The New Rules of the Game: Real Estate Investing After ‘One Big Beautiful Bill’

Jul 11, 2025

 By Axia Partners

The recently passed One Big Beautiful Bill Act marks a significant shift in the tax and policy landscape for real estate investors.

To better understand the significance, it’s helpful to look at how key elements of real estate investing have traditionally worked and how this new legislation changes the equation. Let’s break it down.

Bonus Depreciation 

Before

Bonus depreciation phased down to 60% in 2024 and was scheduled to drop further.

Investors had limited ability to accelerate deductions on renovations and upgrades.

After

100% bonus depreciation is restored and made permanent.

Immediate write-offs for qualified improvements like flooring, HVAC, appliances, and more.

Why it matters: This change turbocharges tax deductions and accelerates investor benefits early in the hold period, especially important for value-add deals like those in our fund. In all Axia offerings 100% of all depreciation-related tax benefits go directly to our investors.
Qualified Business Income (QBI) Deduction

Before

20% QBI deduction available, but with tighter income limits and smaller phase-ins.

Limited use for many investors with passive K-1 income.

After

Higher income thresholds and better phase-outs make the deduction more widely available.

Expanded eligibility means more investors benefit, more of the time.

Why it matters: This is a direct deduction on your K-1 income, making it easier to qualify for and more generous. That translates to more post-tax return in your pocket.
Interest Deductibility

Before

Interest deductions were limited, with depreciation added back into the formula.

After

Depreciation is no longer added back, and EBITDA-based deductibility is made permanent.

Why it matters: In a rising interest rate environment, being able to deduct more interest directly supports fund-level performance and investor distributions.
SALT Deduction Cap

Before

$10,000 cap for state and local tax deductions with no adjustments for inflation.

After

Cap increased to $40,000 for joint filers, with income-based phaseouts starting at $500K AGI.

Why it matters: High-income investors in high-tax states can now deduct more, especially impactful when combined with pass-through income from a real estate fund.
1031 Exchanges

Before

1031 exchanges allowed, but under threat in several tax reform discussions.

After

1031 exchanges fully preserved—no changes.

Why it matters: While Axia doesn’t utilize 1031 exchanges as part of our strategy, it’s still an important tool in the broader real estate landscape. For investors with other direct real estate holdings or those considering active investing down the road, knowing this option remains intact provides greater flexibility in managing gains and reinvestment timing.
Opportunity Zones

Before

OZs were set to expire, with limited clarity on long-term availability.

After

Permanently extended, with expanded eligibility and longer hold periods.

Why it matters: While not all real estate strategies include Opportunity Zone investments, the enhancements in this bill increase the appeal of OZs as a long-term, tax-advantaged option potentially benefiting both direct investors and those considering future OZ-aligned funds.

What This Means for You

The passage of the Big Beautiful Bill reinforces and expands several powerful tax advantages that directly support investor outcomes:

  • Enhanced depreciation opportunities

  • Broader and more accessible deductions

  • Improved deductibility for interest expenses

  • Greater clarity and flexibility for long-term tax planning

While our core focus remains on acquiring and repositioning well-located assets, this legislation equips us with additional levers to strategically time investments, structure deals with greater tax efficiency, and ultimately maximize after-tax returns for our investors.