Updated: July 5, 2025
As a coach and consultant to real estate broker-owners, C-suite executives, recruiters, and agents, I’d like to share an important update on the “One Big Beautiful Bill Act.” This significant tax reform legislation has successfully passed through both the U.S. Senate and the House of Representatives and has been signed into law by the President.
This bill isn’t just another piece of legislation; it’s packed with provisions that will profoundly impact the real estate sector, influencing homeownership incentives, shaping investment strategies, and redefining the operational landscape for real estate professionals like us. The National Association of REALTORS® (NAR) truly went to bat for our industry, and their advocacy efforts certainly paid off.
Let’s dive into the key provisions that will directly impact real estate and homeownership.
Key Provisions Directly Impacting Real Estate and Homeownership
The “One Big Beautiful Bill Act” brings a mix of permanent and temporary changes designed to influence both individual taxpayers and businesses within our real estate world:
- Permanent Extension of Lower Individual Tax Rates: This is big for everyone. By maintaining existing lower income tax rates for individuals, this translates into more disposable income for potential homebuyers and current homeowners. More money in their pockets means stronger demand and improved affordability – a win-win!
- Enhanced and Permanent Qualified Business Income (QBI) Deduction (Section 199A): This is fantastic news for many of you operating as independent contractors or through pass-through business structures. The permanent 20% QBI deduction offers consistent, long-term tax relief. This makes a career in real estate even more financially attractive for self-employed professionals, helping with talent attraction and retention.
- Temporary Quadrupling of the State and Local Tax (SALT) Deduction Cap (Beginning 2025): This is a huge relief for homeowners in high-tax states! The SALT deduction cap is jumping from $10,000 to $40,000 for households earning under $500,000. While temporary (lasting through 2029 with a 1% inflation adjustment after 2025, reverting to $10,000 in 2030), this offers substantial tax relief, potentially freeing up significant funds for housing-related expenses. Plus, the bill safeguards the ability for businesses to deduct state and local taxes paid through state-enacted pass-through entity taxes.
- Permanent Extension of the Mortgage Interest Deduction (MID): The MID continues to be a permanent tax provision, allowing homeowners to deduct interest paid on the first $750,000 of mortgage debt. Even better, it restores the ability to deduct mortgage insurance premiums! This ensures a long-standing incentive for homeownership remains firmly in place and is even stronger.
- Protection for 1031 Like-Kind Exchanges: No changes here, and that’s great news! The bill explicitly maintains and protects 1031 like-kind exchanges. This critical tool allows real estate investors to defer capital gains taxes on investment property sales, supporting ongoing investment activity in our markets.
Other Relevant Measures with Broad Housing and Economic Impacts
Beyond the core real estate items, there are other provisions in the bill worth noting due to their broader economic and housing implications:
- Low-Income Housing Tax Credit (LIHTC) Enhancements: This is a major boost for affordable housing initiatives. The bill permanently increases the LIHTC’s state allocation to 12% and lowers the bond-financing threshold to 25% beginning in 2026. These provisions are expected to significantly support and stimulate the development of affordable housing, with some analysts projecting the creation of around one million affordable units!
- New Provision for Condominium Developers (Completed Contract Method): This is a significant win if you’re involved in condominium development! The bill now allows developers to use the completed contract method for reporting income from sales of to-be-built condominiums, rather than the percentage-of-completion method. This means income is taxed when the sale actually closes and proceeds are received, providing much better cash flow management and potentially incentivizing more new construction.
- Child Tax Credit Increased to $2,200: While not directly real estate, this permanent increase, with inflation indexing, indirectly helps housing affordability for families by increasing their overall financial capacity and disposable income. Happy families mean stable housing.
- Permanent Estate and Gift Tax Threshold Set at $15 Million (Inflation-Adjusted): For those involved in wealth transfer, this measure stabilizes the exemption level at $15 million per person for individuals dying or gifts made in 2026, with continued inflation indexing after 2026. This provides greater certainty for estate planning, particularly when dealing with substantial real estate assets.
- Strengthened Opportunity Zones: Good news for targeted investment! The bill establishes a permanent policy for Opportunity Zones that creates a recurring 10-year designation period beginning in 2026. It also eliminates the December 2026 sunset date for deferring capital gains, allowing investors to defer gains for up to five years or until the investment is sold, fostering long-term economic development in designated areas.
- Termination/Phase-out of Certain Energy Credits: This is an important detail for new home construction and energy-efficient upgrades. The bill includes the termination of the Electric Vehicle Credit as of September 30, 2025, and the elimination of the Section 45L New Energy Efficient Home Tax Credit and the Section 25D Residential Clean Energy Credit after June 30, 2026, and 180 days after enactment, respectively. Keep this in mind for future projects and client advice.
- Restoration of Key Business Provisions (Bonus Depreciation): The bill reinstates 100% bonus depreciation, allowing businesses to fully deduct the cost of qualifying property components (like certain renovations or improvements) in the year they are placed in service. While primarily for commercial properties, this can significantly impact real estate investors and developers.
Strategic Considerations for Your Business
With the “One Big Beautiful Bill Act” becoming law, these tax changes are no longer theoretical – they are happening. Proactive planning is absolutely essential:
- For Agents: Understanding the specifics of these tax provisions allows you to provide informed and accurate guidance to clients on potential financial implications related to homeownership, investment properties, and business operations. This knowledge will solidify your position as a trusted advisor.
- For Broker-Owners and C-Suite: Now is the time to analyze how these changes could influence market demand, operational costs, and your ability to attract and retain talent, especially those operating as independent contractors benefiting from the enhanced QBI deduction. The increased SALT cap and MID provisions may also bolster buyer confidence in certain markets, so consider how to leverage that.
- For Recruiters: The QBI deduction and other individual tax rate provisions significantly enhance the financial attractiveness of a real estate career, particularly for self-employed professionals. Make sure you highlight these robust financial benefits in your recruitment pitches!
The “One Big Beautiful Bill Act” represents a substantial shift in the tax landscape with direct and indirect implications for the real estate industry. Staying informed and adapting your business strategies will be crucial for success in this evolving environment. I will continue to provide detailed analysis as the bill is officially signed into law and its full impact begins to unfold. Stay tuned!
