
At a Glance:
100% Bonus Depreciation Is Permanent
Qualified Opportunity Zones (QOZs) Made Permanent
Expanded Low-Income Housing Tax Credits (LIHTC)
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How the 2025 Tax Law Creates Massive Advantages for Real Estate Investors
Whether you love it or hate it, the new 2025 tax bill is here and real estate investors just hit the jackpot.
The “One Big Beautiful Bill Act,” is a sweeping 940-page piece of legislation that’s made major waves in the world of taxation. While many provisions are complex or narrow in scope, real estate investors are emerging as one of the biggest beneficiaries.
If you’re currently in the market—or even considering dipping your toes into real estate here’s what you need to know about the four major tax changes that can seriously improve your return on investment in 2025 and beyond.
1. 100% Bonus Depreciation is Back (and Permanent)
Let’s start with the showstopper: 100% bonus depreciation is not only back it’s permanent.
This means that if you invest in real estate, you can now write off the full depreciation of qualifying assets in the same year you purchase them. Prior to this change, bonus depreciation was being phased out under the 2017 Tax Cuts and Jobs Act, reducing to 40% in 2025 and down to 20% in 2026 before vanishing completely.
Thanks to the new law, real estate investors can now:
- Write off 100% of building improvements and qualifying components (e.g., HVAC, roofing, security systems) in year one.
- Accelerate tax savings and reduce upfront taxable income.
- Enjoy major deductions even in passive investment deals, like real estate syndications.
This is especially useful in models like the “Lazy 1031 Exchange,” where investors reinvest capital gains into new passive real estate opportunities, using upfront depreciation losses to offset taxable gains from previous deals without the red tape of a traditional 1031 exchange.
2. Qualified Opportunity Zones (QOZs) Made Permanent
Originally introduced in 2017 to spark investment in low-income communities, Qualified Opportunity Zones (QOZs) allow investors to defer and reduce capital gains taxes by reinvesting into designated “opportunity zones.” Under the new law:
- QOZs have been made permanent on a rolling 10-year cycle, starting in 2026.
- States can continue to define and update which areas qualify as QOZs.
- Investors holding qualifying QOZ investments for 10+ years pay no capital gains on the investment’s growth.
Bonus: A new 5-year rule now grants a 10% capital gains tax reduction if you hold a QOZ investment for at least five years. Essentially, your cost basis increases by 10%, shrinking your taxable profit when you sell.
While the jury is still out on the broader impact of QOZs, this update is a significant motivator for real estate investors to explore value-add deals in underserved areas.
3. Expansion of Low-Income Housing Tax Credits (LIHTC)
As affordability continues to challenge many housing markets, the government is encouraging more private investment in affordable housing via the LIHTC (Low-Income Housing Tax Credit) program.
Here’s what’s new:
- The new law raises the cap on how many credits states can issue.
- It relaxes eligibility criteria tied to project financing especially those using tax-exempt bonds.
- These changes apply from 2026 through 2029, though the expansion isn’t permanent.
This makes it easier for developers and syndicators to fund affordable housing and increases the supply of tax-advantaged real estate deals. In clubs like ours (Co-Investing Club), many members have already invested in LIHTC-backed properties, particularly in workforce housing that supports teachers, police officers, and other public servants.
It’s not a partisan issue it’s practical. And with this expanded support, more investors can contribute to real-world impact while also enjoying excellent tax benefits.
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4. Higher Taxes for Foreign Investors from Certain Countries
The final major change is one that’s stirred some political controversy: higher taxes on foreign investors from specific countries deemed to have “discTo recap:
riminatory” tax practices toward U.S. companies or citizens.
The new law introduces:
- Extra taxation on real estate investment income earned by foreigners from countries on a government “discriminatory” list.
- A strategy meant to pressure foreign governments into offering better tax treatment for U.S. interests abroad.
Notably, several close U.S. allies made this list Canada, the UK, Israel, Australia, Germany, and France, to name a few. While the effectiveness of this move remains to be seen, it may cause hesitation among global investors considering U.S. real estate.
For U.S.-based investors, this change may mean:
- Less competition from international buyers in high-demand markets.
- Potential softening of prices in select coastal or global cities.
It’s a complex and evolving issue, and not every country is affected. But it does suggest a stronger focus on favoring domestic investors—at least in the short term.
Final Thoughts: A Golden Era for Real Estate Investors?
Like any major legislation, the “One Big Beautiful Bill” comes with both winners and losers. But for real estate investors, there’s no question 2025 is shaping up to be a big win.
You can now write off 100% of depreciation up front—permanently.
Qualified Opportunity Zones are here to stay and even more appealing.
Low-income housing deals just got easier to fund (and more profitable).
And foreign competition might ease, depending on international tax negotiations.
If you’re already investing passively or planning to these changes create a unique tax window to build wealth, reduce taxable income, and expand your portfolio. Just make sure to consult with a CPA or tax strategist who understands real estate nuances.
And for those new to this space, groups like our Co-Investing Club make it easy to learn, vet deals, and invest alongside experienced professionals with as little as $5,000.
Sources
https://www.bonadio.com/article/key-tax-law-changes-affecting-real-estate-construction-community-investment/
Trump’s Big Beautiful Bill Impact on Commercial & Multifamily Real Estate
https://www.therealestatecpa.com/2025taxchanges/
https://www.therealestatecpa.com/podcasts/the-one-big-beautiful-bill-what-real-estate-investors-need-to-know/
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