When tax law changes, so does the investment landscape—and the newly signed "Big Beautiful Bill" is a tectonic shift for commercial real estate investors.
Signed into law on July 4, 2025, this legislation revives and enhances a number of key tax incentives that had either sunsetted or been phased out in recent years. And the result? Immediate opportunities for CRE buyers to create value, particularly in sectors like net lease, industrial, and multifamily. Here’s a breakdown of why this is a moment that savvy investors should pay close attention to—and act on.
When tax law changes, so does the investment landscape—and the newly signed "Big Beautiful Bill" is a tectonic shift for commercial real estate investors.
Signed into law on July 4, 2025, this legislation revives and enhances a number of key tax incentives that had either sunsetted or been phased out in recent years. And the result? Immediate opportunities for CRE buyers to create value, particularly in sectors like net lease, industrial, and multifamily. Here’s a breakdown of why this is a moment that savvy investors should pay close attention to—and act on.
100% Bonus Depreciation Is Back
Let’s start with the headline: 100% bonus depreciation is now reinstated for qualified property improvements. That means you can write off the entire cost of improvements in year one instead of depreciating them over 15 or 39 years.
This isn’t just helpful—it’s a cashflow rocket booster. Whether you're upgrading an aging distribution facility or retrofitting a suburban office for flex space, the ability to frontload that expense on your tax return immediately improves internal rates of return (IRR) and accelerates the break-even point. This one change alone may bring sidelined investors off the bench.
Corporate and Pass-Through Entities Both Win
The bill also locks the corporate tax rate at 21%—a permanent reduction from the pre-2017 rate of 35%. For REITs and entities with C-Corp structures, this is a meaningful long-term advantage. But the win doesn’t stop there.
For pass-through entities like LLCs and partnerships (which make up a large share of private CRE ownership), the 20% deduction on qualified business income is now permanent too. This puts money directly back in the hands of smaller operators and makes investments in strip centers, small-bay industrial, or Class B multifamily that much more attractive.
Opportunity Zones Gain Momentum
Another noteworthy win: the Opportunity Zone program, often dismissed due to unclear rules and expiration concerns, is now permanent—with a 5-year deferral window. That adds predictability and stability to investments in designated census tracts and encourages long-term holds.
If you're developing workforce housing, renovating older retail, or assembling land in these zones, this change just boosted your underwriting.
Affordable Housing Gets a Lift
The Low-Income Housing Tax Credit (LIHTC) program also receives a meaningful expansion by reducing the 50% test to 25% and locking in permanent funding. It’s now easier to get deals done in the affordable space, which often drives adjacent retail and service-sector development.
For CRE investors with a mission-aligned strategy—or those operating in communities with high demand and low supply—this is a structural tailwind.
Proceed, But With Eyes Wide Open
Of course, there are tradeoffs.
The bill sunsets Section 179D deductions for green building enhancements starting in mid-2026. So if you’re repositioning assets with LEED upgrades or energy-efficient HVAC, plan accordingly. Data centers—especially those reliant on clean energy credits—may also face rising costs by 2027. And a new tax on university endowments could chill development activity around major campuses.
Bottom line: not all asset classes benefit equally. But the core drivers of value—cash flow, tax efficiency, and demand-side growth—are getting a massive shot in the arm.
What We’re Telling Clients
If you're actively acquiring or repositioning property: this is your window opening. Bonus depreciation alone changes the game. Couple that with reduced transaction volume, interest rate volatility (for now), and there’s real leverage in the market.
But don’t treat this as a one-size-fits-all. Success will come down to how well you read your preferred property type in a particular submarket, align your investment structure, and capture these tax tools without assuming they’ll last forever.
At Fountainhead Commercial, we’re helping clients navigate the new terrain with clarity and precision. If you’re looking to acquire or sell assets in light of these changes, let’s have a real conversation.
The game has changed. Let us help you play at your best!
