Could Trump’s New Tax Bill Spark a Real Estate Revival?

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Trump’s new tax bill aims to extend tax deductions that are set to expire, ensuring continued economic growth and stability for real estate investors. But how can these changes benefit your investment strategy? In this episode, Dave breaks down President Trump’s signature tax legislation (the “One Big Beautiful Bill Act” or OBBBA) making its way through Congress, including what’s in it, what’s missing, and the implications for real estate investors.

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Dave:
It’s one big beautiful bill, or at least some people think so while others like Elon Musk are not so convinced today we’re talking about President Trump’s signature legislation making its way through Congress. We’ll talk about what’s in it, what’s missing arguments, both for and against the bill, and of course we’ll talk about what it means for real estate investors. Hey, what’s going on everyone? It’s Dave head of Real Estate Investing at BiggerPockets, and today we’re getting into a very big important topic Trump’s big tax bill. I was actually thinking and considering waiting to make this episode until after the Senate actually passed a bill and we knew for sure what was going to be in it, but then of course, as you probably all know, Elon Musk publicly called it a disgusting abomination, which set off a very public feud, but I figured now is kind of time to break down what’s going on in this bill if it is causing so much controversy.
So in that effort, I read all 3000 pages of this monster bill. Obviously that is a joke. I definitely didn’t do that, but I did do a lot of research into this as much as a normal person can, and I’m going to do my best to break it all down for you today. First we’re going to talk just basics. We’ll talk about what made it into the belt, what was omitted. Next, we’ll talk about arguments both for and against the bill because as you know, our goal in the show is to give you a full well-rounded picture of what’s going on. And lastly, I’ll share my thoughts on what this all could mean for real estate investors. Let’s go. So first things first, what’s in the bill? And again, it’s called the one Big Beautiful Bill Act, O-B-B-B-A. And the primary goal, at least from what Republicans are saying in Trump himself has been saying the primary number one goal is to extend the tax cuts from 2017.
You might remember back to Trump’s first term in office, there was a pretty sweeping tax legislation that brought tax rates down. So just for example, the highest tax bracket before 2017 was nearly 40%. That came down to 37 and there was kind of changes all over the board in terms of the rate that you pay on taxes and the tax Cuts and Jobs Act. That was what it was called in 2017. It also increased income thresholds for each bracket. So meaning if it used to be the lowest bracket was up until $20,000, it was now the lowest bracket is up until $30,000. I’m making up those numbers just as an example, but basically it lowered taxes for everyone and so fast forward to today in 2025, if Congress did nothing right now, those tax cuts from 2017 would expire. The way that they were designed was only to work for about eight years, and so if Congress doesn’t act, they go back to where we were prior to the first Trump administration.
So it is not really surprising that the main thing in this new bill is that those tax cuts and those new tax reforms are going to be extended. That’s the goal Trump and the GOP want to accomplish, I think more than anything else, and it’s also worth mentioning in that 2017 Act that also introduced bonus depreciation, which is a big topic for real estate investors. We’re going to talk about that a little bit later, but that’s sort of where bonus depreciation came from in the first place. So the extension of those are in the bill, all those things. Some of the other things that are in the bill, not all of these are super relevant to real estate investors, but it’s worth knowing just if you live in the United States, there are no tax on tips in certain instances. I didn’t get into all these specific details of when and when not, but no tax on tips.
Part of that is in there no tax on overtime pay. There are border security funding increase. We have things called Trump accounts now where the government contributes a thousand dollars for children born between the years of 2024 and 2028, and there are modifications to the electric vehicle tax credit framework. Very notable. I think a lot of that might be behind what’s going on between Trump and Musk. For real estate investors, you’ll probably be very happy to know that 100% bonus depreciation for qualified properties will be in effect between January of 2025 and January of 2030. So that is a big boon for real estate investors. We’re also seeing for the very fortunate people who have estates worth more than $15 million, the new bill increases the estate tax exemption to $15 million per person up from $14 million for again anyone fortunate enough to be in that category.
One other thing in here is the salt deduction cap. So SALT stands for state and local taxes, and prior to 2017 the way it worked was you could deduct the taxes you pay for state taxes or local municipality taxes from your federal tax return. Then in 2017 they put a cap on that. They said you can deduct up to $10,000 of state and local taxes from your federal return. But everything above that, sorry, that is going away. This new bill is keeping the cap in place, but it’s increasing it to $30,000. So there was no cap in 2016. Then there was a cap in 2017 and now they are increasing that cap to $30,000 and that could be impactful because that will put more money in people’s pockets if they live in a high tax state. So a couple other things in the bill are cuts.
So not only are there tax cuts, but the bill tries to offset some of the loss in revenue from those by decreasing spending. And it’s actually 1.6 trillion in claim spending cuts. The biggest cut is to Medicaid, which is government program that helps provide healthcare to people under a certain income level. And the proposed cuts are 700 billion over 10 years. This would be the largest cuts in the program’s history. It would impose a strict 80 hours a month work requirement for adults without children. It would ban states from imposing new or higher taxes on healthcare providers, which is sort of how a lot of states fund their Medicaid programs. So that would be a very significant cut to that program. Another big cut would be somewhere close to 300 billion over 10 years to SNAP program, which stands for Supplemental Nutrition Assistance Program, which is basically food stamps.
Again, this would be the biggest cut in that program’s history. A couple other spending reductions would be the elimination of clean energy tax credits and there are some overhauls to the federal student loan program as well. So that’s actually what’s in the bill right now. But a lot of ideas have been thrown out about what would be included in this bill. So I think it’s worth mentioning some of the things that were at least floated and were not in this bill. First, there were no significant changes to 10 31 exchanges. There have been on and off discussions about that and for real estate investors, probably happy to hear that there are currently no planned changes to the 10 31 exchange. There are limited modification to depreciation recapture rules. I am not a CPA, this is not advice, but just in my basic understanding of this, I don’t think it’s going to be hugely impactful.
There are no big changes to opportunity zones. That’s one I personally was keeping an eye out for because there were opportunities. IT zones in the 2017 bill didn’t see anything in there about that and there are no provisions for affordable housing tax credits. We’ve had some guests, bipartisan guests on this show propose those things to help increase affordability in the housing market. Those are not included as well. All right, so now that we’ve covered what’s actually in the bill so far and some things that have been omitted that were being floated out there, it’s time to talk about arguments for and against the bill. But first we need to take a quick break. We’ll be right back.
Welcome back to On the Market. I’m here talking about Trump’s new tax bill. Before the break we talked about what’s in it and we also talked about some notable omissions from the tax bill. Let’s start breaking down what people are saying about it. We’ll first start with the supporters case. So people who are in favor of this bill are saying that it will help millions of small businesses in particular because they’ll get to keep more of their money. They’re also saying that it prevents the largest tax in American history. It’s sort of true, right? Because we do have this tax bill that is expiring and if it does expire, it would be a very large tax hike, but the bill was set to expire. But anyway, it would basically lock in and cement the tax cuts from 2017. And obviously if taxes went back up, that could have a short-term negative impact on spending in the economy.
And so supporters of the bill are saying that this will keep things at least close to what they have been over the last eight years. Believers in the bill also believe that tax cuts and specifically these tax cuts will stimulate economic growth saying that they expect it to create a massive surge in wage gain in higher incomes and in GDP increases. So basically these are a lot of the arguments you hear in general for lower taxes, right? Lower taxes puts more money in the pocket of everyday Americans, and in theory, those Americans will probably put it back into the economy, which will stimulate all those things like GDP growth, wage gain, higher incomes, all of that. Now for real estate, I do think there is going to be a lot of support for this bill. There’s a lot of things that are relatively good for the real estate investing market.
This may not impact you personally so much, but these salt deduction caps are actually super important. We saw when that first cap went into place that housing markets, particularly in high tax states did get impacted. And so I think a lot of agents and lenders and just basically everyone who wants to see transactions might be happy about this because housing markets that were sort of adversely impacted by that cap in the first place may see some thawing of the market when the cap increases, if the cap this hasn’t passed, if the cap goes up to 30,000 like is in the bill right now. On top of that, the real estate industry also benefits from more bonus depreciation. Anyone who does renovations, anyone who has done a cost segregation study and done bonus depreciation before can probably tell you it is very advantageous. So that could be really good for the real estate industry in general.
All right, now let’s switch over to arguments against the bill. The critics of this bill are saying that it is likely to add to the deficit. So I dug into this a little bit and I actually got a bunch of different estimates from all over the place. So these are non-partisan estimates. They are conservative GOP leaning estimates, left-leaning estimates, and the general consensus on pretty much all of them is that it will add two to $3 trillion to the national debt including interest over the next decade. So that is the primary argument against the bill is that there is already a very high national debt. We are running a deficit every single year in the United States. We have been for basically 25 years, but this bill is not doing anything to reverse that, and the tax cuts are likely to actually accelerate that. Other criticisms of the bill are that the tax cuts primarily benefit wealthy taxpayers and corporations and critics even within the GOP like Rand Paul have said that the bill maintains Biden spending levels.
So he’s basically saying that we’re not doing anything to curb spending. Now, it’s worth mentioning why people are concerned about the deficit. I think most people intuitively understand this, that taking on a lot of debt can be problematic. But basically the idea here is that if you have increased government spending and a bigger and portion of the budget, every single year goes to paying interest on that debt, that the government is going to be tempted over time to just print more money to service that debt, and that can lead to long-term inflation. And so that is sort of one of the economic concerns that I think some of the critics have, but also we’re seeing some pushback from Wall Street investors and bond investors on the same front about those long-term inflation concerns. So that’s one way that the long-term debt situation can be alleviated is by printing money.
The other thing is that it just may require future tax increases to balance the budget. So critics are saying that this could just be kicking the can down the road. Now, again, going back to the promoter of this, a lot of the proponents of this bill are saying that the economic growth that will come from cutting taxes could offset the decreased tax rate, right? Because even if you bring down the amount that we tax every dollar in the economy, if there’s just more money moving through the economy and GDP goes up, that could offset it and the government can still collect the same amount of revenue from every study. Reputable study I’ve seen that is not what is modeled out to be happening, but proponents of the bill do believe that could happen. So clearly this is still being debated very, very publicly as of this recording, and it’s kind of fascinating to watch.
You’ve got Elon Musk who was Trump’s biggest financial backer now publicly attacking his signature legislation. Most of the GOP has fallen behind Trump and is supporting the bill. It all makes good headlines and good television whether you’re on Musk or Trump’s aside in this debate, but we’re just going to have to watch and see what happens over the next couple of days or maybe the next couple of weeks and see what actually gets included in the final bill. We do have to take one more quick break, but on the other side I’m going to talk a little bit more specifically about the impact on real estate investors. We’ll be right back. Act welcome back to On the Market. I’m here reviewing the one big beautiful bill act, which is making its way through Congress. We’ve talked a little bit about what’s in the bill, what’s been omitted, what proponents and supporters are saying versus what critics are saying.
Now let’s talk about what’s in the bill for real estate investors. I mentioned some of those things earlier in the show about bonus depreciation, but let’s break it all down a little bit. The first and foremost, I think probably the biggest headline that most real estate investors and people in the industry are going to be excited about is bonus depreciation. Now, if you haven’t heard this term, depreciation is always something that’s been present in real estate. Basically, the idea is that every year you are able to deduct a certain amount of your property’s value. You actually calculate it by taking your assessed property value, dividing it by 27 and a half, and that is how much you are able to deduct from your tax returns every single year. And the idea is that the useful life of your asset, of your property declines over time and the government basically gives you a tax break to help maintain and keep up with the depreciation of your asset.
So that’s how it happens normally. Now, in 2017, this idea of bonus depreciation got introduced, which is a tax incentive that allows you to basically fast forward all this. Remember what I said is that in a given year, you could take one 27th of your depreciation, but now using bonus depreciation, you could actually front load and accelerate the tax benefit potentially all into the first year. Now, there are certain eligibility requirements, but what you should know about the tax bill is that this was getting phased out. So the bill in 2017 started that you were able to get 100% bonus depreciation through 2022. Then it was decreasing annually in 2023, I think it was 80%, then it went down to 60%, then down to 40%, and it was set to phase out completely in 2027 until legislation was passed. Now this new bill is proposing going back to 100% bonus depreciation.
So again, you can take all that depreciation upfront up until the year 2030. So for anyone who wants to take advantage of this tax strategy, this is obviously going to be beneficial to you going forward, at least for the next five years. The second really important tax provision in here for real estate investors is something called the 1 99 a pass through deduction. You might hear this called the Qualified Business Income Deduction. This was also established by the 2017 Tax Cuts and Jobs Act and is proposed to be extended. Basically what this does, it allows eligible owners of certain businesses like scorp or LLCs, which is super common in real estate investing. It allows them to deduct up 23% of their qualified business income, basically providing tax relief for these small businesses, which makes it sort of similar compared to the reduced corporate rates that were enacted for C Corp sort of bigger corporation styles in 2017.
So basically the idea was all these big corporations were getting a tax break in 2017. This was the way the tax bill offered some tax relief as well to smaller businesses, and that is proposed to be extended in the new bill as well. And I think for real estate investors, that’s important. Most people who have a legal entity to own their property or to manage their real estate portfolio do that through probably an LLC or a simple partnership kind of agreement. And so they will probably qualify. Not everyone will, but most people will qualify for these pass through deductions. The third big thing for real estate investors is the salt deduction change. I sort of hit on it a little bit earlier, but basically being able to deduct more of your state and local taxes is going to help individuals. It’s going to put more money in their pocket, right?
Because now let’s just say you live in a state where you actually have $30,000 in state and local taxes. I don’t know how many places that is realistic, but just let’s just say that you had $30,000 in state and local taxes. You can now deduct that from your federal returns. Again, and I’ll make the numbers easy. Let’s just say that your tax bracket is 33% and you paid $30,000. That means that $30,000 deduction is going to put $10,000 more in your hand. And so this could be a benefit for real estate investors for sure, or anyone who is in this situation, real estate investors included. But it also could just help spur some of these real estate markets that are expensive. And were hurt by this because imagine when this cap went into place in 2017 that took $10,000 out of people’s hands. In some cases, probably more, and I do think this probably disproportionately impacted very expensive markets in relatively high tax states.
So it’s not everyone being impacted by this, but for markets that were impacted the reversal, or at least the increase of the cap could help those markets. And so I imagine that could be a boon for real estate agents, property managers, loan officers in those kinds of markets as well. So those are some of the specific things, but I think in just a general sense, having these tax cuts go through could in theory just spur some demand, right? If people are experiencing significant tax savings that could free up more capital for investments, it could free up more capital that boosts the stock market, it could provide some footing for an economy that feels extremely uncertain right now. And I think personally, this is just my suspicion. I think a lot of markets and individuals are waiting to see what happens with some of these big economic questions.
It does not seem right now, like the tariff and trade policy situation is going to be sorted and will have clear direction there anytime in the next couple of months, but having some certainty if this tax bill does pass about what the rules are going to be for the next five years, that could help businesses and individuals start formulating plans, making decisions, and getting a little unstuck. That’s kind of how I feel the economy’s been for the last six months. Not necessarily good or bad, but just a little bit stuck as a lot of uncertainty. A lot of tax policy and trade policy is so uncertain, people aren’t making big decisions, and if this tax bill passes whatever the final details are, that might provide at least some grounding for people to make decisions based off of. Alright, so that’s what we got for you guys today.
Again, this is a bill that has not passed the Senate. It has gone through the House of Representatives and I’ve shared with you what we know so far. I do think something is eventually going to pass one way or another, whether there are significant changes or just minor changes, I am expecting that this bill will pass in the next couple of weeks, and we will certainly make sure to update you once we know for sure what’s in it, what’s not, and if there are any other implications for real estate investors. That’s all we got for you guys today. Thank you all so much for listening to this episode of On The Market. We’ll see you next time.

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