New Tax Cuts Reshape the Real Estate Landscape
The Roebling Report · By Corey Cohen · Principal, The Roebling Team at Compass
The One Big Beautiful Bill brings several tax changes with material implications for real estate — SALT, mortgage interest, depreciation. Here's what changed.
Updated October 1, 2026. Corrections to the original: the SALT phase-down, the Opportunity Zone start date, the 179D label, the LIHTC figures, and the depreciation language. Details are marked below.
The One Big Beautiful Bill, signed into law on July 4, brings several tax changes with meaningful implications for real estate.
SALT deduction — big impact in high-tax areas
The cap on the State and Local Tax (SALT) deduction rises from $10,000 to $40,000 for 2025, then grows 1% a year ($40,400 for 2026) through 2029, and reverts to $10,000 in 2030. The enhanced deduction is reduced by 30% of the amount your modified adjusted gross income exceeds $500,000 ($505,000 in 2026; half those amounts if married filing separately). The reduction stops at the old $10,000 floor, which is reached at roughly $600,000 of income. Above that, you keep the $10,000 deduction. You do not lose the deduction entirely.
For property owners in high-tax states like New York, New Jersey, and California, the change restores a significant deduction that was largely erased in 2017 — offering thousands in annual tax relief and renewed affordability in premium ZIP codes.
Mortgage insurance premium deduction returns
The deduction for mortgage insurance premiums is reinstated and made permanent, starting with the 2026 tax year, and is subject to income limits. Confirm the current IRS rules for your income before you rely on it. For buyers putting down less than 20%, this can translate to thousands in annual savings — especially meaningful in markets where entry prices are high and loan-to-value ratios are stretched.
Major boost for investors & developers
100% bonus depreciation is permanently restored for qualifying property with a recovery period of 20 years or less, such as equipment, appliances, and land improvements, acquired after January 19, 2025. It does not apply to a building itself: residential and ordinary commercial structures still depreciate over 27.5 and 39 years. The bill adds separate 100% expensing for certain nonresidential buildings used in manufacturing and production, if construction begins after January 19, 2025 and before 2029, and the building is placed in service before 2031.
The Section 179 expensing cap is increased to $2.5 million, allowing more up-front deduction of capital expenditures.
The pass-through business deduction under Section 199A is also made permanent at 20%, offering long-term tax savings to LLCs, partnerships, and S corps — structures common in real estate ownership and development.
Affordable housing & Opportunity Zones
The Low-Income Housing Tax Credit (LIHTC) sees a permanent 12% increase in allocation beginning in 2026, and the bond financing threshold for 4% credits drops permanently from 50% to 25% for bonds issued after 2025. (The original version of this article said 12.5% and "through 2035." Both were wrong.)
Opportunity Zones are made permanent, with new rural designations, recurring 10-year designation terms with the first new designations taking effect January 1, 2027, and revised gain deferral rules. These changes provide stability and expanded reach for long-term, community-focused development projects.
What's not included
Two federal green-building incentives end in mid-2026. The 179D energy-efficient commercial buildings deduction ends for property whose construction begins after June 30, 2026, and the 45L new energy efficient home credit ends for homes acquired after June 30, 2026. Both have historically supported sustainable construction and may now require replacement incentives.
Many of the new provisions sunset by 2030, and the bill's contribution to the national deficit increases the chance of future tax policy changes.
Who benefits?
- Homeowners & buyers: Greater deduction room via SALT and PMI provisions helps improve affordability, especially for move-up buyers and refinancers in high-tax states.
- Investors & developers: Faster cost recovery and improved cash flow through bonus depreciation, Section 179, and permanent pass-through deductions.
- Affordable housing sponsors: Expanded credit allocations and relaxed bond rules increase project viability.
- Commercial & industrial owners: Permanent Opportunity Zone provisions and 100% expensing for qualifying equipment and production buildings support long-term redevelopment and industrial growth.
Bottom line
This legislation offers meaningful financial advantages across the real estate spectrum — from improved homeownership affordability to stronger investor returns. Many provisions are time-sensitive, with key benefits set to expire by 2030.
If you're considering buying, selling, developing, or leasing real estate, this is a smart moment to revisit your strategy.
Reach out if you'd like to understand how these changes could affect your next move.
Corey Cohen · Principal, The Roebling Team at Compass