Why Real Estate Investors Should Take Action Now Under the New Tax Cuts

Jul 7

On July 4, 2025, President Trump signed the One Big Beautiful Bill into law—a sweeping, pro-growth tax package that permanently extended and expanded many of the 2017 Trump-era tax cuts. But beyond the headlines, real estate investors stand to benefit in powerful, immediate ways. Here's how—and why now is the time to capitalize.

The Tax Cuts: What Matters Most for Investors

1. Permanent Lower Tax Brackets

Investors operating pass-through entities (LLCs, S-corps, partnerships) will continue to benefit from lower individual tax rates—now permanently locked in. That means more of your rental income stays in your pocket year after year.

2. 20% Pass-Through Deduction Lives On

The Qualified Business Income (QBI) deduction—allowing eligible real estate investors to deduct up to 20% of net rental income—is here to stay. Combined with depreciation and cost segregation, this deduction dramatically reduces your effective tax rate.

3. Bonus Depreciation Extended

The bill preserves 100% bonus depreciation—allowing investors to write off large portions of real estate improvements, appliances, and short-lived assets in the first year. This is a massive tool for sheltering cash flow from taxes.

4. SALT Deduction Raised to $40,000

For high-income investors in high-tax states, the $40K SALT cap increase will free up more deductibility—particularly on primary residences or state income taxes—making property ownership in places like California, New York, and New Jersey more attractive again.

How This Changes Market Demand

More Disposable Income = More Renters

Tax-free tips, tax-free overtime, and a larger child tax credit mean more take-home pay for working-class households. That fuels demand for quality rental housing, especially in suburban and Sunbelt markets where affordability and lifestyle intersect.

Reduced Barriers to Entry for Landlords

With continued deductions and bonus depreciation, the after-tax ROI on rentals improves dramatically. Investors who act now can:

Defer or eliminate income taxes using cost segregation,
Compound equity faster, and
Reinvest into more properties through 1031 exchanges or BRRRR strategies.

Inflation Hedge Still Needed

Although inflation has moderated, the long-term fear of fiscal imbalance (with the deficit expected to grow $3T+) suggests assets that produce cash flow and appreciate over time—like rental property—remain critical hedges.

Why Real Estate Is the Ultimate Vehicle Under This Bill

Real estate is the only asset class that lets you:

Leverage capital (5:1 or better),
Create cash flow,
Legally reduce taxable income through depreciation,
Passively build wealth, and
Transfer assets tax-efficiently to heirs.

And under this new bill, the rules just got more favorable—especially for investors who qualify as real estate professionals, where passive losses can offset active income.

Final Thought: Use It or Lose It

Laws change. Political control shifts. And tax reform rarely favors investors in the long term. The One Big Beautiful Bill offers a window to lock in cash-flowing properties under the best tax conditions in years.

If you're a real estate investor—or plan to be—this is the moment to: