Hi community!

President Trump's proposed "One Big Beautiful Bill Act" (OBBBA) is generating significant discussion among real estate investors. The bill aims to extend and enhance several provisions from the 2017 Tax Cuts and Jobs Act (TCJA), with potential implications for the real estate sector.
 

Key Provisions Affecting Real Estate Investors

1. Restoration of 100% Bonus Depreciation
   The OBBBA proposes reinstating full bonus depreciation for eligible property acquired and placed in service after January 19, 2025, through December 31, 2029 . This change would allow investors to immediately deduct the full cost of qualifying property, potentially enhancing cash flow and investment returns.

2. Expansion of the Qualified Business Income (QBI) Deduction
   The bill seeks to make permanent the QBI deduction for pass-through entities, increasing it to 22% . This could benefit real estate investors operating through partnerships, LLCs, or S corporations by reducing taxable income.

3. Increase in Estate Tax Exemption
   Starting in 2026, the OBBBA would raise the federal gift and estate tax exemption to $15 million per individual, adjusted annually for inflation. This change may facilitate wealth transfer planning for real estate investors with significant holdings.

4. Adjustments to the State and Local Tax (SALT) Deduction Cap
   The House version of the bill proposes increasing the SALT deduction cap to $40,000 for households earning under $500,000, while the Senate version maintains the current $10,000 cap . This discrepancy has led to debates, particularly among legislators from high-tax states.
    

Potential Implications for Real Estate Investment Strategies

• Enhanced Cash Flow: The restoration of 100% bonus depreciation could improve cash flow by allowing immediate expensing of property improvements.

• Tax Planning Opportunities: The permanent QBI deduction may offer long-term tax planning benefits for investors structured as pass-through entities.

• Estate Planning Considerations: An increased estate tax exemption could influence decisions around property transfers and succession planning.

• Regional Investment Decisions: Changes to the SALT deduction cap may affect the attractiveness of investing in certain high-tax states, depending on the final provisions.
   

Points for Discussion

• Strategic Adjustments: How might these proposed tax changes influence your investment strategies or portfolio allocations?

• Estate Planning: Are you considering revising your estate plans in light of the potential increase in the estate tax exemption?

• Regional Focus: Would changes to the SALT deduction cap affect your interest in investing in high-tax versus low-tax states?

• Legislative Outlook: What are your thoughts on the likelihood of these provisions being enacted as proposed?