In July 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), a massive new law that changes taxes and government spending. While it covers a lot of ground, real estate investors should pay attention because it includes major wins for those who own, buy, or sell rental properties.
Here’s what you need to know:
1. 1031 Exchanges Are Safe
If you use 1031 exchanges to avoid paying capital gains taxes by swapping one property for another, you’re in luck. OBBBA keeps 1031s alive and well. You can still sell an investment property and reinvest the profits without paying taxes right away.
Why it matters: This means more flexibility to grow your portfolio while keeping more cash working for you.
2. Lower Capital Gains Taxes Stay in Place
There were rumors about raising capital gains taxes, but that didn’t happen.
Why it matters: If you sell a rental property after holding it for a year or more, your profits are still taxed at lower rates (not regular income rates).
3. The 20% Rental Income Deduction Is Now Permanent
If you earn money from rentals, you likely qualify for the 20% pass-through deduction. OBBBA makes it permanent.
Why it matters: If you earn $100,000 in net rental income, you may only pay taxes on $80,000. That’s serious savings.
4. 100% Bonus Depreciation Is Back
The law brings back full 100% bonus depreciation through 2030. That means you can deduct big chunks of a property’s cost in year one.
Why it matters: If you buy a property and do a cost segregation study, you could deduct tens or even hundreds of thousands of dollars right away.
5. Real Estate Pros Keep Their Benefits
If you or your spouse qualify as a Real Estate Professional, you can still use rental losses to offset other income (like W-2 wages).
Why it matters: Combined with bonus depreciation, this can mean huge first-year tax write-offs.
6. More Affordable Housing Incentives
OBBBA expands the Low-Income Housing Tax Credit (LIHTC) and improves Opportunity Zone rules.
Why it matters: There will be more tax credits and financing available for investors and developers who build affordable housing or invest in underserved areas.
7. Faster Permits for New Construction
The bill also speeds up some federal approvals, especially for developments that need environmental reviews.
Why it matters: Faster approvals = faster projects = faster profits.
Final Thoughts
If you invest in real estate, this bill is good news. It locks in key tax breaks, brings back big depreciation write-offs, and makes it easier to build or renovate. It’s not just about tax cuts—it’s about creating more opportunities to grow your portfolio.
Make sure you talk to your CPA about how to best use these benefits. The next few years could be a golden era for real estate investors who know how to take advantage of the new rules.
