One Big Beautiful Bill Act’s Impact on Commercial Real Estate
With the president having signed the sweeping tax and economic legislation known as the "One Big Beautiful Bill Act" (OBBBA) on July 4, 2025, commercial real estate (CRE) stakeholders benefit from major tailwinds. Several provisions within the OBBBA could significantly impact investment strategy, asset performance, and transaction planning. Building upon the 2017 Tax Cuts and Jobs Act (TCJA), this sweeping tax and economic legislation aims to extend and enhance key industry incentives, including Qualified Opportunity Zones (QOZs) and 1031 like-kind exchanges.
QOZ Permanent Expansion and Like-Kind Exchanges Endure
Below we outline provisions within this new legislative policy related to commercial real estate. What is staying the same, what is changing, and what is entirely new.
Key Tax Provisions CRE Comparison Table
Strategic Implications for CRE Stakeholders
Qualified Opportunity Funds Reinvigorated - Originally created under the 2017 TCJA, qualified opportunity zones (QOZs) are designated census tracts in economically distressed areas. The program was set to expire on December 31, 2026, however, the OBBBA commits to an ongoing QOZ framework. The program will refocus on newly designated rural areas, marking a deliberate shift from the original program's more urban focus. Governors will designate new OZ tracts in cycles, beginning in July 2026 for implementation in 2027, and every 10 years thereafter. A previous rule, which allowed tracts adjacent to designated zones to qualify, has been repealed. Investors can now benefit from continuous new investment periods (5-year deferral plus eventual tax-free appreciation), a significant uplift from the original sunset schedule. In addition, OZ investments made after 2026 and held for at least five years could receive a 10% step-up in basis (30% for rural OZs), an enhancement from the original program's approach. This policy has garnered rare bipartisan support.
1031 Exchanges and 721 Exchange/UPREITs Protected - The OBBBA preserves two of the most important tools for tax deferral and portfolio optimization in commercial real estate, offering long-term planning certainty.
Depreciation Benefits Front-Loaded - The OBBBA preserves two of the most important tools for tax deferral and portfolio optimization in commercial real estate, offering long-term planning certainty.
Higher SALT Caps Creates State-Specific Upside - Raising the deduction cap from $10,000 to $40,000 is a meaningful win for high-income investors in states like NY, CA, IL, and NJ. This may spur new inflows into local CRE markets previously disadvantaged by the original SALT cap introduced in 2017.
Sustainability and Affordable Housing Receive Tailwinds - The act's incentives for ESG and LIHTC-related development could shift investor focus toward projects that deliver both financial and societal returns.
Permanent QBI Deduction Provides Stability - The 20% QBI deduction has been made permanent, providing additional stability and predictable planning.
Accredited Investor Reform (Not Part of OBBBA) - The House recently passed the "Fair Investment Opportunities for Professional Experts Act" with strong bipartisan support. This bill would expand the definition of accredited investors to include individuals with demonstrated financial expertise or professional licensing, rather than relying solely on income or net worth thresholds. If enacted, this could broaden access to private placements, including real estate syndications, qualified opportunity funds, and other investment vehicles, thereby deepening the capital base for CRE sponsors. The bill now moves to the Senate for a vote.
In general, the One Big Beautiful Bill Act represents a rare blend of tax stability and targeted modernization for the commercial real estate-focused cohort. This new legislation preserves or enhances key tools such as qualified opportunity zones, 1031 exchanges, and 721 exchanges, while enhancing benefits like bonus depreciation. The act makes permanent key provisions from TCJA such as the QBI deduction, and also adds new incentives for investing in affordable housing and rural areas. Most importantly, it provides greater clarity and stability to tax planning—helping investors make long-term decisions. As tax policy continues to evolve, the OBBBA may help align overall portfolio strategy with the next wave of investment trends.
