The One Big Beautiful Bill Act and the Real Estate Industry

On May 22, the U.S. House of Representatives passed the One Big Beautiful Bill Act (OBBBA), a sweeping tax and domestic policy reform package that offers powerful benefits for real estate developers, builders, and investors. While the bill still faces debate and probable changes in the Senate, its provisions already represent major wins for the housing industry.

Key Tax Wins for Real Estate Developers

1. Business SALT Deduction Preserved

   1. The bill retains the ability for businesses to fully deduct state and local property taxes. This ensures real estate professionals continue to benefit from crucial tax offsets tied to their properties.

2. Pass-Through Tax Deduction Enhanced

   1. Section 199A, the Qualified Business Income (QBI) deduction for pass-through entities, is increased from 20% to 23% and made permanent. This provides direct tax relief to the many small and mid-sized real estate businesses structured as LLCs or S-corps.

3. Low-Income Housing Tax Credit (LIHTC) Expanded

   1. The bill broadens eligibility and increases the allocation of credits, helping developers finance affordable housing projects more efficiently.

4. Estate Tax Exemption Raised

   1. The exemption is increased to $15 million per individual and indexed for inflation, supporting generational wealth transfer in family-owned real estate businesses.

5. Bonus Depreciation and Expensing Restored

   1. The bill brings back 100% bonus depreciation and expands expenses under Section 179. This will allow developers to immediately deduct the cost of eligible property and improvements and significantly improve project cash flow.

6. Opportunity Zones Renewed

   1. The bill revives and expands Opportunity Zone incentives, including a new round of designations with greater rural emphasis. These provisions promote long-term investments in distressed communities, spurring real estate redevelopments.

Housing Market Stability and Affordability Boosted

• Mortgage Interest Deduction Preserved

  • The bill makes the mortgage interest deduction permanent, protecting a cornerstone of homeownership incentives.

• SALT Cap Quadrupled for Individuals

  • The individual state and local tax deduction cap increases from $10,000 to $40,000 for households earning under $500,000, helping buyers in high-cost states afford homes and making home ownership attractive to more people.

• Child Investment Accounts Introduced

  • New tax-advantaged savings accounts can be used for first-time home purchases, helping more Americans achieve homeownership in the future.

Workforce, Regulatory, and Supply Chain Support

• Workforce Pell Grants for Construction Careers

  • A new grant program will train students for high-demand fields, including residential construction, helping address the industry's labor shortage.

• Regulatory Reform Measures

  • Federal agencies must now assess direct and indirect costs of new rules, and major regulations require congressional approval. This reduces regulatory risk for developers.

• Domestic Timber Production Incentivized

  • Increased harvesting from federal lands aims to lower lumber costs and improve housing affordability.

Looking Forward

The Senate is expected to take up the bill in June, where bipartisan negotiations will play a key role in shaping the final version of the OBBBA before it moves toward a vote. However, the bill in its current form already offers meaningful tax relief, investment incentives, and regulatory support for developers and real estate professionals. These reforms have the potential to drive housing supply, improve affordability, and strengthen the broader real estate economy.