The “Big Beautiful Bill Act of 2025,” signed into law by President Trump, introduces several impactful tax reforms—especially for real estate investors and LLC owners. From reinstating full bonus depreciation to expanding affordable housing incentives and solidifying deductions for pass-through businesses, the bill represents a significant step toward increasing capital efficiency in real estate investment.
Here are the three confirmed and impactful tax changes real estate professionals should understand:
1. 100% Bonus Depreciation Reinstated
What’s New:
The bill permanently reinstates 100% bonus depreciation for qualifying property placed in service after January 19, 2025.
Why It Matters:
This allows investors to immediately deduct the entire cost of eligible improvements or assets—such as renovations, fixtures, or certain commercial property components—in the first year of service.
Investor Takeaways:
- Improved cash flow: Investors can front-load deductions to reduce taxable income and boost first-year returns.
- Accelerated scaling: With upfront savings, capital can be reinvested faster into new acquisitions or upgrades.
- Strategic planning: Eligible assets typically include tangible property with useful lives under 20 years—consult your CPA to optimize asset qualification.
2. Qualified Business Income (QBI) Deduction Made Permanent
What’s New:
The 20% Qualified Business Income deduction (Section 199A) is now a permanent feature of the tax code for eligible pass-through entities.
Why It Matters:
Real estate investors operating as LLCs, S-corps, or partnerships often rely on this deduction to reduce their taxable income.
Investor Takeaways:
- No sunset risk: Investors can count on long-term planning around this deduction without concern for legislative expiration.
- Applicable to rental income: Most passive rental income held in qualified structures can benefit.
- Strategic use of LLCs: Structuring holdings through LLCs continues to be both tax-efficient and liability-protective.
3. Affordable Housing Tax Credit Expansion
What’s New:
The bill expands the Low-Income Housing Tax Credit (LIHTC), aiming to spur development of over 1.2 million affordable units over the next decade.
Why It Matters:
For developers and investors in workforce and affordable housing, the increase in available credits enhances project feasibility and return potential.
Investor Takeaways:
- More credits available: Investors can more easily partner with developers or syndicators to secure tax credits.
- Renovation incentives: Adaptive reuse or repositioning of aging properties into affordable housing can now receive stronger tax backing.
- ESG-aligned investing: For mission-driven investors, LIHTC expansion provides a way to combine impact with profit.
Conclusion: Strategic Opportunities Ahead
The 2025 Big Beautiful Bill Act gives real estate investors renewed clarity and powerful incentives. Whether you’re a physician seeking tax efficiency through passive income, or a tech entrepreneur diversifying into hard assets, the combination of immediate depreciation, permanent pass-through deductions, and affordable housing incentives creates a compelling landscape for Multifamily Real Estate Investments.
Next Step:
Schedule a consultation with our investment team to explore how these reforms can enhance your portfolio performance and tax strategy.