In this article, we’ll explore the key benefits of the OBBBA for real estate investors, focusing on the reinstatement of TCJA provisions, the return of 100% bonus depreciation, estate tax changes, and other critical elements driving investment opportunities.

Permanently Enhancing TCJA Benefits: An Advantage for Real Estate Investors

The permanent extension of significant tax benefits from the 2017 TCJA, which were initially scheduled to expire in 2025, is one of the OBBBA's greatest victories. This helps high-net-worth investors preserve more after-tax income to reinvest in real estate and other wealth-building opportunities by keeping the top marginal tax rate at 37% rather than returning to 39.6%.

For investors who do not itemize, the bill also locks in the higher standard deduction, which will be $15,750 for single filers and $31,500 for joint filers in 2025 (indexed for inflation).

100% Bonus Depreciation: A Catalyst for Real Estate Investment

The OBBBA brings back a major incentive for real estate investors: 100% bonus depreciation under Section 168(k). This tax provision, originally introduced under the Tax Cuts and Jobs Act (TCJA), allows investors to fully deduct the cost of qualifying improvements in the first year they’re placed in service, rather than spreading the deduction over decades.

Under the new legislation, this benefit applies to assets placed in service between January 20, 2025, and December 31, 2029. That means investors can once again unlock substantial first-year tax savings for key components of their commercial properties.

Here’s why it matters: with a cost segregation study, you can reclassify certain physical elements of your building like HVAC systems, lighting, electrical, plumbing, and interior finishes into shorter depreciation categories of 5, 7, or 15 years. With 100% bonus depreciation, those items can now be fully written off in year one.

Let’s say you acquire a $2 million commercial building. Through cost segregation, you identify that $600,000 of the purchase price applies to qualifying systems and improvements. At the highest tax rate, that’s a potential first-year tax savings of $222,000, money that stays in your pocket and can be reinvested immediately into renovations, operations, or additional acquisitions.

 At Wilkinson, we view this as a game-changing opportunity to enhance cash flow and accelerate ROI. Leveraging 100% bonus depreciation isn’t just a tax move, it’s a smart strategy for scaling your portfolio while maintaining disciplined capital deployment.

QBI Deduction: 20% (Now More Reliable)

Most significantly, the 20% Qualified Business Income (QBI) deduction under Section 199A is made permanent by the OBBBA. Owners of pass-through entities, such as partnerships, LLCs, S corps, and sole proprietorships, are able to deduct up to 20% of their qualified business income thanks to this potent provision.

For pass-through real estate investors, that is revolutionary. For instance, you could deduct $100,000 from your $500,000 in QBI, which would save you about $37,000 in top-rate federal income tax. This deduction's permanence gives tax planning more long-term clarity and promotes ongoing investment in properties that generate income.

Increased Estate and Gift Tax Exemption: Safeguarding Generational Wealth

Starting in 2026, the OBBBA raises the lifetime estate and gift tax exemption to $15 million per person ($30 million for joint filers), adjusted annually for inflation. This is an increase from roughly $13.99 million under the TCJA. This permanent increase is significant for real estate investors with substantial holdings. It reduces the tax burden when transferring property to heirs and provides more certainty for long-term estate planning. For investors managing portfolios of apartments, commercial buildings, or land, this means more assets can pass to the next generation tax-free. 

Enhanced Section 179 Expensing: Supporting Smaller Real Estate Ventures

The OBBBA increases the Section 179 expensing limit to $2.5 million from $1.25 million, with a phase-out threshold of $4 million for property placed in service after December 31, 2024. This provision allows real estate investors to immediately deduct the cost of qualifying tangible personal property, such as equipment or property improvements, instead of depreciating it over time.  

For Wilkinson, this goes beyond a higher limit; it’s about providing a strong tool for careful investing and asset management.

State and Local Tax (SALT) Deduction Cap Increase

The OBBBA provides meaningful relief by raising the SALT deduction cap from $10,000 to $40,000 ($20,000 for married filing separately) for tax years 2025 through 2029, with a phase-out for taxpayers with adjusted gross income (AGI) above $500,000 ($250,000 for married filing separately). This benefits real estate investors by allowing them to deduct a larger portion of expenses, such as property taxes.  

This legislative change also offers greater financial stability for investors and gives valuable tax savings. For instance, an investor with $30,000 in annual property taxes can now deduct the full amount, saving up to $7,400 at the 37% tax rate, compared to only $10,000 under the previous law.  

Preservation of Like-Kind Exchanges and Other Real Estate Incentives

The OBBBA’s protection of Section 1031 like-kind exchanges is a crucial aspect for long-term real estate investors. This provision allows investors to defer capital gains taxes by exchanging one investment property for another. This supports our careful strategies and long-term focus, as well as our goal of building wealth, stability, and generational legacy within the Five Forms of Capital. It’s another way the OBBBA helps reinforce the resilience of multifamily real estate as a tangible asset that offers predictable income and long-term stability.

Section 1031 is a powerful tool for promoting continuous reinvestment in quality assets. This aligns with our approach to building wealth and generational legacy. By maintaining these incentives, along with provisions related to mortgage interest deductions and capital gains exclusions, the OBBBA provides certainty for investors and reinforces real estate as a dependable asset for stable returns.  

Strategic Considerations for Real Estate Investors

To capitalize on the OBBBA’s benefits, real estate investors should consider the following key strategies:

1. Leverage Cost Segregation Studies: Combine 100% bonus depreciation with a cost segregation study to unlock large upfront deductions on property components like HVAC systems, lighting, and interior improvements.

2. Time Acquisitions Strategically: Thanks to the recently passed OBBBA legislation, full bonus depreciation is now available retroactively for assets placed in service after January 19, 2025. Businesses that made qualifying acquisitions after that date or plan to do so can still take advantage of this benefit.

3. Plan Estate Transfers: With the estate and gift tax exemption increasing to $15 million per person, it’s a smart time to explore tax-efficient ways to transfer real estate to the next generation.

4. Optimize SALT Deductions: If you’re in a high-tax state, consider itemizing to take advantage of the new $40,000 SALT deduction cap before it reverts to $10,000 in 2030.

5. Consult a Tax Advisor: The new bill opens up some exciting possibilities, but it also adds complexity. A qualified advisor can help you navigate the details and align your strategy with your investment goals.

Conclusion: What This All Means For Real Estate Investors

The One Big Beautiful Bill Act delivers sweeping tax incentives designed to fuel real estate investment and preserve wealth across generations. By locking in key provisions from the Tax Cuts and Jobs Act, bringing back 100% bonus depreciation, raising the estate and gift tax exemption, and expanding deductions like Section 179 and SALT, this legislation creates meaningful opportunities for investors to reduce tax liability, boost cash flow, and strengthen long-term financial planning.

For real estate investors, this is a moment to move strategically. With the right planning, these changes can support everything from accelerated portfolio growth to smoother transitions of wealth to future generations. Of course, these benefits come alongside broader fiscal implications and policy trade-offs, making it more important than ever to consult with trusted tax and legal advisors to navigate the road ahead with confidence.

At Wilkinson, we are experienced in passive real estate investing and are here to help you navigate the complexities of real estate taxation and investment strategies, especially those newly amplified by the One Big Beautiful Bill Act. Whether you're a seasoned investor or just starting, our team can guide you through the process and help you build a strong financial foundation.

Ready to capitalize on the profound benefits of the OBBBA for your real estate investments, including leveraging new opportunities like 100% bonus depreciation and enhanced expensing limits?

Schedule a time to talk with David today. 

About the Author

David McKinney is the Managing Director and EVP of Investor Relations at Wilkinson. With over $2.5 billion in transactions completed during his tenure, David leverages his strategic insights and emotional intelligence to enhance client and team experiences. Beyond his professional endeavors, he is a husband and father, enjoying outdoor adventures in lakes and mountains near his home in Washington State, and he is actively involved in his community as a Rotarian, committee chair advisory board member reflecting his commitment to leadership and service.

*This does not constitute an offer to sell or the solicitation of an offer to buy securities. Securities may be sold only to accredited investors and only through an offering memorandum. No person has been authorized to give any information or to make any representations in connection with any offering of Wilkinson Corporation’s securities other than the information and representations contained in the offering memorandum. All prospective investors should read the offering memorandum and consult with their own legal, accounting, tax, and financial advisors before deciding to invest. This email contains forward-looking statements that relate to future events, future developments, or forecasts of a property’s or fund’s future financial performance. All investments involve risks and uncertainties and these statements are only predictions based upon assumptions. Actual events or results may differ materially. There is no guarantee that any fund’s objectives, future results, levels of activity, performance, or plans will be achieved.​