Officially passed by the Senate on July 1, 2025, the One Big Beautiful Bill (OBBB) introduces a large variety of budget adjustments spanning many policy areas. As a whole, the bill is quite complex, and understanding the implications for your business can feel overwhelming.
However, the bill contains many potential benefits for commercial real estate, so it’s a smart idea to familiarize yourself with the new tax rules. In this article, we’ll break down the most important things you need to know about the Big Beautiful Bill as a commercial real estate owner or investor.
What are the Major Changes to Commercial Real Estate?
The One Big Beautiful Bill introduces a long list of changes to tax policies, many of which expand and update parts of the 2017 Tax Cuts and Jobs Act. While not every part of the bill will impact commercial real estate businesses, here are a few new or updated policies you should look out for:
Bonus Depreciation (SEC. 111001)
The bill reintroduces 100% bonus depreciation for qualified property. This policy allows property owners to deduct the full price of assets with short depreciation periods immediately. For example, owners might be able to deduct the cost of new lighting or furniture in a commercial building. In order to qualify, property must have been bought and placed in service after January 19, 2025.
Previously, the bonus depreciation rate was at 40%, lowered gradually from 100% as part of a plan to phase out completely by the end of 2026. The new bill makes it a permanent benefit for property owners and investors. The higher rate will free up additional cash flow for owners.
Additionally, a new type of property qualifies for full bonus depreciation benefits. Qualified Production Properties are factories or manufacturing centers constructed between Jan. 1, 2025, and Jan. 1, 2030.
Qualified Business Income Deductions (SEC. 110005)
The bill raises the qualified business income (QBI) deduction permanently to 23%, up from 20%. This deduction allows owners of businesses including partnerships, sole proprietorships, S corporations, and LLCs to deduct a portion of their domestic income from their taxes. However, not every type of income or asset counts towards QBI deductions. Be sure to learn what income qualifies in order to make the most of this benefit.
Estate and Gift Tax Exemptions (SEC. 110006)
Estate and gift tax exemptions will rise to $15 million per person beginning in 2026, and will adjust for inflation. This raised exemption will make it easier to pass along valuable assets, including commercial property, without incurring high taxes, allowing heirs and new owners to start off strong.
Qualified Opportunity Zones (SEC. 111102)
Qualified Opportunity Zones (QOZs) are areas around the country experiencing economic difficulty, where investors can receive tax benefits for investing. The policy helps boost economic activity in these areas.
The program was originally intended to end in 2026, leaving limited time for owners to take advantage of tax benefits from holding QOZ properties. The One Big Beautiful Bill makes the program permanent. It also allows opportunity zones to change every ten years. Make sure to keep up with new zoning rules if you’re considering investing in a QOZ.
If you purchase commercial property in a Qualified Opportunity Zone and hold it for more than five years, you can reduce the amount of capital gains you owe when you sell the property. Benefits increase the longer you hold the property.
How Can Owners and Investors Take Advantage of the One Big Beautiful Bill?
These policies introduced or updated by the One Big Beautiful Bill have many potential benefits for commercial real estate businesses. However, they also introduce new processes and possible challenges. How can you ensure that you make the most of these changes and avoid pitfalls? Follow the tips below to successfully navigate the new legislation.
Conduct Thorough Research on Legislation
It’s important to fully understand each policy change. Conduct further research and consult experienced tax professionals to understand how the bill impacts your business specifically. The more complete your knowledge of the bill is, the better prepared you will be to take advantage of new growth opportunities.
Use Cost Segregation Studies
Cost segregation studies involve bringing in a team of tax experts and engineers to appraise a property. This team determines which parts of the property, like parking lots, landscaping, and equipment, are eligible for bonus depreciation or accelerated depreciation. With bonus depreciation at 100%, now is the time to conduct a cost segregation study and maximize your savings.
Time Business Activity to New Laws
As the Big Beautiful Bill policies go into effect, time your transactions to ensure you receive the full benefits. A few policies even apply retroactively, so know the dates for each policy and check with a tax expert for the highest savings.
Beware of Interest Rate Increases
Though the bill is largely positive for commercial real estate owners, experts believe that it may also lead to higher interest rates. Take action to protect your business now by leveraging savings like bonus depreciation as soon as possible. Savings now will help you manage rising rates in the future.
STRATAFOLIO Commercial Property Management Software Prepares You to Leverage Legislation
Keeping up with policy changes can be difficult, but managing your commercial real estate portfolio doesn’t have to be. STRATAFOLIO is a program designed to help you track key financial details for each property and automate management tasks in one convenient location.
To learn more about how STRATAFOLIO can help you manage your portfolio, schedule a 1:1 demo now.
