One Big Beautiful Bill Act: Key takeaways for real estate businesses

By Phil Wuollet, CPA

The One Big Beautiful Bill Act (OBBB), signed into law in July 2025, has brought significant changes to U.S. tax law. Many of these changes make tax provisions from the Tax Cuts and Jobs Act (TCJA) permanent; others introduce new deductions and modify key business tax rules. For owners of real estate, the changes are largely beneficial.

Some of these benefits, however, come with a time limit. For this reason, it’s important to consider new OBBB provisions as you look ahead to 2026.

Here are a few key OBBB takeaways to consider.

Bonus depreciation is back.

The OBBB has permanently restored 100% bonus deprecation for qualified property acquired and placed into service after January 19, 2025.

This marks a major shift from previous TCJA-era rules, which provided for 100% expensing of certain business property through 2022. These old rules also required taxpayers to take a 20% stepdown each year before reaching 0% in 2027.

Thanks to the OBBB, the 40% bonus depreciation rate that was scheduled for 2025 has been increased to 100%—again, for property acquired after January 19 of this year.

These new bonus depreciation rules also apply to qualified production property (QPP)—nonresidential real estate property that is used by the taxpayer as a critical part of qualified production activity.

A few things to know about QPP…

• Under the OBBB, the term “qualified production activity” is now defined as the manufacturing, production, or refining of a qualified product (i.e., tangible personal property) that results in its substantial transformation.
• Qualified production activities do not include ancillary functions such as administrative, parking, sales or engineering activities. What’s more, lessee activities cannot be used by the lessor as part of a qualified production activity.
• Construction of QPP must begin after January 19, 2025, and before January 1, 2029. QPP must be placed in service before January 1, 2031.

Per the OBBB, taxpayers can now apply 100% bonus depreciation to QPP constructed after January 19, 2025, and before January 1, 2029. (The QPP must be placed into service before January 1, 2031.)

The Section 179 deduction has been increased.

Starting in tax year 2025, the OBBB increases the overall IRC Section 179 expensing limitation to $2.5 million and the investment limitation to $4 million. These changes apply to property placed in service after December 31, 2024, and are adjusted for inflation for tax years beginning after 2025.

One thing to note:

The new rules relating to Section 179 expensing do not apply to sport utility vehicles (SUVs). The maximum Section 179 deduction for SUVs placed in service in 2025 remains $31,300. Additionally, the calendar year for cost-of-living adjustments for SUVs is unchanged.

The Qualified Opportunity Zone program has been permanently extended and enhanced.

The Qualified Opportunity Zone (QOZ) program offers tax benefits to investors who make investments in designated (often economically distressed) areas in the U.S. through Qualified Opportunity Funds.

The OBBB permanently extends and enhances this program by allowing for the following:

• Rolling, 10-year QOZ designations beginning on January 1, 2027
• New rolling gain deferral rule
• Permanent 10% basis step-up benefit

In addition to these enhancements, the OBBB establishes stricter eligibility criteria for QOZ designations along with a new fund category, Qualified Rural Opportunity Fund, that provides for ample tax benefits. The new rules also include new reporting requirements and penalties for noncompliance.

Consider acting now.

Although these new OBBB rules offer several benefits for real estate owners, they come with limitations, especially regarding the availability and utilization of deductions.

To make the most of these deductions, it may be worthwhile to consider purchasing real estate before year-end.

This, of course, depends on your unique situation. To determine if a real estate purchase is a good tax strategy for you in 2025, your Abdo advisor can help you weigh and pros and cons and assess the potential tax benefits.

If you’d like to explore how the OBBB could impact your tax strategy in the year ahead, we’re here to shine a light on your options. Contact us today.