3 big tax wins for investors in the 'One Big Beautiful Bill Act'

Most real estate professionals and investors heard one thing when the “One Big Beautiful Bill” Act (OBBBA) became law: full, immediate expensing is back. The return of bonus depreciation grabbed headlines, especially since investors can now immediately deduct certain real estate expenditures, accelerating their cash flow and freeing up resources for even more investing.

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3 OBBBA tax benefits for investors

That being said, as a certified public accountant (CPA), there are several other significant benefits tucked away within the OBBBA that could save real estate investors thousands of dollars in tax bills. Here are three to pay attention to: 

1. The 20% small business break just became permanent

Back in 2017, the Tax Cuts and Jobs Act (TCJA) introduced a way for pass-through business owners to deduct 20 percent of their profits before calculating taxes for real estate, which included rental operations that qualify as businesses. The OBBBA extended the 199A deduction provision, meaning this qualified business income (QBI) deduction is officially here to stay. 

However, the trick is proving you’re running a business, not just collecting rent checks. You need to spend 250 hours per year working on each property to be able to take advantage of this deduction.

That means maintenance calls, tenant screening, property improvements and bookkeeping can all count toward the minimum required hours. It’s also important to note that this deduction applies to Real Estate Investment Trusts /REITs dividend income, creating tax advantages for investors who prefer publicly traded real estate exposure.

2. State tax deductions just quadrupled

If you invest in expensive states, this one’s huge. Thanks to OBBBA, the federal deduction for state and local taxes jumps from $10,000 to $40,000 annually, but only for taxpayers earning under $500,000 and only through 2029. 

This change directly addresses the tax penalty that has made property investment less attractive in states with high property taxes and income taxes. For example, in states like New York, California, New Jersey, Connecticut and Massachusetts, investors can now deduct four times more in local tax payments.

The math will affect investment decisions. Properties that barely worked financially because of tax burdens can now make sense to invest in, and markets with strong fundamentals (but high carrying costs) become viable again.

However, because of the temporary nature of the adjustment, there will be a natural urgency to capitalize on the improved economics in these premium markets before we revert to the old limits.

3. Wealth transfer rules got a major overhaul

Another benefit of OBBBA is that the lifetime gift, estate and generation skipping transfer (GST) tax exemptions have been permanently increased (remember, they had only temporarily increased under the TCJA). Now, beginning Jan. 1, 2026, the federal lifetime gift and state exemption amount rises to $15 million per person, double the previous permanent level.

More importantly, this higher threshold won’t sunset like previous increases. That means wealthy investors can now plan long-term strategies around transferring $30 million per couple without federal tax consequences.

This provision is beneficial in that it offers a vast opportunity to transfer more wealth in the form of bequeathed property and real estate, without triggering federal transfer taxes, whether during life or death. Combined with annual gifting allowances of $19,000 per recipient ($38,000 for couples), a substantial wealth transfer becomes possible. In addition, dynasty trusts gain new relevance with higher exemption levels, meaning that these vehicles can now shelter much larger real estate portfolios for multiple generations while avoiding transfer taxes.

With these much higher exemption limits, wealthy real estate investors can now pass way more property to their kids and grandkids without getting hammered by taxes.

Strategic planning becomes critical

This legislation signals an apparent policy shift toward supporting real estate investment across the wealth spectrum. From new investors using business deductions to established players optimizing their estate strategies, the updates to the tax code now offer more tools for building and preserving real estate wealth across generations. 

However, these provisions work best when implemented thoughtfully. It’s essential to ensure entities are set up correctly up front, as each provision carries compliance requirements that can eliminate benefits if mishandled. So, savvy investors would benefit from reviewing their current structures against these new opportunities to capitalize on the new legislation.

Kevin DeCicco is a Managing Tax Partner and Chief Operating Officer at Alpine Mar.