One Big Beautiful Bill's Passage Launches New Tax Era For CRE

President Donald Trump signed the multitrillion-dollar One Big Beautiful Bill into law at the White House Friday, locking in one of the most consequential rewrites of the U.S. tax code in a generation — and setting the stage for broad and lasting ripple effects across commercial real estate.

The bill’s final passage came on Thursday after lawmakers frantically cobbled together the votes required to usher through the 887-page tax and spending package before Trump’s live-wire, symbolic Fourth of July deadline.

"I think when you go over the bill, it was very easy to get them to a ‘Yes,’” Trump told reporters Thursday evening before he boarded Air Force One for an Iowa rally. “We went over that bill, point after point. ... Biggest tax cut in history, great for security, great on the southern border. ... We covered just about everything."

He continued: “The biggest bill of its kind ever signed — and it's going to make this country into a rocket ship. I think we're going to have record numbers.”

Beyond the bill’s comprehensive economic and real estate impacts, it also adds military and border funding and cuts Medicaid by $1T, which will push nearly 12 million Americans off of health insurance, according to the Congressional Budget Office. 

The final vote — 218-214 — came after House Minority Leader Hakeem Jeffries staged a marathon floor speech condemning the bill as a “disgusting abomination” and reading Medicaid testimonials for hours. Democrats have stayed unified in opposition, aiming to stall the bill and spotlight GOP infighting. 

But it was to no avail.

At the top line, the legislation makes permanent the corporate tax cuts enacted in 2017, including the headline reduction in the corporate rate to 21% from the pre-2017 level of 35%. 

That change, already baked into many underwriting models, now becomes a permanent fixture, reshaping business valuations, tax planning and long-term investment appetite across all sectors. Likewise, the move to make permanent the 20% deduction for qualified business income from pass-through entities benefits real estate, which leans heavily on LLCs and partnerships. 

For CRE, the bill is a full-throated attempt to reignite investment. 

It locks in opportunity zones as a permanent fixture of the tax code, revives 100% bonus depreciation and allows manufacturers to immediately write off qualifying real estate investments. For example, logistics firms such as Prologis or Lineage Logistics looking to build near ports or transportation hubs could find that the revamped depreciation rules supercharge return on investment on major facilities.

These incentives arrive at a pivotal time, with capital scarcity still throttling new development. Sources have told Bisnow in recent weeks that private equity shops and merchant builders are already eyeing distressed office-to-industrial conversions and last-mile warehouse plays with renewed interest.

The housing sector gets a boost too: The bill expands the Low-Income Housing Tax Credit and includes new measures to ease condo sales, offering relief to developers stuck with unsold units in cities like Miami and Chicago, where for-sale inventory has piled up amid high borrowing costs and slow absorption.

Still, not every corner of CRE saw wins. 

A proposed deduction for green building retrofits, like the expanded Section 179D incentive that helps offset the costs of upgrades such as insulation and high-efficiency HVAC, was stripped from the final bill, disappointing landlords pushing environmental, social and governance improvements in aging office towers, multifamily properties and energy‑intensive data centers under pressure to curb power usage and carbon footprints.

Sharp new taxes on university endowments could hit real estate in myriad ways. Smaller technical changes, including a tweak to REIT taxation and a cap on casualty loss deductions, are drawing early scrutiny from tax advisers and industry groups.

Whether the bill unlocks stalled projects or simply nudges capital toward more tax-efficient strategies remains to be seen. But from industrial spec builds in Texas to affordable housing rehabs in the Bronx, the industry is already recalculating.

Here are the facets of the One Big Beautiful Bill Act expected to impact CRE the most.

More Tailwinds For Manufacturing — And Specifically Its Real Estate

The One Big Beautiful Bill Act is perhaps the biggest policy push toward Trump’s decadelong effort to reshore manufacturing. As he wages a global trade war, the domestic tax package includes a sprawling set of incentives to boost American manufacturing. 

The budget includes a $243B tweak to the tax code that changes how businesses deduct equipment expenses. The provisions expand 100% bonus depreciation — companies’ ability to deduct the entirety of some large expenses in a single year rather than over several tax cycles — to cover the full cost of qualifying equipment.

The new budget expands a similar provision from the Tax Cuts and Jobs Act of 2017 through 2029 and adds real estate as a qualifying purchase.

The nonprofit Tax Foundation estimates the change will save businesses $51.5B in taxes in 2025 and more than $200B over the next five years.

Bonus depreciation is a well-worn tax tool, but the inclusion of property itself is a significant change meant to spur the construction of new factories. The tax break allows businesses to squeeze five years of tax deductions for equipment purchases into one tax cycle. For real estate, it squeezes a 39-year timeline into a single year, which can amount to millions of dollars in additional tax savings. 

The One Big Beautiful Bill Act also includes tens of billions of dollars in direct spending on military manufacturing, including a $25B outlay for expanding munitions production capacity.

The updates to bonus depreciation policy retroactively apply to any manufacturing facility construction that began this year. They include a rule that the facility remain in operation for at least a decade to keep the deduction and tasks the IRS with clawing back lost tax revenue if a facility closes early.

Major manufacturers are the most likely beneficiaries of the new policy, given the huge amounts of cash and coordination it takes to build a modern factory, JLL Head of Advanced Manufacturing Greg Matter told Bisnow in May.  

“This benefits the Nvidias and the Apples, Foxconn, the aerospace, defense and automotive companies expanding their presence,” he said. 

A Boost To Housing Tax Credits 

The budget measure includes reforms to the policy most commonly used to finance affordable housing construction in the country, the Low-Income Housing Tax Credit.

The change is “the biggest investment in the housing credit in 25 years,” said Ayrianne Parks, a senior director of policy advocacy at Enterprise Community Partners.

LIHTC funding comes from the federal government issuing tax credits to state governments, and state housing agencies then award the credits to private developers building affordable housing. Private developers often sell those credits to investors to get funding, and investors can use credits against their federal income tax in exchange for making equity investments in the developments.

In order to get LIHTC, projects have historically had to meet what’s known as the “50% test”: half of the development’s costs have to be financed by municipal bonds. The federal government also caps the volume of tax-exempt bonds each state can issue, leading to funding shortfalls.

The bill cuts the 50% test down to 25% and makes the funding permanent instead of something that is voted on every four years.

The measure will have immediate local impacts, New York Housing Conference Executive Director Rachel Fee said.

“While this bill will hurt many low-income renters who will be at risk of losing Medicaid and SNAP benefits, there is a silver lining for affordable housing supply through the significant expansion of LIHTC,” she told Bisnow in an email. “In lowering the 50% test, NY can start to move the significant backlog of affordable housing projects in the queue for financing.”

The bill also permanently extends the New Markets Tax Credits Program. Funding for the program used to be decided annually but is now allocated permanently at $5B a year.

“It's been really successful, despite the fact that you never know from year to year if it's actually going to be available or not,” Parks said. “I think this will really add a lot of stability by making it permanent at the $5B in investment to communities every year.”

Nixing Funding, Tax Credits For Building Upgrades

The bill repealed a 20-year-old section of the tax code called Section 179D, or the energy-efficient commercial building deduction. 

The provision had allowed landlords that upgrade their commercial buildings to reduce their tax bill by 50 cents per SF if they reduce their energy consumption by at least 25%, with the ability to increase those tax savings fivefold if they pay local prevailing wages.

The One Big Beautiful Bill Act rescinds the program for projects starting July 1, 2026, or later. The nixing of the program has drawn alarm from industry groups that say it has helped incentivize building upgrades, reduced greenhouse gases and helped owners reduce risk to properties from natural disasters, preserving housing stock. 

Accountants from CliftonLarsonAllen wrote in a post on the firm's website that they helped the owner of a 250K SF, Class-A office building secure a $750K tax deduction through the program after the owner installed LED lights, upgraded its HVAC system and complied with wage requirements.

“At a time when inflation, material tariffs, and policy uncertainty are slowing project announcements and disrupting the construction economy, eliminating or curtailing energy efficiency incentives like 179D would be both untimely and damaging,” the Sheet Metal and Air Conditioning Contractors’ National Association said in a letter to Congress, ACHR News reported. “Section 179D is also aligned with national energy goals. It helps reduce energy demand on urban power grids, lowers long-term building operating costs, and promotes infrastructure resiliency.”

The bill also rescinds any “unobligated” funding from the Green and Resilient Retrofit Program for multifamily housing, which was passed in 2022 as part of the Inflation Reduction Act. 

The GRRP allocated $1.4B in Department of Housing and Urban Development grants and nearly $4B in loans to housing providers to upgrade their buildings to be more energy efficient.

The Trump administration already targeted the program via executive order this year, canceling previously approved grant funding and throwing projects relying on the money into limbo. Only a few dozen projects had reportedly received their funding, Multifamily Dive reported.

A federal judge ordered the funding to be unfrozen in April, but the passage of the budget bill allows the Trump administration to cancel any unfunded commitments.

“The rescission of this funding is one of the most drastic and imprudent fiscal policies of our generation. It moves us back decades and puts a lot of working-class Americans, veterans, seniors and families in direct paths in harm's way,” Laurie Schoeman, a former White House senior housing and urban policy adviser, told Bisnow. “The storms are not going away, and we don't want our housing to go away either." 

Opportunity Zones: Bigger And Here To Stay

The Opportunity Zone program has become a permanent feature of the tax code.

The OZ program was created under the Tax Cuts and Jobs Act of 2017 as an economic development tool to steer investment into real estate projects and businesses in low-income areas. Governors nominated 8,764 qualified census tracts as opportunity zones in the program’s first iteration, but it was scheduled to sunset at the end of next year, leading industry players to push for an extension with this bill. 

“Today’s vote secures the future of one of the country’s most crucial economic development policies,” Economic Innovation Group CEO John Lettieri said in a statement. 

The new policy will also lead to a redrawing of the opportunity zone map.

The bill changed the criteria for what census tracts qualify as opportunity zones, tightening the income threshold to 70% of the area median income from the first iteration’s 80%, and it removed the ability for areas adjacent to low-income tracts to be included. 

The new program will also standardize benefits for investors with a five-year rolling deferral that starts the date they invest. In the first iteration, the deferral period got shorter as the program’s sunset date approached. 

The bill also requires reporting and data collection on the program’s impacts. For new OZ investments, funds will need to file an annual return, and the Treasury Department will have to report to Congress about the program’s efficacy. 

Some industry leaders have voiced concern about a “dead zone” issue — with the new benefits not kicking in until 2027, investors are likely to wait until then to put money into OZ funds. They had called for lawmakers to resolve that with an amendment, but they didn’t do so. 

One provision from prior drafts of the bill that didn't make it into the final version was the ability to use $10K of ordinary income per year for opportunity zone investment. The program will continue to only allow investors to deploy capital gains into OZ funds.

“The work is not done,” Lettieri told Bisnow. “This is a major milestone and it sets the foundation for good policy making going forward for OZ.”

Data Centers’ Power Struggles

Data center leaders have concerns that the bill’s phase-out of clean energy tax credits will exacerbate the sector’s already acute power shortage.

Tech giants like Microsoft, Google, Amazon and Meta are the world’s largest buyers of renewable energy. The data center sector has driven a wave of low-carbon energy projects like solar and wind farms across the U.S. as the skyrocketing energy requirements of the artificial intelligence building boom have collided with Big Tech’s carbon reduction goals. 

The One Big Beautiful Bill Act will phase out tax credits used to develop wind and solar generation. It eliminates targeted tax breaks for any solar or wind project that doesn’t break ground within a year or isn’t completed by 2027. 

Developers and industry groups told Bisnow last week that the loss of these credits will dramatically increase the price of some renewables projects, likely leading some to be canceled and shrinking the pipeline of new power generation, which will in turn hinder data center construction.

Industry leaders say the tax credit rollback needlessly shrinks the country’s future energy supply at the worst possible time, undermining the Trump administration’s stated goal of leveraging energy production to stay ahead of China in the AI arms race. 

“As the voice of the largest energy buyers in America … we regret that the tax credits for solar and wind are being sunset at a difficult time when we need all energy options to support unprecedented electricity growth in America,” Clean Energy Buyers Association CEO Rich Powell said in a statement Thursday, adding that he appreciates other work Trump has done to support carbon-free energy.

The final bill didn’t go as far in curtailing new renewable energy development as some earlier versions. Prior drafts would have phased out the tax credits on a shorter timeline without the carve-out for shovel-ready projects, and they would have eliminated incentives for other low-carbon “baseload” generation like geothermal and nuclear. Other measures aimed to pin most wind and solar projects with a punitive excise tax.

The final bill’s more moderate approach came as a relief to industry groups like the Data Center Coalition that had engaged heavily with lawmakers on the bill.

“We appreciate Congress providing a longer runway for baseload resources to utilize key tax credits, removing the excise tax on energy production, and supporting DOE’s Loan Programs Office,” Data Center Coalition Director of Federal Affairs Cy McNeill said in a statement. 

New Taxes On University Endowments Could Bite CRE Funding, Demand

Elite universities with massive endowments could soon face a steep new tax bill.

A section of the One Big Beautiful Bill Act replaces the flat 1.4% excise tax on net investment income with a sharply tiered structure. Schools would be taxed based on their “student-adjusted endowment,” or the size of their endowment divided by the number of eligible students. 

Institutions with more than $500K per student, the top tier, would see rates escalate from 1.4% to 8%. The bill also redefines who counts as an eligible student, excluding international enrollees — a shift that could inflate per-student averages and push more schools into higher tax brackets.

It is a direct shot at the wealthiest schools, many of which already operate with endowments larger than most cities’ budgets. Harvard University has an endowment worth $53.2B, while the city of Boston’s 2025 budget is $4.6B.

The taxes are likely to reduce commercial property investment volume from university endowments, an increasingly large source of capital. The 50 largest U.S. university endowments had $806B invested in alternative assets, including real estate, as of April, according to Pitchbook data reported by the Center for Economic and Policy Research.

Harvard, a particular target of Trump’s, has nearly $40B invested in alternative assets.

Universities are also significant users and builders of space on their own, and growing campuses lead to student housing demand. Harvard has already pulled out of two commercial leases and said it is consolidating its campus as a result of its battle with the Trump administration over funding, and schools like the University of Houston have put development projects on ice.

REITs Get Tweaked

The bill includes a provision that bumps up the maximum value REITs can invest in taxable REIT subsidiaries from 20% to 25% of total assets. These subsidiaries may do things that typically would cause REITs to lose their tax-advantaged status, like operate businesses that are closely related to their real estate holdings or provide atypical services to tenants.

This came up last year when Sen. Elizabeth Warren asked the IRS to increase scrutiny on hospitality and medical REITs amid the Steward Health Care collapse. Warren accused healthcare landlords like Medical Properties Trust of “meddling in the operations of their tenants” in a way that violated tax code.

“We’re pleased to see the provision in the bill,” Nareit said in a statement to Bisnow. “It reinstates prior law, and it is important because it ensures REITs that need it have the necessary flexibility to operate their businesses in the most effective and efficient manner.”

CORRECTION, JULY 9, 12:22 P.M. ET: An earlier version of this story misstated the new max endowment tax level.