What Property Owners Should Know About OBBBA

As property owners, staying informed about shifts in tax laws is crucial to make the most out of deductions, credits, and investments. With the One Big Beautiful Bill Act (OBBBA) passing on July 4, 2025, significant changes are on the horizon for different property types, including residential, rental, and commercial. Here's what you need to know.

For Homeowners

The OBBBA permanently allows the deduction of private mortgage insurance and FHA premiums. However, homeowners should carefully evaluate whether itemizing is beneficial, especially considering the standard deduction set at $15,750 for individuals and $31,500 for joint filers. Additionally, the mortgage interest deductions on loans up to $750,000 are now permanent, which could influence your decision to itemize.

Another critical change to note is the new SALT (state/local/property taxes) deduction cap of $40,000, which will phase out for those earning over $500,000 and is due to expire in 2029. It's also important to realize that there are no new federal down payment or first-time homebuyer tax credits included in the bill, so exploring local, state, or employer assistance programs might be beneficial.

If you're considering energy-efficient upgrades, act fast—major home energy tax credits, including the 30% Residential Clean Energy Credit for solar installations, will expire after December 31, 2025. Taking immediate action on these upgrades could provide substantial savings.

For Commercial Property Owners, Developers, and Investors

Great news for commercial property owners: the 100% bonus depreciation is now a permanent provision for properties placed in service from January 19, 2025. This change presents a valuable opportunity for long-term financial planning.

The 20% Qualified Business Income deduction is also now permanent, but be mindful of the new income phaseouts at $75,000 for singles and $150,000 for joint filers. Opportunity Zone incentives have been made permanent, too, with new 10-year designations starting in 2027 and unique benefits for rural zones.

Developers should rush to take advantage of Section 179D ($5.81/sq ft for energy upgrades) and Section 45L (up to $5,000 per qualifying unit) by the deadline of June 30, 2026. Developers from 2022 might even consider amending their returns to retroactively claim 45L.

Next Steps

It's time to assess your current tax position and determine if itemizing under the new rules is advantageous for you. Explore pressing tax incentives, especially those pertinent to solar and energy-efficient upgrades.

Consider speeding up commercial or multifamily building improvements to capture remaining benefits from 179D and 45L. Moreover, proactively seek guidance on local programs or financing strategies that align with your investment goals.

Remember, while the OBBBA presents both opportunities and payoffs, preparing now can yield significant financial benefits. Reach out to tax or real estate professionals to ensure you're maximizing every available incentive— particularly as several key provisions are set to expire soon.