The new tax law passed in July 2025 – the “One Big Beautiful Bill Act” – brings several key benefits to the commercial real estate world. This is relevant to property investors, developers and business owners for the following reasons:
1. 100% Bonus Depreciation Is Back
Bonus depreciation lets business owners deduct the full cost of certain property or equipment in the year they buy it, instead of spreading the deduction out over many years. With this bill, bonus depreciation is restored to 100% and made permanent for real property placed in service after January 19, 2025. This means investors can immediately write off the entire cost of eligible property, which is great news for cash flow and returns.
2. Section 179 Expensing Doubled
Similar to bonus depreciation, Section 179 expensing allows businesses to immediately deduct the cost of certain equipment, vehicles and property instead of writing it off over many years. This results in immediate tax savings. With the passing of the bill, the limit for Section 179 expensing has been raised to $2.5 million. Small and mid-sized property owners can now deduct more upfront on qualifying improvements, including HVAC, security systems and roofs.
3. Opportunity Zones Are Permanent
An Opportunity Zone is a temporary, designated area to encourage investment and development, usually in a low-income or underserved community. Investing in these areas can result in significant tax breaks. Under the 2025 law, Opportunity Zones are now permanent, with a 10% bonus for rural areas and more clear rules for who qualifies. This makes investing in underserved areas more attractive and predictable.
4. R&D and Manufacturing Investment Encouraged
The new tax law brings back full and immediate deductions for U.S.-based research and development (R&D) expenses, making it cheaper for companies to innovate. On top of that, a new rule allows businesses to fully deduct the cost of building or improving facilities used for domestic manufacturing. This is great news for industrial property developers and tenants, as it lowers the cost of expanding operations and makes the U.S. a more attractive place for manufacturing and tech investment.
5. REIT Rules Get More Flexible
Real Estate Investment Trusts (REITs) can now allocate up to 25% of assets to taxable subsidiaries, up from the previous limit of 20%. This gives REITs more flexibility to implement value-add strategies, like managing properties directly, offering extra services, or investing in businesses related to their real estate, while still keeping their REIT status and tax advantages. This, in turn, could make REITs a smart investment.
The “One Big Beautiful Bill Act” is a game-changer for commercial real estate. It rewards investment, speeds up depreciation, supports development in opportunity zones, and provides major tax incentives for upgrading, improving, and expanding properties.
For anyone interested in investing in commercial real estate, it might be a good time to take full advantage of what’s now on the table. Contact me for more information about potential commercial real estate opportunities.
