One Big Beautiful Bill’s Impact on Real Estate: Buyers & Sellers

One Big Beautiful Bill’s Impact on Real Estate: Buyers & Sellers

The One Big Beautiful Bill Act was signed into law on July 4 2025.  It makes many of the temporary tax cuts from the 2017 Tax Cuts and Jobs Act permanent and introduces a few new rules.  Below is a straightforward look at how this law helps different groups in the real‑estate world.

How it Helps Buyers

• Lower taxes and bigger deductions – The law keeps the 2017 lower tax rates and large standard deduction in place. That means many families will pay less tax and have more money left to spend on a home.

• Higher SALT deduction – For 2025–2029, buyers in high‑tax states can deduct up to $40,000 (under $500K modified adjusted gross income) of state and local taxes instead of the old $10,000 limit. This lowers the cost of owning a home in those areas.

• More affordable homes – Because the law expands low‑income housing tax credits, experts estimate it will finance over 1.22 million additional affordable homes in the next decade. More supply helps keep prices in check.

How it Helps Sellers

• More qualified buyers – Lower personal taxes and a higher SALT deduction mean more people can afford to buy, which helps sellers find qualified buyers.

• 1031 exchanges stay intact – Sellers of investment property can still use like‑kind exchanges to defer capital gains tax. This encourages investment property transactions.

• Stable real‑estate incentives – Proposed cuts to the mortgage‑interest deduction and other seller‑friendly rules were left out of the law, preserving familiar tax benefits.

• The permanent $15 million estate‑and‑gift exemption - This reduces the likelihood that family‑owned properties will need to be sold to pay estate taxes.  This benefits sellers looking to pass property to heirs without forced sales.

How it Helps Real‑Estate Investors

• 20 % deduction for pass‑through income – Investors who own property through LLCs or other pass‑through entities can permanently deduct 20 % of their qualified business income.

• Continued use of 1031 like‑kind exchanges - By leaving section 1031 unchanged, sellers of investment property can continue deferring capital‑gains taxes when reinvesting in similar property. 

• MUCH Better business write‑offs (This is a lot of our clients are asking me about) – Immediate 100 % expensing (often called “bonus depreciation”) of equipment, machinery, and certain real‑property improvements is reinstated and made permanent. A discriminatory tax accounting rule for condominium developers is repealed. There is also a temporary four‑year 100 % expensing benefit for building new manufacturing facilities, and the limit on business‑interest deductions is increased.

The key is that the improvements must be made to a non‑residential structure; “qualified improvement property” (QIP) doesn’t include enlargements of the building, elevators, escalators or any internal structural framework

Long‑term rental property

For typical long‑term residential rentals, interior remodels generally don’t qualify as QIP and can’t be expensed at 100 %.  Residential rental property has a 27.5‑year recovery period, so improvements must be depreciated over that period.  Section 179 expensing is also off‑limits for passive rental property unless the rental is run as an active trade or business. (Please consult with your tax advisor)

Short‑term rentals (Airbnb‑type)

Short‑term rentals treated as a business may be able to use bonus depreciation.  Industry guidance notes that for Airbnb hosts who materially participate in the business, 100 % bonus depreciation covers:

• Furniture and furnishings (beds, sofas, tables, décor)

• Appliances (refrigerators, washers/dryers, dishwashers, coffee makers)

• Electronics (smart TVs, sound systems, Wi‑Fi equipment, security cameras)

• Interior renovations such as flooring upgrades, lighting fixtures, and HVAC improvements.

Because these assets all have a recovery period of 20 years or less, they can be deducted in full the year they are placed in service.  The building itself and the land are not eligible for bonus depreciation, so structural remodels or expansions still must be depreciated over many years  Be sure to document that the rental is run as a business (e.g., meeting material‑participation tests) and consult a tax professional to confirm eligibility.

Disclaimer: Information about bonus depreciation is provided below for general awareness. Please consult your tax advisor; this is just rough information and not professional tax advice.

How it Helps the Housing Market Overall

• Prevents a tax‑hike shock – By making the TCJA tax cuts permanent, the law avoids the sharp tax increase that would have started in 2026.  A stable tax environment supports consumer confidence and the housing market.

• Encourages building and upgrades – Immediate expensing for equipment and certain improvements and a temporary 100 % write‑off for new factories make it cheaper to build or refurbish housing.

• Protects key real‑estate incentives – The law does not repeal like‑kind exchanges, does not increase the top income tax rate, and does not change the mortgage‑interest deduction. Keeping these rules in place maintains investment incentives and market stability.

How it Helps Affordable Housing

• More credits for affordable apartments – States get a permanent 12 % boost in low‑income housing tax credits, and projects need only 25 % bond financing instead of 50 %.  Analysts expect this to create about 1.22 million more affordable homes.

• Opportunity Zones and rural incentives – Continuing Opportunity Zones and adding rural incentives help direct investment into underserved areas.
   

In short, the One Big Beautiful Bill Act delivers broad tax relief and preserves popular real‑estate deductions.  It helps buyers afford homes, gives sellers a larger pool of potential buyers, offers investors permanent tax breaks, expands affordable housing production and creates a more stable environment for the overall housing market.

Here’s the updated version with North County San Diego included:

Representing this stunning new community is Rannie Huang Greer of Luxury Coast Group, Barry Estates—one of the top real estate agents in luxury markets in San Diego, such as Rancho Santa Fe, Carmel Valley, Del Sur, Del Mar, La Jolla
With over $80 million in annual sales, Rannie is recognized for her local expertise, powerful marketing strategies, and multilingual communication skills—perfect for navigating San Diego’s competitive real estate market.

Whether you’re relocating, upgrading, or investing in San Diego, Rannie ensures a seamless, professional, and rewarding experience.

Ready to Make a Move?

Contact Rannie today and take the next step toward your dream home in San Diego.

Rannie Huang Greer

Cell: 619-736-0791

Email: [email protected]

LINE & Wechat: rannie0907

Realtor® DRE 02004582 | Luxury Coast Group Barry Estates

Fluent in English, Chinese, Taiwanese, & Japanese