“One Big Beautiful Bill” Implications for Real Estate Investors: A Closer Look

By James P. Schlimmer

Signed into law on July 4, 2025, President Donald Trump’s sweeping tax legislation—known as The One Big Beautiful Bill Act—is making headlines across the country. For real estate investors, this new law may bring powerful, long-term benefits.

Backed by lobbying efforts from industry organizations including the National Association of Realtors® (NAR), Mortgage Bankers Association (MBA), and National Association of Home Builders (NAHB), the new law includes multiple tax provisions that may positively impact real estate investment strategies.

We previously shared how the bill could affect retirement savers. Now, we take a closer look at the portions of the bill that could be of interest to real estate investors and self-directed IRA account holders in particular.

Key real estate provisions in the bill

According to HousingWire and Inman News, the legislation includes several long-awaited tax measures that real estate professionals and investors have advocated for:

1. Continued protection for 1031 like-kind exchanges

The new law protects Section 1031 like-kind exchanges, a critical component of real estate investment strategy for many investors. This provision allows eligible investors to defer capital gains taxes on the sale of investment property by reinvesting in another qualifying property.

This continued protection gives real estate investors flexibility to strategically reallocate assets and preserve more capital for future investments.

This provision may be one of the most significant victories for real estate investors. There had been speculation in prior years about potential limitations on 1031 exchanges, including proposals to cap deferrals or eliminate exchanges for high-value properties. By keeping Section 1031 intact, the bill reaffirms the ability for real estate investors to defer capital gains taxes when exchanging one investment property for another of like kind.

For investors, this means you can continue using 1031 exchanges as a strategy to scale a portfolio, shift to better-performing markets, or diversify property types—all without triggering immediate tax liability.
Additionally, if you’re using a self-directed IRA or other tax-advantaged account, understanding how 1031 exchanges apply outside of retirement accounts can help you navigate Unrelated Business Income Tax (UBIT) scenarios more strategically.

*Don’t forget that Equity 1031 Exchange has an experienced team of Qualified Intermediaries ready to help you navigate this process.

2. Permanent 20% Qualified Business Income (QBI) deduction

The law makes the 20% QBI deduction permanent for eligible pass-through entities. For real estate professionals operating through LLCs or S-Corps, this could help reduce overall taxable income when structured appropriately.

The permanence of the QBI deduction may significantly benefit real estate investors who operate through pass-through entities—such as single-member LLCs or S-Corporations. The deduction could reduce taxable income by up to 20% for eligible income streams, depending on how the business is structured.

This can create meaningful tax efficiency for investors with rental portfolios, especially when combined with depreciation, interest deductions, and other expense write-offs. For those with income flowing through to personal returns, this provision may also provide additional flexibility in how earnings are distributed and reported.

Investors should consult with a tax professional to ensure they meet the “qualified trade or business” criteria and are optimizing the deduction based on their entity structure and income thresholds.

3. Quadrupled SALT deduction cap

Beginning in 2025, the state and local tax (SALT) deduction cap will increase from $10,000 to $40,000—a change that may benefit property owners in high-tax states. According to Marty Green of Polunsky Beitel Green, this update is “welcome news” in areas where property taxes commonly exceed $10,000 annually. Note: The benefit phases out for taxpayers with adjusted gross income over $600,000.

For real estate investors residing in or holding property in high-tax states like California, New York, or New Jersey, the expanded SALT deduction may provide significant relief. Many investors previously saw large portions of their property taxes and state income taxes go unreimbursed due to the prior $10,000 cap.

By raising the cap to $40,000, the new law could improve after-tax returns and make certain markets more financially attractive. This may influence both where investors choose to live and where they choose to invest, especially for those evaluating out-of-state opportunities.

It’s worth noting that the benefit phases out at higher income levels, so it’s important to evaluate how this aligns with your total adjusted gross income (AGI).

4. Mortgage interest deduction made permanent

Mortgage interest on loan amounts up to $750,000 remains deductible, and this provision is now permanent under the bill. This benefits investors financing real estate and may support continued demand in housing markets.

Preserving the mortgage interest deduction could help both homeowners and real estate investors who utilize financing. By making the $750,000 cap permanent, the bill ensures a stable tax benefit for those leveraging debt to acquire or refinance properties.

For real estate investors outside of retirement accounts, this deduction may help offset rental income and reduce overall taxable income—especially in the early years of a mortgage when interest payments are highest. Additionally, this provision may bolster demand for single-family homes, supporting long-term value and rental income potential for those holding residential property.

Investors using debt in a self-directed IRA may not qualify for this deduction within the retirement account, but the broader market impact of continued mortgage affordability can still influence investment performance.

5. Expanded Opportunity Zone incentives

The law enhances incentives for investing in Opportunity Zones, aimed at driving economic development—including in rural and underserved areas. These zones offer tax advantages for long-term investments that may align with retirement and legacy-building goals.

The bill expands the range of benefits for Opportunity Zone investments, including longer deferral periods, increased basis step-ups, and new eligibility for certain rural and distressed areas. These enhancements may attract greater capital to areas previously overlooked, creating new avenues for investors seeking tax-favorable, long-hold real estate opportunities.

For investors using taxable capital, Opportunity Zones may allow deferral and potential elimination of capital gains when held long term. While not directly applicable to IRA investing, the broader development momentum in these zones may create compelling indirect opportunities—such as investing in property upgrades, commercial redevelopment, or build-to-rent communities where demand is growing.

This could be beneficial for investors with a long-term horizon and interest in combining financial growth with community impact.

Additional provisions that may influence investors

Beyond real estate, the bill also includes broader tax and economic updates that could indirectly impact investor sentiment and market dynamics:

• Permanent improvements to the Low-Income Housing Tax Credit (LIHTC)
• Full and immediate expensing for industrial structures
• Bonus depreciation extension
• Estate and gift tax exemption of $15 million, indexed to inflation
• New “Baby Bonds” program: A one-time $1,000 government contribution for children born after the law’s enactment, intended to build long-term wealth

These provisions are intended to incentivize economic growth and investment in housing supply, while offering estate planning flexibility for higher-net-worth families.

What this means for real estate, self-directed IRA investors

These legislative updates could influence how real estate investors structure future transactions—particularly those involving 1031 exchanges, LLC-owned property, or Opportunity Zone projects.

If you’re a self-directed IRA investor with real estate in your portfolio, now may be a good time to explore how these tax law changes align with your long-term investment goals. You may also want to speak with your tax advisor or legal professional to determine if any of these provisions apply to your current or future strategies.

Key takeaways

• 1031 exchanges remain intact and protected, allowing investors to continue deferring capital gains when exchanging qualifying investment properties.
• Investors operating as LLCs or S-Corps may benefit from a permanent 20% QBI deduction.
• The SALT cap increase to $40,000 beginning in 2025 could benefit property owners in high-tax states.
• Mortgage interest deductions and Opportunity Zone incentives were strengthened, encouraging continued investment in real estate.
• The bill also includes broader tax incentives, such as bonus depreciation and industrial expensing, which may align with commercial or multifamily strategies.

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Visit TrustETC.com/RealEstate to explore educational resources, investor guides, and real-world examples.

James P. Schlimmer is SVP, Real Estate Growth Officer at Equity Trust Company.

The role of Equity 1031 Exchange, LLC (formerly Midland 1031, LLC) as Qualified Intermediary is limited to acting as qualified intermediary within the meaning of Regulations section 1.1031(k)-1(g)(4) for Federal and state income tax purposes. In this regard, Equity 1031 Exchange is not providing other legal, investment, or due diligence services. The taxpayer/exchanger must direct all investment transactions and choose the investment(s) for the exchange. Nothing contained herein shall be construed as investment, legal, tax or financial advice or as a guarantee, endorsement, or certification of any investments, legal effect or tax consequences of the transfer, conveyance and exchange of the Relinquished Property and/or the Replacement Property.