NEW TAX BENEFITS FOR REAL ESTATE INVESTORS IN 2025
How the One Big Beautiful Bill Act Strengthens Wealth-Building Opportunities for Today’s Property Owners
The One Big Beautiful Bill Act, signed into law on July 4, 2025, has reshaped the tax landscape for real estate investors in a major way. Blending new incentives with the preservation of long-standing tax advantages, the Act positions real estate as one of the strongest wealth-building vehicles available today.
At SanctumRS Asset Management, we understand how much tax planning impacts long-term returns. Below is a clear breakdown of the new benefits and what they mean for investors heading into 2025 and beyond.
100% Bonus Depreciation Restored
One of the most significant wins for property owners is the return of 100% bonus depreciation for qualified improvements. Investors can now deduct the full cost of eligible upgrades in the same year they are completed—dramatically improving early-year cash flow and accelerating ROI.
For value-add investors, this creates a stronger financial cushion and greater leverage during renovation cycles.
Enhanced 1031 Exchange Flexibility
The Act protects the 1031 Like-Kind Exchange and expands its flexibility. Investors now benefit from:
Longer identification windows
Greater access for mixed-use properties
Expanded eligibility for DSTs and fractionalized structures
These updates provide more time, more options, and more confidence when transitioning into higher-performing assets.
New Housing Supply Credit (HSC)
To encourage the creation of additional rental housing, the Act introduces a new Housing Supply Credit—a multi-year federal credit available to investors who add units to the market.
Projects that may qualify include:
Ground-up rental construction
Conversion of commercial buildings into residential
ADUs added on existing rental properties
This incentive rewards investors who help meet growing housing demand.
Relaxed Passive Loss Limitations for Active Investors
Investors who materially participate in rental operations now have more room to deduct passive losses. This especially benefits:
Landlords who manage their own properties
Short-term rental operators
Investors who qualify for Real Estate Professional Status (REPS)
The updated rules allow more income offsetting, lowering overall tax burden and improving year-end financial performance.
Expanded Energy-Efficiency Credits
Sustainability-driven improvements receive meaningful support under the new law. Credits have increased for:
Solar systems
Heat pumps and high-efficiency HVAC
Energy-saving electrical upgrades
Water-efficient improvements
These incentives reduce upgrade costs while boosting property value and tenant appeal.
Capital Gains Relief for Long-Term Holders
Long-term investors also see enhanced benefits with new capital gains reductions for properties held over 10 years. Additional savings are available for rentals maintained at affordable levels, making long-hold strategies even more attractive for wealth planning.
Core Real Estate Tax Advantages Remain Strong
In addition to new incentives, the Act preserves the foundational tax tools investors depend on:
Depreciation
Mortgage interest deductions
Repairs and operating expense write-offs
Opportunity Zone benefits
Cost segregation strategies
These longstanding advantages continue to give real estate a strategic edge compared to other investment classes.
Final Thoughts
The One Big Beautiful Bill Act of 2025 strengthens the financial case for owning and expanding rental real estate. Whether you operate a single home or a multi-door portfolio, the combination of new incentives and preserved tax structures makes this an ideal time to enhance your investment strategy.
At SanctumRS Asset Management, we help investors navigate these benefits, optimize property performance, and build durable long-term wealth.
Disclaimer: This blog is for informational and educational purposes only. The content is based on interpretations of current federal legislation as of its publication date. It is not intended to serve as tax, legal, accounting, or investment advice. Every investor’s situation is unique, and tax outcomes can vary based on property type, ownership structure, and individual financial circumstances. SanctumRS Asset Management does not provide tax or legal advice. Before making any financial decisions or acting on the tax-related information provided, readers should consult with a certified tax advisor, CPA, or qualified financial professional who can provide guidance tailored to their specific needs.
