Description

On July 4, 2025, OBBBA was signed into law by President Trump. OBBBA extends many provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) that were set to expire and made several key reforms to real estate and passthrough taxation permanent. OBBBA is generally viewed as favorable for the real estate industry and investors.

Some key changes that OBBBA provides for real estate investors, developers, and owners include the permanent 20% pass-through deduction; new markets tax credit; renewal and enhancement of the qualified opportunity zone (QOZ) program; revisions to the REIT asset test; restoration of 100% bonus depreciation for certain real estate assets; immediate expensing of qualified production property; and restoration of the low-income housing tax credit program.

Some notable real estate tax provisions that remain unchanged include Section 1031 like-kind exchanges, the taxation of carried interest, and the pass-through entity tax workaround for the state and local tax cap. Also, the controversial "retaliatory tax," was ultimately dropped from the final Act. This tax would have been imposed on persons who are residents of or have a sufficient nexus to certain foreign countries, which would have been difficult for real estate funds with foreign investors.

Listen as our authoritative panel discusses the important real estate implications of OBBBA and steps investors, developers, and owners may want to consider to take advantage of these new tax incentives and credits.