Introduction
The One Big Beautiful Bill (OBBB) of 2025, signed into law on July 4, 2025, represents a landmark tax reform with profound implications for commercial real estate (CRE) investors. This legislation, officially H.R. 1, builds on the 2017 Tax Cuts and Jobs Act (TCJA) by extending key provisions and introducing new incentives tailored to stimulate real estate investment. From immediate deductions for property improvements to permanent tax breaks for business income, the OBBB offers a robust framework for reducing tax liabilities and enhancing cash flow.
This guide provides a detailed breakdown of the OBBB’s key provisions, eligibility criteria, a planning checklist for 2024, and potential risks to consider, ensuring investors can navigate this new tax landscape effectively.
Bill at a Glance (Headline Provisions)
The OBBB includes several headline provisions that are game-changers for real estate investors, designed to reduce tax burdens and encourage investment:
- 100% Bonus Depreciation: The OBBBA allows for 100% bonus depreciation and new expensing options for specific types of real property, including nonresidential properties, enabling businesses to recover costs more rapidly. (Thomson Reuters Tax & Accounting).
- Increased Section 179 Deduction: The deduction cap reaches $2.5 million; phaseout threshold reaches $4 million (inflation‑indexed) in 2025. (Bipartisan Policy Center)
- Permanent QBI Deduction: The 20% Qualified Business Income (QBI) deduction under Section 199A is now permanent, offering long-term tax savings for pass-through entities like partnerships and S-corporations, including real estate businesses (Molentax, July 2, 2025).
- Protected 1031 Like-Kind Exchanges: The OBBB preserves the ability to defer capital gains taxes through 1031 exchanges, allowing investors to swap investment properties without immediate tax consequences. This is particularly beneficial for those seeking triple net (NNN) 1031 exchange opportunities (Cox Castle, July 17, 2025).
- Enhanced Opportunity Zones: The Opportunity Zones program is now permanent, with new designations starting in 2026. This offers tax deferrals and potential tax-free gains for investments in distressed communities (LBMC, July 8, 2025).
- New QPP Depreciation: A 100% depreciation allowance is available for qualified production property (QPP), including nonresidential real estate used in manufacturing, production, or refining, for construction starting between January 19, 2025, and December 31, 2028 (Crowe LLP, July 17, 2025).
- Permanently Preserved Mortgage Interest Deduction: The mortgage interest deduction remains intact, supporting homeowners and investors in building wealth through real estate (Molentax, July 2, 2025).
- Baby Bonds: A $1,000 government-funded savings account for children born after July 4, 2025, can be used for first-time home purchases, indirectly supporting the housing market (Molentax, July 2, 2025).
These provisions create a robust framework for real estate investors to optimize their tax strategies and enhance returns.
Timeline & Phase-In Table
Timing is critical to maximize OBBB benefits. The following table outlines the effective dates and phase-in periods for key provisions:
| Provision | Effective Date |
| 100% Bonus Depreciation for Commercial Real Property | After January 19, 2025 |
| Qualified Production Property (QPP) Depreciation | Construction: Jan 19, 2025 – Dec 31, 2028; Placed in service: before Jan 1, 2031 |
| Section 179 Deduction Cap Increase | After December 31, 2024 |
| Permanently Preserved Mortgage Interest Deduction | Permanent, no phase-in |
| Protected 1031 Like-Kind Exchanges | Permanent, no changes |
| Enhanced Opportunity Zones | Current designations end 2026; New designations start 2026 |
| Baby Bonds | For children born after July 4, 2025 |
| Full Expensing for Certain Capital Investments | After January 19, 2025 |
This table highlights the importance of planning around specific start dates, particularly for provisions like bonus depreciation and QPP depreciation, which have defined windows.
Who Qualifies? Entities & REITs
The OBBB’s tax benefits are accessible to a wide range of entities, ensuring inclusivity across real estate investment structures:
- Individuals: Can claim deductions like QBI, bonus depreciation, and Section 179 for personal real estate investments, such as rental properties or single-tenant NNN investments.
- Partnerships: Benefit from pass-through deductions, particularly the permanent QBI deduction, ideal for real estate ventures with multiple investors.
- S-Corporations: Eligible for QBI deductions and bonus depreciation, suitable for smaller real estate businesses.
- C-Corporations: Can utilize bonus depreciation and Section 179 deductions for larger real estate portfolios, including commercial developments.
- Real Estate Investment Trusts (REITs): Benefit from the permanent 20% QBI deduction on dividends and an increased allowance for taxable REIT subsidiaries (TRS) from 20% to 25% of assets, enhancing flexibility for REIT investors (Crowe LLP, July 17, 2025).
This broad eligibility ensures that investors, whether operating solo or through institutional structures, can leverage the OBBB to reduce tax liabilities and enhance returns.
Planning Checklist Before 12/31
To fully capitalize on the OBBB’s tax benefits, real estate investors should take the following steps before December 31, 2024:
- Time Property Placements: Schedule the placement of bonus depreciation–eligible property after January 19, 2025, to claim 100% bonus depreciation. For example, timing the completion of a commercial renovation to early 2025 could maximize deductions.
- Review Business Structures: Optimize your business entity (e.g., partnership, S-corp) to maximize QBI deductions. For instance, a partnership structure may be ideal for real estate ventures seeking passive net-lease income.
- Explore Opportunity Zones: Invest in current Opportunity Zones before designations change in 2026 to secure tax deferrals and potential tax-free gains. This is particularly relevant for investors targeting distressed communities.
- Conduct Cost-Segregation Studies: Perform a cost-segregation study real estate to identify short-life assets (e.g., fixtures, HVAC systems) that qualify for faster depreciation, enhancing tax savings (KBKG, July 18, 2025).
- Plan for 1031 Exchanges: If selling a property, plan a triple net (NNN) 1031 exchange to defer capital gains taxes. 1031 Deal Hub offers 1031 exchange properties for sale, including single-tenant NNN investments and DST 1031 listings under $1M, ensuring compliance with the replacement property 45-day rule and safe-harbor 1031 timelines.
- Consult Tax Professionals: Work with tax advisors to align your investment strategy with OBBB provisions, especially given potential delays in IRS guidance. This is crucial for navigating complex provisions like QPP depreciation.
These steps can help investors position themselves to fully leverage the OBBB’s tax advantages, particularly for those seeking passive net-lease income through 1031 Deal Hub.
Risks & Caveats (Sunset Clauses)
While the OBBB offers significant opportunities, there are risks and caveats to consider:
- Sunset Clauses: The increased State and Local Tax (SALT) deduction cap, raised from $10,000 to $40,000, is temporary and reverts to $10,000 in 2030, potentially affecting high-tax state investors (Crowe LLP, July 17, 2025).
- State Tax Conformity: Some states may not conform to federal tax rules, such as 100 percent bonus depreciation real estate, which could limit savings in certain jurisdictions (KBKG, July 18, 2025).
- IRS Guidance Delays: New provisions, such as QPP depreciation, may require additional IRS guidance, potentially delaying implementation or creating uncertainty (KBKG, July 18, 2025).
- Economic Impact: The OBBB is projected to increase the federal deficit by $2.4 trillion over the next decade, which could lead to higher interest rates, impacting real estate financing costs (Kajmst, July 2, 2025).
Investors should consult with tax professionals to navigate these complexities and ensure compliance, particularly when planning triple net (NNN) 1031 exchange strategies.
Triple-Net Lease Markets to Watch
Looking to capitalize on the OBBB 2025 tax incentives? The following US cities offer rapidly growing triple-net lease (NNN) opportunities ideal for investors interested in stable, passive income and significant tax advantages:
| City | Notable Investment Opportunities |
| Chicago | Thriving retail corridors and QSR triple-net properties in highly trafficked areas. |
| Houston | Energy and healthcare-focused single-tenant assets driving passive cash flow. |
| Phoenix | High-demand medical and industrial single-tenant NNN assets with attractive yields. |
| Dallas | Strong growth in NNN retail and logistics sectors, delivering reliable passive income. |
| Jacksonville | Growing market for retail and industrial NNN lease properties with robust returns. |
| Austin | Booming technology and retail-driven triple-net assets in a rapidly expanding metro. |
| Fort Worth | Highly attractive cap rates on passive assets, particularly in retail and industrial properties. |
| Columbus | Stable, recession-resistant markets featuring retail and warehouse NNN investments. |
| Charlotte | Strong demand for single-tenant retail and financial services NNN opportunities. |
| Denver | Rapidly expanding mixed-use and retail triple-net developments offering steady returns. |
| Washington, DC | Prime government-leased single-tenant NNN properties ensuring consistent passive cash flow. |
| Nashville | Music and entertainment-centric retail NNN lease investments with strong tenant profiles. |
| El Paso | Logistics and cross-border trade-focused industrial NNN properties providing stable returns. |
| Oklahoma City | Affordable retail and restaurant NNN assets generating attractive passive income streams. |
| Detroit | Revitalization-driven retail and industrial triple-net properties with excellent tax advantages. |
| Baltimore | Healthcare and retail-focused triple-net assets ideal for secure, passive investments. |
| Milwaukee | High-demand industrial and retail NNN properties backed by stable tenant industries. |
| Albuquerque | Strong growth opportunities in healthcare and essential retail triple-net assets. |
| Tucson | Affordable retail and medical-focused single-tenant NNN assets ideal for steady income. |
These cities represent some of the best locations to find prime triple-net investments eligible under the new OBBB 2025 tax provisions.
Frequently Asked Questions
- What is the OBBB, and how does it affect real estate investors?
The OBBB is a comprehensive tax reform bill passed in 2025 that includes provisions like 100 percent bonus depreciation real estate, permanent QBI deductions, and protected 1031 exchanges, reducing tax liabilities and enhancing cash flow for real estate investors.
- What are the key tax benefits for real estate under OBBB?
Key benefits include 100% bonus depreciation, increased Section 179 deductions, permanent QBI deductions, protected 1031 exchanges, enhanced Opportunity Zones, and new QPP depreciation.
- How can I qualify for 100% bonus depreciation on my real estate investments?
Qualifying property, such as nonresidential real property and equipment, must be placed in service after January 19, 2025. A cost-segregation study real estate can identify additional eligible assets for faster depreciation.
- Are there any changes to 1031 exchanges under OBBB?
No, 1031 like-kind exchanges are protected, allowing investors to defer capital gains taxes. Compliance with the replacement property 45-day rule and safe-harbor 1031 timelines remains essential.
- What should I do before December 31, 2024, to take advantage of OBBB provisions?
Time property placements for 2025, review business structures for QBI deductions, explore Opportunity Zones, conduct cost-segregation study real estate, and plan triple net (NNN) 1031 exchange with platforms like 1031DealHub.
- Are there any risks or caveats I should be aware of with OBBB?
Risks include temporary provisions (e.g., SALT cap reverts in 2030), state tax conformity issues, potential IRS guidance delays, and economic impacts like higher interest rates due to increased federal deficits.
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DISCLAIMER
I am not a CPA, attorney, broker-dealer, or investment adviser. This content is for general education and must not be relied upon for tax, legal, or accounting advice. Always consult your licensed professional. Federal and state rules change frequently; info may become outdated. Circular 230 Notice: Nothing here is intended for, nor can it be used for, avoiding U.S. tax penalties.
Advertising Disclosure. Posts may reference services offered by AMC Real Estate Investment Services and affiliates, including 1031DealHub.
Forward-Looking Statements. Any opinions or projections are based on current data and may change without notice.
