% reduction in their capital gains tax.
LIHTC Expansion
The Low-Income Housing Tax Credit (LIHTC) got a refresh, allowing a higher cap for states to offer these to boost low-income housing.
The Co-Investing Club does sometimes invest in affordable housing, and has invested in LIHTC properties before. We consider it a win-win when these make sense: reduced taxes on investments that boost much-needed affordable housing supply.
Higher Taxes on Foreign Investors from Some Countries
The OBBBA adds some additional taxes on foreigner investors in US real estate. It identifies a list of “discriminatory foreign countries” that the government claims unfairly taxes US companies and citizens who do business in them. Full list at the bottom in case you’re curious, but it includes some important allies of the US including Canada, the UK, South Korea, Ireland, Australia, and many more.
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Winners & Losers
The OBBBA, like all major tax and spending changes, helps some people and hurts others.
Real estate investors definitely come out ahead as winners.
Whether you approve or disapprove, the IRS is about to enforce new tax rules. You need to understand them – and ideally optimize for them.
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