The New Era of Real Estate Tax Benefits: Inside the 2025 Big Beautiful Bill
One of the most compelling reasons to invest in real estate is the variety of tax benefits that can significantly reduce your taxable income. The Big Beautiful Bill (previously signed into effect July 4th, 2025) includes various tax and develop provisions that will significantly benefit the real estate sector in the United States. The 20 percent Qualified Business Income Deduction (Section 199A) is made permanent and slightly improved. This was the largest single tax reduction for most investors (next to cost segregation) and other independent contractors and owners of pass-through businesses from the Tax Cuts and Jobs Act of 2017 (TCJA), but it was scheduled to expire at the end of 2025. Its extension and enhancement prevents a nasty tax hike that otherwise would have hit most real estate professionals in a few months.
The Bill creates a temporary, 4-year 100 percent expensing benefit for the construction of new facilities, which are defined as nonresidential real property used in the manufacturing, production, or refining of tangible personal property. Construction must begin after January 19, 2025, and be completed before the end of calendar year 2028 and the property must be owner-occupied.
The Bill reinstates and permanently extends immediate 100 percent expensing of equipment, machinery, leasehold improvements, and nonresidential interior improvements to real property. A big plus is also the inclusion of no new limits on 1031 like-kind exchanges for real estate investors.
The Act increases permanently the allocation of low-income housing credits to states by 12 percent and permanently lowers the requirement for private bond financing for these projects without a state credit allocation from 50 percent to 25 percent. This is projected to result in the creation of over a million additional apartments throughout the USA for real estate investors.
The Act also keeps alive cost segregations and bonus depreciation on any real estate purchases on an annual basis. This can equate to substantial tax savings for real estate investors if utilized. This means investors can continue building wealth through real estate without being heavily burdened by taxes, creating a cycle of growth and compounding benefits. For anyone looking to grow wealth strategically, the tax advantages of real estate make it one of the most powerful investment vehicles available.