A sweeping new federal tax law is creating what some experts describe as one of the best environments in history for real estate investment. At a recent industry conference, tax specialists detailed how the legislation makes key deductions permanent and extends other benefits, providing significant financial advantages for real estate professionals and property owners.
The legislation, known as the One Big Beautiful Bill Act (OBBBA), has solidified several tax provisions that were previously temporary. This move provides newfound certainty for long-term investment planning in the housing sector, affecting everything from individual real estate agents to large-scale property investors.
Key Takeaways
- A new law makes the 20% Qualified Business Income (QBI) deduction permanent, securing a major tax break for real estate professionals.
- Bonus depreciation rules have been extended through 2030, allowing rental property owners to accelerate deductions on assets.
- Experts believe these changes make the current period an exceptionally favorable time for real estate investment.
- The law also enhances tax credits that support the development of affordable and mixed-income housing projects.
A New Landscape for Real Estate Taxation
During a recent forum at the NAR NXT conference, a panel of tax and housing experts gathered to discuss the far-reaching implications of the new legislation. The session, titled “The Tax Talk: Housing, Deductions, and Future Tax Priorities,” focused on how the OBBBA reshapes the financial calculus for the real estate industry.
Panelists emphasized that the law’s most significant impact comes from providing stability. Previously, many valuable deductions had expiration dates, forcing investors and business owners to plan around potential legislative changes. Now, with key provisions made permanent, the industry can operate with greater confidence.
The "20% Off Coupon" Becomes Permanent
One of the most celebrated changes is the permanent status of the Qualified Business Income (QBI) deduction, also known as Section 199A. This provision allows eligible taxpayers to deduct up to 20% of their qualified business income from pass-through entities, which include sole proprietorships, partnerships, and S corporations—structures commonly used by real estate agents and brokers.
Greg Antipoff, a CPA specializing in real estate, described the deduction's impact in simple terms during the forum.
“It’s essentially a 20% off coupon on the income that you generate in your business,” Antipoff stated.
Before the OBBBA was signed into law, this critical deduction was scheduled to expire at the end of 2025. Ryan Ellis, president of the Center for a Free Economy, highlighted that making it permanent offers unprecedented certainty for taxpayers and small business owners in the real estate sector.
What is a Pass-Through Business?
Unlike C corporations, which are taxed at the corporate level, pass-through businesses do not pay income tax themselves. Instead, the income is "passed through" to the owners, who then report it on their personal tax returns. This structure is prevalent among independent contractors and small businesses, including a majority of real estate professionals.
More Tools for Property Investors
Beyond the QBI deduction, the new law also solidifies other valuable tools for those who own and invest in property. The panel drew attention to bonus depreciation rules, which are particularly beneficial for owners of rental properties.
Under the OBBBA, these rules are effective through the 2030 tax year. They allow property owners to accelerate the depreciation of certain assets, effectively increasing their tax deductions in the short term. This can free up capital for reinvestment, repairs, or expansion.
Antipoff also pointed to federal passive loss rules, which give qualified real estate professionals access to tax deductions that are not available to the average taxpayer. The combination of these provisions led him to a strong conclusion.
“From a tax perspective, there has been no better time in history than for our profession to be investing in real estate,” he remarked.
Did You Know? Depreciation allows property owners to deduct the cost of an asset over its useful life. Bonus depreciation lets them take a much larger deduction in the first year, significantly reducing their taxable income.
Boosting Affordable Housing with Tax Credits
The discussion also covered the critical role of tax policy in addressing the nation's housing affordability crisis. Neal Rackleff, chief operating officer of the Houston Housing Authority, spoke about the power of the Low-Income Housing Tax Credit (LIHTC) in funding new developments.
“I've been involved in every single affordable housing program that the federal government has... I think the [LIHTC] is by far the best,” Rackleff said, attributing its success to the public-private partnerships it fosters.
He noted that provisions within the OBBBA expand opportunities for creating mixed-income housing and make it easier for local authorities to allocate these vital credits. This helps stimulate the construction of affordable rental units in communities across the country.
A Cautious Look to the Future
While the experts celebrated the newfound stability, they also offered a dose of realism. Tax laws, even those labeled permanent, can be changed by future legislative action. “All these things are permanent until they're not,” Antipoff cautioned the audience.
The panel concluded by stressing the need for continued advocacy. Greg Zagorski of the National Council of State Housing Agencies highlighted the importance of protecting the independent contractor status for real estate professionals, a classification that is fundamental to how the industry operates.
Forum Chair Andrea Sheridan reaffirmed the industry's commitment to promoting fair tax policies. As Congress considers its next priorities, real estate professionals aim to ensure that housing, investment, and community growth remain central to the conversation.
