One Big Beautiful Bill Overview and Commentary

Throughout June and the first part of July, the One Big Beautiful Bill Act (OBBB) was top of mind for many. The bill was signed into law by President Donald Trump on July 4, 2025. We thought it would be valuable to supply an overview of the aspects of this 887-page bill and how it might affect investment in private debt and real estate.

The OBBB has a lasting impact on the tax and spending plan, fundamentally reshaping the U.S. tax code and bringing about substantial modifications across various sectors. For real estate investors, the bill presents substantial tax incentives, expanded investment opportunities, and strategic planning advantages—but also introduces risks tied to environmental policy rollbacks, university endowment taxation, and potential long-term fiscal impacts. 

Key Positive Aspects for Real Estate Investors 

1. 100% Bonus Depreciation (Permanent) 

• Investors can now deduct 100% of the cost of qualifying property (e.g., HVAC, lighting, flooring, site improvements) in the first year. 

• Applies to assets with a useful life of 20 years or less. 

• Impact: Dramatically improves cash flow of projects when paired with cost segregation studies. 

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

• Real estate investors using pass-through entities (LLCs, partnerships) can continue to deduct 20% of qualified net income. 

• Impact: Enhances after-tax returns. 

3. Opportunity Zones (OZ) Made Permanent 

• OZ program extended indefinitely with new eligibility criteria and mandatory reporting. 

• Investors benefit from rolling five-year deferral windows and capital gains tax advantages. 

• These OZ benefits don’t take effect until 2027. 

• Impact: Encourages long-term investment in underserved areas with clearer compliance expectations. 

4. Section 179 Expensing and Expanded State and Local Tax (SALT) Deduction 

• Section 179 allows immediate expense of capital improvements. Assets can be individually calculated rather than grouped if needed. 

• SALT deduction cap raised to $40,000, benefiting investors in high-tax states. 

• Impact: Supports renovation-heavy strategies and increases demand in markets like NY and CA. 

5. Low-Income Housing Tax Credit (LIHTC) Expansion 

• Reduces the “50% test” to 25%, unlocking more projects via more diverse funding options. 

• Impact: Accelerates affordable housing development and opens new equity investment channels. 

6. Estate and Gift Tax Exemption Raised 

• Exemption increased to $15 million, allowing more real estate wealth to transfer tax-free. 

• Impact: Reduces forced liquidation of assets during estate transitions. 

7. Qualified Production Property 

• Immediate 100% deduction of adjusted basis of the building for properties built after January 19, 2025, and before January 1, 2029, and placed in service before January 1, 2031. 

• This deduction applies to property that would normally be deducted over 39 years and applicable to Alternative Minimum Tax purposes. 

• Property must be involved in manufacturing, production, refining, agricultural or chemical production. 

8. Qualified Production Property 

• The top Income tax bracket stays at 37% rather than increasing back to 39.7%. 

9. Standard Deduction Boost 

• New deduction limit of $15,750 (Individual) $31,500 (joint). 

• Temporary deduction for seniors (65+) of $6,000. 

• $10,000 deduction for domestic vehicle loan interest. 

Negative or Risk-Laden Provisions 

1. Repeal of Section 179D (Energy-Efficient Building Deduction) 

• Ends in mid-2026; previously allowed up to $5.81/SF in deductions for energy-efficient upgrades. 

• Impact: Disincentivizes green retrofits, especially in the office and multifamily sectors. 

2. Phase-Out of Renewable Energy Tax Credits 

• Wind and solar projects must break ground by 2026 and finish by 2027 to qualify for credits. 

• Impact: Could raise energy costs for data centers and large commercial properties, especially in power-constrained markets. 

3. New Taxes on University Endowments 

• Tiered tax structure up to 21% on endowments with an investment balance over $500K per student. 

• Impact: May reduce university-driven real estate development and investment. It is estimated that 127 universities have endowments that are over the threshold, according to Forbes. 

4. Potential Interest Rate Pressure 

• The Bill’s fiscal adjustments could contribute to higher interest rates for longer. 

• Medicaid cut by $1 trillion.

• Impact: Higher rates will increase borrowing costs, potentially dampening leveraged investment strategies, and keep valuations under pressure. 

5. Uncertainty Around Timing of Benefits 

• Some incentives (e.g., OZ enhancements) don’t activate immediately. This will create gaps in funding and investment. 

• Impact: May delay investment decisions or reduce near-term positive effects.  

Conclusion 

The One Big Beautiful Bill Act is a net positive for real estate investors, offering powerful tax tools and long-term investment incentives. However, the rollback of green building incentives, funding cuts, and sector-specific risks (e.g., education, data centers) could cause potential inflationary events that would position the Federal Reserve to hold rates or consider raising rates.