How the 2025 Tax Bill Could Impact Real Estate Investors

A sweeping new tax bill is moving through Congress. While it’s not yet a law, and it is difficult to predict what changes may be made by the Senate, these proposed changes could significantly reshape how you plan, finance, and grow your real estate portfolio.

Whether you own rental properties, manage commercial spaces, or develop large-scale projects, this legislation — dubbed the One Big, Beautiful Bill — includes proposals that could work in your favor.

Key Proposals That Could Affect You

Here is a breakdown of the proposals most relevant to real estate investors.

Full Property Write-Offs Could Be Back

One of the most attractive provisions for real estate investors is the return of 100% bonus depreciation. If approved, this would allow you to fully deduct the cost of qualifying renovations, property improvements, and certain building components immediately, instead of spreading the deductions out over several years. This could be a game-changer for your 2025 renovation or development plans. The provision would apply to eligible property acquired and placed in service after Jan. 19, 2025, and before Jan. 1, 2030.

Bigger Deductions for Business Equipment

The bill proposes raising the Section 179 deduction limit from $1.16 million to $2.5 million, with the phaseout threshold increased to $4 million. What does that mean for you? The increased limit would help you deduct the full cost of equipment, vehicles, or some property improvements upfront. The change would apply to taxable years beginning after Dec. 31, 2024, and the limits would be indexed for inflation starting in 2026.

You May Be Able to Deduct More Interest

For highly leveraged projects, a proposed change to the interest limitation rules means more of your interest expenses could be deductible. Specifically, the 163(j) limitation would be computed without regard to deductions for depreciation, amortization, or depletion. This could help reduce your overall tax burden if you’ve financed recent or upcoming projects with significant loans, effective for tax years beginning after Dec. 31, 2024, and before Jan. 1, 2030.

Opportunity Zones Could Expand and Improve

The bill includes a proposal to launch a new round of Opportunity Zones, with a renewed focus on rural areas and simpler reporting requirements. This could open new tax-advantaged avenues for development and long-term investment. The House bill sets an early expiration date for the 2018 OZ designations. Instead of expiring on Dec. 31, 2028, they would now expire on Dec. 31, 2026. This change would likely create a gap in new investment activity, which the Senate is expected to address.

Larger Rental Income Deduction

If you earn net rental income through pass-through entities like LLCs, your Section 199A deduction may increase from 20% to 23% for taxable years beginning after Dec. 31, 2025, and will not expire. The current phase-in of W-2 wages, capital investment, and specified services trades, or businesses for taxpayers whose taxable income exceeds threshold amounts, is replaced and indexed for inflation for taxable years after 2025. That could mean more after-tax income, especially for those who qualify as real estate professionals.

Limits on Loss Deductions Could Tighten

The “excess business loss” limitation would be made permanent. Further, the carryover amount would be treated as an excess business loss rather than as a net operating loss. This would effectively result in permanent disallowance unless or until the taxpayer has sufficient business income.

New Write-Off for Industrial Buildings

A proposed new deduction for “qualified production property” could apply to some types of industrial or manufacturing real estate. This might create an additional tax advantage for investors in logistics, warehousing, or production-related facilities. The reduction would be an elective 100% depreciation deduction. Qualified production property is defined as the portion of any U.S. nonresidential real property that is used originally as an integral part of a “qualified production activity” and placed in service after the date of enactment and before Jan. 1, 2033 (if construction begins after Jan. 19, 2025, and before Jan. 1, 2029). Qualified production activity is the manufacturing, production, or refining of tangible personal property, if there has been a substantial transformation of the property comprising the product.

Estate Planning Flexibility Could Increase

For those planning to transfer real estate holdings or wealth to the next generation, the bill would increase the lifetime estate and gift tax exemption to $15 million, a permanent change that offers more flexibility in passing along high-value property portfolios.

Want to Get Into the Weeds? If you’re looking for a deep dive into the full scope of the proposed legislation, including technical details and specific tax code changes, check out the comprehensive analysis from our tax professionals.

What’s Not Changing

Some areas are staying the same—at least for now. The bill doesn’t propose changes to corporate tax rates or carried interest rules. And some key tax breaks from the 2017 tax reform law will likely be extended, helping preserve current planning strategies.

Smart Moves to Make Before the Bill Passes

Here are four proactive steps you can take while the bill is still in progress:

• Talk to Your Tax Advisor Now, Not Later: Now’s the time to start a conversation, not when the bill passes. Work with your advisor to understand how the proposals could impact your 2025 strategy, particularly in terms of purchases, financing, or restructuring.
• Revisit Your Investment Timeline: If 100% bonus depreciation or increased Section 179 limits pass, consider adjusting the timing of purchases or renovations to leverage these deductions fully.
• Watch for New Opportunity Zones: Keep an eye on how new zones are mapped and where incentives are focused, especially if you’re exploring new markets. Rural and underdeveloped areas may become more attractive investment targets under the new framework.
• Stay in the Loop: Sign up for updates from reliable tax or investment advisors so you can respond quickly if and when the bill becomes law.

The Bottom Line

The One Big, Beautiful Bill Act isn’t law yet – but it could move quickly. If passed, it could bring several tax advantages to the real estate industry. By understanding what’s in the bill now, you will be better positioned to act fast, restructure smartly, and maximize your tax strategy as early as 2025.

Ready to protect your portfolio and plan for what’s next? Discover unique solutions from our real estate advisors who understand your needs.