The recently enacted One Big Beautiful Bill , officially titled the "Tax Cuts and Jobs Act of 2025," introduces significant tax benefits for commercial real estate (CRE) owners and investors.

Highlighted below are the most impactful provisions:

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100% Bonus Depreciation Restored: Immediate expensing for qualifying assets is available through 2029. When combined with cost segregation studies, this allows for substantial first-year deductions.

Enhanced Cost Segregation Opportunities: Breaking down properties into shorter-life components (such as HVAC, parking lots, and lighting) can maximize tax deductions and improve cash flow. With 100% bonus depreciation at its centerpiece.

Estate Tax Exemption: Increased from $13.61 million to $15 million.

20% Permanent QBI Deduction for Pass-Through Entities: The Qualified Business Income deduction for LLCs, partnerships, and S-corporations is preserved at 20% .

Short-Term rentals: Double Benefit: STR owners already benefit from material participation rules that allow them to take active losses against ordinary income. Adding permanent 100% bonus depreciation supercharges this strategy

Expanded Interest Deductibility: EBITDA-based limits on interest deductions have been reinstated, benefiting leveraged transactions. Capital intense businesses can add back EBDITA when calculating ATI.

Opportunity Zones Expanded and Made Permanent: Opportunity Zones now offer permanent benefits, with additional incentives for rural areas. These remain a powerful tool for deferring and potentially eliminating capital gains.

Strengthened Low-Income Housing Tax Credits (LIHTC): Higher caps and easier access to credits provide significant advantages for multifamily developers.

Section 1031 Exchanges Fully Preserved: Tax-deferred exchanges remain intact, allowing for portfolio repositioning without immediate capital gains tax.

Increased Section 179 Expensing: Up to $2.5 million (formally $1.25M) in immediate write-offs is now available for building improvements and equipment.

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Bottom Line:

The new legislation creates a more favorable tax environment for CRE investors. Should you have question regarding how these changes may apply to your specific development, please contact your preferred CRE counsel at Thompson Burton, PLLC to discuss strategies for maximizing these benefits in 2025 and beyond.

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