Trump’s big beautiful bill & Multi-Family
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Big tax wins: Permanent 100% bonus depreciation, 1031 exchanges preserved, and the 20% pass‑through (199A) deduction made permanent. Estate/gift exemption lifted to ~$15M per person; SALT cap temporarily raised to $40k (2025–2029). Mortgage interest and PMI deductions extended.
Permitting & regs: Optional pay‑to‑expedite NEPA reviews; some green incentives (e.g., 179D/45L) rolled back by 2026. No federal preemption of local zoning or rent rules.
Affordable housing: LIHTC expanded (states’ 9% allocation up ~12% from 2026; 4% deals’ bond “50% test” cut to 25%), aiming to unlock more projects. Section 8 and tenant protections unchanged.
Place‑based incentives: Opportunity Zones made permanent with 5‑year basis step‑ups (10% standard, 30% for new Rural OZs) and tax‑free gain after 10+ years; targeting tightened to poorer tracts. New Markets Tax Credit made permanent at $5B/year.
Financing environment: Business‑interest limit stays at 30% of EBIT, but real estate can elect out via ADS. Tax‑exempt PABs protected; FHFA allows more GSE LIHTC investment.
REITs & syndications: REIT TRS asset cap rises to 25% (from 2026); 20% deduction on REIT dividends made permanent; carried interest and FIRPTA unchanged; condo developers can use completed‑contract accounting.
Tenant/rent policy: Federal status quo—no new rent control or tenant‑law mandates.
Net effect (per the doc): Very pro‑investment and pro‑supply for multifamily; faster approvals and richer tax tools, fewer green subsidies, and local laws still rule operations.
Multifamily Real Estate Under the OBBBA: A New Era
President Trump’s “One Big Beautiful Bill Act” (OBBBA), signed into law on July 4, 2025, introduces a transformative landscape for multifamily real estate. Building upon the foundation of the 2017 Tax Cuts and Jobs Act, the OBBBA solidifies pro-growth tax policies and adds targeted incentives designed to stimulate investment and development in the sector. Key provisions include enhanced tax benefits like permanent 100% bonus depreciation, the preservation of 1031 exchanges, and a permanent 20% pass-through deduction, offering significant financial advantages to investors.
Furthermore, the Act expands housing investment tools through a boosted Low-Income Housing Tax Credit (LIHTC) and the permanent extension of Opportunity Zones, fostering development in underserved areas. Regulatory relief is achieved through streamlined permitting processes. Importantly, the OBBBA maintains the status quo on core rental policies, such as Section 8 vouchers and rent control, focusing on financial incentives to encourage development and investment. Overall, the OBBBA sets a highly optimistic trajectory for the multifamily real estate sector.
Understanding the "One Big Beautiful Bill Act": A New Era for Multifamily Real Estate
President Trump's "One Big Beautiful Bill Act" (OBBBA), a landmark piece of legislation signed into law on July 4, 2025, marks a new era for multifamily real estate. Its overarching purpose is to significantly benefit the sector by cementing and expanding pro-growth tax breaks from the 2017 Tax Cuts and Jobs Act, while also layering on new, targeted incentives for real estate investment and development.
This document provides a detailed breakdown of the major impacts in key areas, drawing insights from the bill text and expert commentary. Our goal is to help multifamily stakeholders fully understand and strategically leverage these transformative changes for future growth. By exploring the nuances of the OBBBA, investors, owners, and developers can position themselves to capitalize on the opportunities presented by this groundbreaking legislation.
Pillar 1: Maximized Tax Benefits for Multifamily Real Estate Investors
The OBBBA delivers substantial tax relief and financial advantages for real estate by extending or expanding lucrative deductions and deferrals, creating a more favorable investment landscape.
100% Bonus Depreciation (Permanent Expensing)
The Act permanently reinstates 100% bonus depreciation for qualifying property. Multifamily investors can immediately write off eligible assets (e.g., building improvements, equipment, and personal property within complexes) in the first year, instead of depreciating them over decades. This revival of full expensing supercharges the benefits of cost segregation for apartments. Developers can confidently launch projects knowing they can fully expense qualified costs through 2030, without the risk of mid-project phaseouts.
Preserved 1031 Like-Kind Exchanges
Importantly, the bill preserves the tax-deferred treatment of like-kind 1031 exchanges for real estate. Multifamily owners can continue deferring capital gains taxes when exchanging one apartment property for another, allowing portfolio growth and consolidation without immediate tax friction.
Section 199A Pass-Through Deduction Made Permanent
The 20% qualified business income (QBI) deduction – a major tax break for LLCs, LPs, REIT dividends, and other pass-through real estate income – is now permanent. This guarantees that partnership and LLC investors in multifamily deals (and REIT shareholders) can deduct 1/5 of their rental income indefinitely, reducing effective tax rates on rental profit. The law even modestly raised the income thresholds for phasing out this deduction (to $150,000 joint), ensuring more middle- and upper-income investors can fully benefit.
No New Carried Interest or Capital Gains Taxes
The final bill maintains the current tax treatment of carried interest for general partners – meaning real estate fund managers and syndicators can still receive promote/performance fees taxed at low long-term capital gains rates (so long as assets are held 3+ years). Additionally, no new capital gains taxes or "retaliatory" taxes ended up in the law, preserving the favorable tax environment for real estate profits (including foreign investor treatment). This stability reassures multifamily syndicators that their exit gains and profit splits remain lightly taxed.
Estate Tax Relief for Property Owners
For those passing down apartment holdings, OBBBA significantly raised estate/gift tax exemptions. It permanently increased the estate and gift tax exemption threshold from $10 million to $15 million per individual (indexed). High-net-worth multifamily owners can now transfer up to $15M tax-free ($30M for couples), enabling easier generational transfers of real estate portfolios without estate tax burdens.
State and Local Tax (SALT) Deduction Relief
While the 2017 SALT deduction cap isn’t fully repealed, the bill temporarily quadruples it from $10,000 to $40,000 (for 2025, with small inflation bumps through 2029). For multifamily investors in high-tax states, this means greater federal write-offs for state income and property taxes (if they itemize deductions).
Home Mortgage Interest and PMI Deductions
The law also permanently extends the deduction on mortgage interest up to $750,000 of mortgage debt for homeowners, and restores the ability to deduct mortgage insurance premiums (PMI) as an itemized deduction. These provisions boost the overall housing market.
In sum, these provisions cement a very favorable tax regime for multifamily real estate. Investors get bigger upfront deductions, ongoing write-off stability, and enhanced planning tools that collectively lower the cost of owning and trading apartment assets, encouraging continued investment and modernization.
Pillar 2: Deregulation and Permitting Efficiency for Construction and Development
The OBBBA takes several steps to reduce regulatory hurdles and costs for multifamily development, recognizing the importance of efficient construction processes.
Faster Environmental Reviews (NEPA Streamlining)
The Act introduces an 'optional permitting fee mechanism,' allowing project sponsors to pay for expedited federal environmental reviews. For example, a developer might pay a $50,000 fee to speed up National Environmental Policy Act (NEPA) assessments and other permit approvals. This fast-track permitting is expected to significantly reduce approval timelines for larger multifamily projects that trigger federal reviews, potentially shaving months or even years off the process.
Relief from Certain Environmental Mandates
In line with broader deregulatory goals, the OBBBA rolls back some green regulations and incentives. This includes rescinding all remaining funding for HUD’s Green and Resilient Retrofit Program (GRRP) and repealing or phasing out various clean-energy tax credits, such as 179D and 45L by 2026. While fewer green mandates may allow builders to focus on cost-effective design and potentially lower construction costs, it also means foregoing incentive funds for sustainable building.
No Federal Preemption of Local Zoning or Rent Laws
The bill notably does not override or directly change local zoning or rent laws, leaving land use deregulation decisions with state and local authorities. The OBBBA employs a 'carrot, not stick' approach, using generous tax incentives to encourage new construction rather than mandating zoning reform. This respects local autonomy while still promoting development through financial incentives.
In conclusion, multifamily developers are expected to benefit from greater certainty and speed in the pre-construction phase, thanks to streamlined federal approvals and fewer new mandates. This effectively 'removes regulatory roadblocks' and streamlines access to resources for building housing.
Pillar 3: Historic Boosts to Affordable Housing Incentives and Supply
Recognizing the nation’s housing affordability challenges, OBBBA couples tax measures with targeted housing policies – chiefly by expanding funding through tax credits rather than direct subsidies. It's notable that direct rental assistance programs (like Section 8 vouchers) are not cut or changed in this bill, focusing instead on the tax side of housing support.
Historic Boost to Low-Income Housing Tax Credits (LIHTC)
LIHTC, the primary financing tool for affordable rental housing, receives a major boost. The Act permanently increases each state’s 9% LIHTC allocation by 12% starting in 2026. The law also reduces the private activity bond financing requirement from 50% to 25% for 4% LIHTC deals, effectively "unlocking more projects that previously didn’t pencil out" by freeing up bond cap.
According to affordable housing advocates, these two changes together are "the most significant expansion of the Housing Credit in over two decades." Estimates suggest an additional 1.2 million affordable rental homes will be built nationally over the next 10 years as a result.
Housing Trust Fund and Other HUD Programs
Direct rental assistance programs like Section 8 vouchers are not cut or changed, and existing tenant protections are untouched. While the bill rescinds some unspent HUD program funds (Green Retrofit grants), its housing policy primarily favors supply-side incentives through tax credits over expanding rent subsidies.
Homeownership and FHA
The law extends homeowner tax deductions (mortgage interest and SALT), indirectly supporting the for-sale housing market. Separately, FHFA doubled Fannie Mae and Freddie Mac’s LIHTC investment cap to $4 billion annually, aligning with the bill's goals to support affordable housing.
In summary, multifamily developers stand to gain from a friendlier financing environment for affordable projects, with the bill leaning on "build more supply" using the tax code as the primary lever to address affordability challenges.
Pillar 4: Permanent Opportunity Zones for Targeted Investment and Community Revitalization
The OBBBA significantly bolsters Opportunity Zones (OZ), making them a permanent feature of the tax code and enhancing their benefits for multifamily investment in underserved areas.
Permanent Extension and Enhanced OZ Benefits
The Act eliminates the December 31, 2026, sunset date for OZ investments, enabling investors to continuously defer capital gains beyond 2026 by rolling them into Qualified Opportunity Funds (QOFs). After a 5-year hold in a QOF, investors receive a basis step-up: 10% for ordinary OZ investments and 30% for investments in new "Rural Opportunity Zones." The most attractive benefit is that if the OZ investment is held for 10 years or more, the basis increases to fair market value on sale, making all appreciation tax-free. This benefit extends out as far as 2040–2055, aiming to unleash a new wave of capital into qualifying neighborhoods for multifamily development.
Tighter Targeting to Truly Distressed Areas
The OBBBA reforms OZ eligibility to prevent abuse by lowering the income threshold for designation to 70% of the area median income (from 80%) and repealing the prior "contiguous tract" rule. A special Rural Opportunity Zone category is created with added incentives, like the 30% basis boost and a relaxed "substantial improvement" requirement (only 50% investment above basis, instead of 100%) for projects. These tweaks make rural and truly low-income urban areas especially attractive for OZ-funded apartment projects.
Transparency and Overlap with Housing Programs
The Act includes new data collection, reporting, and transparency requirements for OZ investments ($15 million for IRS tracking) to improve public trust. While proposals to better align OZs with LIHTC didn't make the final act, the permanence of OZ provides crucial certainty for developers incorporating OZ benefits into long-term project planning.
New Markets Tax Credit (NMTC)
The permanent extension of the New Markets Tax Credit (NMTC) at $5 billion annual allocation spurs investment in community facilities and economic development in low-income areas. This complements housing efforts by unlocking an estimated $100 billion in new investment and 400,000 jobs.
In conclusion, place-based incentives like OZs and NMTC will continue to channel private capital into multifamily and related developments in struggling areas. These incentives offer greater rewards for long-term commitments and special boosts for rural projects, making OZ funds a permanent and strategic part of real estate tax planning.
Maintaining Stability: No Federal Intervention in Rent Control or Tenant Law
The federal bill notably avoids overriding or directly addressing state and local tenant laws, including rent control, rent caps, just-cause eviction ordinances, and tenant screening regulations. These areas remain under local jurisdiction, meaning multifamily owners must continue navigating the existing patchwork of state/local rules.
The bill does not override or directly address rent control. Cities and states with existing rent stabilization laws see no change from federal action, and landlords must continue abiding by local rent increase caps. No new federal rent controls were imposed, as the focus remained on tax incentives, not direct price regulation.
Federal tenant protections were also not a topic of this bill. No new eviction restrictions or tenant-right-to-counsel funding were included. Multifamily owners will continue to follow state laws for evictions and leases, and existing fair housing and anti-discrimination laws remain fully in force.
This silence is instructive: the federal government is encouraging investment through financial means rather than regulatory mandates. Apartment investors should not expect relief from local rent control via federal law, nor will they face new federal tenant regulations from this bill, maintaining the status quo of 'federal government stays out of landlord-tenant law.'
Optimized Financing and Capital Access for Multifamily Projects
The OBBBA's impact on interest rates is indirect, but it includes measures to facilitate real estate financing and lower borrowing costs.
Business Interest Deduction Rule
The bill retains the stricter EBIT-based limit (30%) for business interest deductibility, potentially impacting highly leveraged real estate companies since depreciation no longer boosts the limit. However, real estate businesses can elect out of these limits by using a slower depreciation schedule (ADS), allowing many apartment owners to fully deduct interest on rental mortgages.
Preservation of Tax-Exempt Bond Financing
The bill explicitly protects tax-exempt municipal bonds, enabling counties and housing agencies to finance critical infrastructure and multifamily development via private activity bonds at lower costs. Lowering the LIHTC 50% test to 25% makes these bonds more potent for leveraging federal credits.
Federal Lending Programs
While the Act didn't change HUD's FHA multifamily loan programs or Fannie Mae/Freddie Mac lending mandates, it indirectly improves lenders' eagerness to underwrite multifamily deals by improving project credit profiles through tax breaks and credits. Actions like FHFA doubling Fannie and Freddie’s LIHTC investment cap to $4 billion/year will also channel more capital into affordable projects.
Interest Rates and Inflation Outlook
Proponents argue that the bill's deficit reduction measures will ease inflation, potentially reducing pressure on the Fed to raise rates and stabilizing mortgage interest rates. The certainty of tax policy provided by OBBBA also makes financial modeling for projects more reliable, as lenders and underwriters dislike uncertainty.
In summary, financing multifamily projects should become easier: interest expenses remain mostly deductible, tax-exempt bond financing and credit programs are bolstered, and the pro-growth stance may foster a favorable borrowing climate, allowing investors to raise capital confidently.
Enhancing Investment Structures: Impacts on REITs and Syndication Models
The Act contains several provisions fine-tuned for Real Estate Investment Trusts (REITs) and real estate fund structures, ensuring these investment vehicles remain attractive.
Higher REIT Subsidiary Asset Limit: OBBBA increases the limit on the amount of assets a REIT can hold through taxable REIT subsidiaries (TRSs) from 20% to 25% of total assets, starting in 2026. This allows REITs to conduct more ancillary businesses within TRS entities without jeopardizing REIT status, potentially boosting overall returns and providing operational flexibility.
Permanent 20% Deduction for REIT Dividends: Investors in REITs benefit from the permanent Section 199A qualified business income deduction on REIT dividends. This effectively lowers the tax rate on generally ordinary income dividends, making publicly traded apartment REITs attractive and benefiting private REITs and real estate syndications.
No Change to FIRPTA or Foreign Investment Taxes: The Act did not alter the Foreign Investment in Real Property Tax Act (FIRPTA) rules, nor did it introduce new international tax frictions. This stability avoids discouraging foreign investment in U.S. real estate, keeping syndicators open to raising cross-border equity for large multifamily deals.
Syndication Carried Interests and Fund Structures: Carried interest tax treatment remains favorable, encouraging the launch of multifamily funds and value-add syndications. The preservation of 1031 exchanges benefits syndication models like Delaware Statutory Trusts (DSTs) and Tenancy-in-Common (TIC) structures, allowing tax-deferred rollovers.
Accounting Method for Condo Developers: A niche provision allows developers to use the completed-contract method for condo sales, deferring income recognition on presales until project completion, helping manage cash flow and taxes more smoothly for mixed multifamily projects.
These changes signal a very pro-REIT and pro-syndicator stance, ensuring that 'key tax tools' for the industry are kept. This continuity allows existing investment models to proceed unabated, making the playing field very attractive for pooled real estate investment.
Conclusion: Unprecedented Growth Opportunities for Multifamily Real Estate
The "One Big, Beautiful" bill delivers a comprehensive package bolstering multifamily real estate through tax, finance, and policy. Investors gain from permanent 100% bonus depreciation, preserved 1031 exchanges, and a permanent 20% pass-through deduction, significantly reducing tax burdens and boosting returns. The stable, pro-real estate tax regime avoids disruptive changes, enabling long-term planning.
Incentives drive development in underserved areas via LIHTCs and Opportunity Zones. Lower financing costs result from tax-exempt bonds and enhanced REIT/syndication models. Maintained autonomy on local regulations allows operators to focus on expansion without federal red tape.
As President Trump stated, it is a "massive victory," positioning the multifamily sector for accelerated growth and making real estate a more attractive asset class.
Obviously, take everything to your CPA for their professional advice.