The One Big Beautiful Bill & Commercial Real Estate Investors
On July 4, 2025, the One Big Beautiful Bill was signed into law. While headlines focused on broad tax reform, high-net-worth commercial real estate (CRE) investors noticed something else:
This bill delivers several targeted tax provisions that could significantly improve after-tax cash flow, deal structuring flexibility, and long-term wealth preservation.
100% Bonus Depreciation is Back
This bill brings back the return of 100% bonus depreciation for tangible personal property placed in service after January 19, 2025.
For CRE investors in syndicated or private equity deals, this means:
- Sponsors may accelerate depreciation using cost segregation
- Significant year-one losses may pass through via K-1s
- Opportunity to offset income and reduce tax burden (subject to limitations)
Why it matters: Bonus depreciation can increase early after-tax cash flow, enhancing investor-level returns —especially for those in higher tax brackets.
Opportunity Zones Reinstated
The bill reintroduces Qualified Opportunity Zones with a new structure: rolling 10-year eligibility windows.
This means investors can once again:
- Defer eligible capital gains
- Potentially eliminate tax on gains held long-term
- Align tax deferral with their investment horizon
Why it matters: This provision brings back one of the most compelling tax incentives for patient, long-term CRE investors.
QBI Deduction Now Permanent
The 20% Qualified Business Income (QBI) deduction —previously temporary —is now permanent.
For investors who receive income from REITs, LLCs, or LPs invested in commercial real estate this deduction continues to reduce taxable income on qualified distributions.
Why it matters: With QBI locked in, CRE cash flow remains one of the more tax-efficient income streams for accredited investors.
Interest Deduction Rules Improve
The bill updates how business interest deductions are calculated. For investors, that means sponsors may be able to deduct more interest—without giving up accelerated depreciation.
Why it matters: More favorable deduction rules allow sponsors to optimize deal structure and enhance investor returns after taxes.
Estate Planning and Wealth Transfer Benefits
- Estate and gift tax exemption increased to $15 million per person
- SALT deduction cap temporarily increased to $40,000
- Rental loss limitations (Section 461(l)) made permanent
These provisions may impact how investors hold, transfer, or structure their real estate interests for long-term planning.
What Didn’t Pass But Still Matters
Several proposed tax increases did not make it into the final bill, including:
- Carried interest being taxed as ordinary income
- Elimination of the SALT workaround for pass-throughs
- Foreign investor surtaxes
Their absence is a short-term win but investors should stay aware of potential future proposals.
Why Now is a Strategic Time to Invest
At First National Realty Partners (FNRP), we acquire and manage necessity-based retail centers across the U.S. assets that align well with many of the tax advantages reinforced in the One Big Beautiful Bill.
If you’re considering commercial real estate a long-term, tax-efficient part of your portfolio, now is an ideal time to evaluate opportunities.
Disclaimer
This content is for informational purposes only and only provides a general overview of certain tax incentives and benefits, and does not constitute tax, legal, or investment advice. Investors should consult their professional advisors to determine how the One Big Beautiful Bill may apply to their specific situation, if at all.
