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Here’s how the "One Big Beautiful Bill" (OBBBA)—sometimes just called the "Big Beautiful Bill"—benefits commercial property owners under the new law signed on July 4, 2025:

Key Benefits for Commercial Property Owners

  1. 100% Bonus Depreciation (Full Expensing)
  • Owners can immediately write off the full cost of qualifying assets placed in service between January 20, 2025 and 2030.
  • This accelerates depreciation, boosts cash flow, and enhances the economics of real estate investments, particularly when combined with cost segregation techniques.
  1. Expanded Section 179 Expensing
  • For mid-size projects, up to $2.5 million can now be expensed immediately (with a $4 million phase-out), covering systems like HVAC, roofs, and security.
  • Note: Traditional passive rental properties may not qualify for Section 179 unless operating as an active trade or business.3. Enhanced Qualified Business Income Deduction (Section 199A)
  • The 20% pass-through deduction (applicable to many real estate operations) is now permanent; in some cases it has been increased up to 23%.
  1. Greater Interest Deductibility (Section 163(j) Relief)
  • The bill revamps the limitation on deducting business interest by:
    • Reintroducing depreciation, amortization, and depletion as add-backs to Adjusted Taxable Income (ATI), increasing the deductible amount.
    • Switching the calculation to an EBITDA basis, which allows more interest to be deducted—especially beneficial for leverage-heavy real estate ventures.C
  1. Extension of Energy-Efficient Building Deduction (Section 179D)—with a Deadline
  • Owners who start qualifying energy-saving construction before June 30, 2026 can still claim valuable commercial building efficiency deductions.
  1. Other Strategic Tax Opportunities
  • The bill keeps 1031 like‑kind exchanges intact and maintains favorable capital gains treatment—important for deferring taxes during property reinvestments.
  • It also bolsters affordable housing development by expanding Opportunity Zone benefits and the Low‑Income Housing Tax Credit (LIHTC).

Key Benefits for Mid‑Core Apartment Owners

  1. Permanent 100% Bonus Depreciation & Expanded Section 179

You can now immediately expense eligible property components (e.g., HVAC systems, appliances, roofing) instead of depreciating them over decades. Section 179 expensing jumps to $2.5 million (phases out at $4 million)

Example:
A 20-unit building purchased for $3M—assume $900K of systems (30%) are eligible. Instead of deducting a mere ~$32K per year (27.5-year schedule), you can write off the full $900K in year one, radically improving early cash returns.

  1. Permanent & Enhanced QBI Deduction (Section 199A)

Your rental income, if passed through via an LLC or partnership, can qualify for a 23% deduction, versus the previous 20%, with a smoother phase-out threshold

Example:
A building generating $500K in net rental income could save an extra ~$15K in taxes annually—pushing your effective tax rate even lower.

  1. Enhanced Interest Deductibility (Section 163(j))

Interest on financing traditionally subject to limits is now fully deductible if depreciation and amortization are excluded from the adjusted taxable income calculation

Example:
If you have a $2M loan at 5% (~$100K in interest), that entire amount may now be deductible—boosting after-tax returns.

  1. Affordable Housing Tax Credit Enhancements (LIHTC)

If your mid-core property qualifies as or includes affordable housing, you benefit from a 12% permanent increase in LIHTC allocations and a reduced bond threshold (from 50% to 25%), enabling more projects to pencil out

Example:
Converting part of your property to target income-qualified tenants could unlock tens of thousands in credits, significantly reducing development costs.

  1. Perks of Opportunity Zone (OZ) Investments

If your property is in a designated Opportunity Zone, you retain OZ tax advantages—and these are now permanent. That unlocks capital-gains deferral and potential basis boosts

Example:
Selling another property for a gain, you can invest into your OZ-located mid-core building and defer gains while benefiting from depreciation and QBI—amplifying returns and tax efficiency.

Summary Table: Benefit to Mid-Core Apartment Owners

Provision Impact for Mid‑Core Apartment Owners
100% Bonus Depreciation / Section 179 Immediate write-offs on critical upgrades
Enhanced QBI Deduction (199A) Lower effective tax rate on rental income
Broader Interest Deductibility Full interest write-offs improve cash flow
Expanded LIHTC Financial boost if targeting affordable tenants
Permanent Ozone Tax Incentives Capital deployment flexibility with tax deferral

These provisions can fundamentally reshape your investment strategy—especially if you're planning upgrades, expansions, or affordable housing conversions.

Peter Dacko
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