Multifamily Benefits Analysis
Executive Summary
The "One Big Beautiful Bill Act" (OBBBA), signed July 4, 2025, delivers unprecedented benefits to multifamily real estate investors through a comprehensive package of tax incentives, deregulatory measures, and housing policy enhancements.
This landmark legislation makes permanent key pro-growth tax breaks from 2017's Tax Cuts and Jobs Act while introducing new benefits specifically tailored to real estate investment and development. The law focuses on financial incentives to spur development and investment while leaving core rental policies unchanged.
100% Bonus Depreciation
Immediate write-off of eligible assets including building improvements and equipment through 2030+
Pass-Through Deduction
Permanent Section 199A deduction on rental income for LLCs, partnerships, and REIT dividends
Estate Tax Exemption
Increased from $10M per individual, enabling easier generational transfers of real estate portfolios
SALT Deduction Relief
Temporary increase from $10K cap through 2029, providing significant relief in high-tax states
Annual Tax Savings for Typical Multifamily Investment
Low-Income Housing Tax Credit (LIHTC) Expansion
Permanent 12% increase in state allocations starting 2026, with reduced private activity bond requirement (50% to 25% for 4% credits). Expected to generate 1.2 million additional affordable rental homes over the next decade.
Opportunity Zone Investment Benefits Timeline
Permanent Opportunity Zone Benefits
• Eliminated December 31, 2026 sunset date
• 10% basis step-up for standard OZ investments
• 30% basis step-up for Rural Opportunity Zones
• Tax-free appreciation after 10+ year hold period
• Tighter targeting to truly distressed areas (70% AMI threshold)
| Benefit Category | Previous Rule | OBBBA Enhancement |
|---|---|---|
| REIT Subsidiary Assets | 20% maximum | 25% maximum (effective 2026) |
| REIT Dividend Deduction | Expires 2025 | Permanent 20% deduction |
| Carried Interest | Under threat | Current treatment maintained |
| 1031 Exchanges | Under threat | Fully preserved |
OBBBA Signed into Law - Most provisions take immediate effect
LIHTC Enhancement - 12% permanent increase in state allocations begins
REIT TRS Limit - Taxable REIT subsidiary asset limit increases to 25%
SALT Cap Reversion - Deduction cap returns to $10,000 unless extended
Expected Multifamily Development Increase
Immediate Actions
• Accelerate acquisition plans to maximize 100% bonus depreciation
• Review portfolio for 1031 exchange opportunities
• Evaluate OZ investment potential
Medium-Term Planning
• Structure new developments to capture LIHTC benefits
• Consider REIT conversion for expanded TRS flexibility
• Plan estate transfers before 2030
Long-Term Strategy
• Build permanent tax planning around 199A deduction
• Develop rural OZ investment expertise
• Prepare for potential 2030 policy adjustments