{"id":183149,"date":"2025-06-04T12:48:53","date_gmt":"2025-06-04T18:48:53","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=183149"},"modified":"2025-06-04T12:51:03","modified_gmt":"2025-06-04T18:51:03","slug":"key-tax-changes-coming-in-2025-to-watch-for","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/key-tax-changes-coming-in-2025-to-watch-for","title":{"rendered":"How 2025 Tax Changes Could Reshape Real Estate Investing"},"content":{"rendered":"\n<p><span data-preserver-spaces=\"true\">It\u2019s not exactly breaking news: Taxes change. But what\u2019s brewing for 2025 could be the biggest shake-up in real estate tax policy in a generation. And whether you\u2019re a long-time investor or just closing on your first rental, the moves you make now (before those changes kick in) could shape your financial future for decades to come.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here at BiggerPockets, we\u2019ve been watching this unfold closely. Our partners at Rent To Retirement have also been hard at work helping investors navigate what\u2019s coming. Together, we\u2019re breaking it all down so <\/span><span data-preserver-spaces=\"true\">you\u2019re not caught<\/span><span data-preserver-spaces=\"true\"> off guard\u2014and might maybe even end up ahead.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What\u2019s Happening in 2025?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Several key tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025 unless Congress extends them. These provisions have helped real estate investors, especially those using <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/beginners-guide-depreciating-investment\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">depreciation<\/span><\/a><span data-preserver-spaces=\"true\">, pass-through deductions, and estate planning strategies.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here are the five biggest things to watch.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">1. Bonus depreciation might make a comeback<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Let\u2019s start with what might be good news.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Under the original TCJA, real estate investors could use 100% bonus depreciation to deduct the full cost of qualifying assets in the year they <\/span><span data-preserver-spaces=\"true\">were placed<\/span><span data-preserver-spaces=\"true\"> in service: furniture, appliances, HVAC systems, and more. <\/span><span data-preserver-spaces=\"true\">That was huge for anyone <\/span><span data-preserver-spaces=\"true\">running<\/span> <a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/cost-segregation-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cost segregation studies<\/span><\/a><span data-preserver-spaces=\"true\"> on their <\/span><span data-preserver-spaces=\"true\">rentals<\/span><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> But it\u2019s been phasing out:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><span data-preserver-spaces=\"true\">2023:<\/span><\/strong><span data-preserver-spaces=\"true\"> 80%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">2024:<\/span><\/strong><span data-preserver-spaces=\"true\"> 60%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">2025:<\/span><\/strong><span data-preserver-spaces=\"true\"> 40%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">2026: <\/span><\/strong><span data-preserver-spaces=\"true\">20%<\/span><\/li>\n\n\n\n<li><strong><span data-preserver-spaces=\"true\">2027: <\/span><\/strong><span data-preserver-spaces=\"true\">Gone (unless extended)<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">Here\u2019s the twist: Congress might be bringing <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.flyingmag.com\/bonus-depreciation-set-to-return-in-new-tax-bill\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">100% bonus depreciation <\/span><span data-preserver-spaces=\"true\">back<\/span><\/a><span data-preserver-spaces=\"true\">.<\/span><span data-preserver-spaces=\"true\"> A newly proposed tax bill, dubbed the \u201cOne Big Beautiful Bill,\u201d includes a <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/on-the-market-305\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">reinstatement of full bonus <\/span><span data-preserver-spaces=\"true\">depreciation<\/span><\/a><span data-preserver-spaces=\"true\">,<\/span><span data-preserver-spaces=\"true\"> retroactive <\/span><span data-preserver-spaces=\"true\">to January 2025<\/span><span data-preserver-spaces=\"true\">. Treasury officials and business leaders are optimistic it could pass this year.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If that happens, it\u2019s another shot for investors to write off a significant portion of their investment properties in year one. If not? 2025\u2019s 40% bonus depreciation might be your last real chance to benefit.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">2. <\/span><span data-preserver-spaces=\"true\">Estate and gift tax exemptions could be cut<\/span><span data-preserver-spaces=\"true\"> in half<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you\u2019re building long-term wealth with real estate, this one matters more than you think. <\/span><span data-preserver-spaces=\"true\">Right now<\/span><span data-preserver-spaces=\"true\">, the estate tax exemption is <\/span><span data-preserver-spaces=\"true\">about<\/span><span data-preserver-spaces=\"true\"> $13.6 million per individual (<\/span><span data-preserver-spaces=\"true\">double<\/span><span data-preserver-spaces=\"true\"> that for married couples).<\/span><span data-preserver-spaces=\"true\"> That means most rental investors don\u2019t worry about estate taxes.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But in<\/span><span data-preserver-spaces=\"true\"> 2026, that number could drop to <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bipc.com\/trump-return-to-the-white-house-a-sunset-or-sunrise-on-tax-law-changes\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">around $7 million per person<\/span><\/a><span data-preserver-spaces=\"true\">, which suddenly <\/span><span data-preserver-spaces=\"true\">puts<\/span><span data-preserver-spaces=\"true\"> many more portfolios at risk of significant taxation during transfer.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For many real estate investors <\/span><span data-preserver-spaces=\"true\">who\u2019ve<\/span><span data-preserver-spaces=\"true\"> built their wealth slowly, especially <\/span><span data-preserver-spaces=\"true\">using<\/span><span data-preserver-spaces=\"true\"> leverage, this <\/span><span data-preserver-spaces=\"true\">reminds them<\/span><span data-preserver-spaces=\"true\"> to <\/span><span data-preserver-spaces=\"true\">think about<\/span><span data-preserver-spaces=\"true\"> trusts, gifting strategies, and tax planning now, <\/span><span data-preserver-spaces=\"true\">not<\/span><span data-preserver-spaces=\"true\"> later.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">3. The 20% pass-through deduction is set to expire<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">Suppose you\u2019re a landlord or operate through an LLC. In that case, you might currently qualify for the Qualified Business Income (QBI) deduction, which gives a 20% write-off on rental income if your business meets the criteria. <\/span><span data-preserver-spaces=\"true\">But<\/span><span data-preserver-spaces=\"true\"> this <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/tax.thomsonreuters.com\/en\/glossary\/qualified-business-income-deduction\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">deduction <\/span><span data-preserver-spaces=\"true\">goes away<\/span><\/a><span data-preserver-spaces=\"true\"> at the end of 2025 unless extended.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> could mean thousands more in taxes each year for investors with high rental income, especially in states without favorable tax treatment. <\/span><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> is a great time to evaluate whether your rental operation qualifies as a business (<\/span><span data-preserver-spaces=\"true\">versus<\/span><span data-preserver-spaces=\"true\"> passive income) and whether it\u2019s time to restructure your portfolio.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">4. Personal income tax rates could go up<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">This<\/span><span data-preserver-spaces=\"true\"> affects everyone, <\/span><span data-preserver-spaces=\"true\">investor<\/span><span data-preserver-spaces=\"true\"> or not.<\/span> <span data-preserver-spaces=\"true\">The tax brackets from the TCJA were lowered<\/span><span data-preserver-spaces=\"true\"> across the board. But in 2026, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/about.bgov.com\/insights\/elections\/2025-tax-policy-crossroads-what-will-happen-when-the-tcja-expires\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">those rates could increase<\/span><\/a><span data-preserver-spaces=\"true\"> again:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">The top bracket jumps back to 39.6% (from 37%).<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Lower brackets shift upward, too.<\/span><\/li>\n<\/ul>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you\u2019re earning W-2 income or actively managing rentals (like <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/short-term-rental-investing\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">short-term rentals<\/span><\/a><span data-preserver-spaces=\"true\"> or <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/guides\/how-to-flip-houses\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">flips<\/span><\/a><span data-preserver-spaces=\"true\">), you might be paying a higher rate on that income.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Savvy investors are already <\/span><span data-preserver-spaces=\"true\">looking into<\/span><span data-preserver-spaces=\"true\"> Roth conversions, year-end acceleration of income or deductions, and leveraging depreciation while rates are lower.<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">5. The 1031 exchange could face new scrutiny<\/span><\/h3>\n\n\n\n<p><span data-preserver-spaces=\"true\">To be clear:<\/span><span data-preserver-spaces=\"true\"> The <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-exchange\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">1031 exchange<\/span><\/a> <span data-preserver-spaces=\"true\">isn\u2019t currently set<\/span><span data-preserver-spaces=\"true\"> to expire like some other tax provisions. However, it has been the <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/exclusivefinancialresources.com\/1031-exchange\/1031-exchange-trends-and-market-update-2025\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">subject of ongoing discussions<\/span><\/a><span data-preserver-spaces=\"true\"> and proposals to limit its use, particularly for higher-value transactions or luxury properties.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">If you\u2019ve been holding on to a property with significant equity and are considering a sale, 2025 could be a smart time to take advantage of the current 1031 rules and defer your capital gains.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">What BiggerPockets Members Can Do Now<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">You don\u2019t have to be a tax expert. But the name of the game? Be proactive, not reactive.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Smart<\/span><span data-preserver-spaces=\"true\"> investors can do the following:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span data-preserver-spaces=\"true\">Talk to<\/span><span data-preserver-spaces=\"true\"> a CPA who <\/span><span data-preserver-spaces=\"true\">understands<\/span><span data-preserver-spaces=\"true\"> real estate.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Consider whether a cost segregation study makes sense or wait for more information on bonus depreciation.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Review your legal and trust structures.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Consider accelerating purchases before <\/span><span data-preserver-spaces=\"true\">depreciation phases out<\/span><span data-preserver-spaces=\"true\">.<\/span><\/li>\n\n\n\n<li><span data-preserver-spaces=\"true\">Reassess whether you should be using 1031 exchanges now.<\/span><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Where Turnkey Fits In&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">We love working with <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.renttoretirement.com\/\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Rent To Retirement<\/span><\/a><span data-preserver-spaces=\"true\"> because they don\u2019t just sell turnkey rental properties; they help investors plan for tax efficiency and long-term wealth.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">They\u2019ve built a national network of tax advisors, lenders, and markets where you can still buy fully renovated, <\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">cash-flowing<\/span><\/a><span data-preserver-spaces=\"true\"> rentals with depreciation and cost seg potential already in mind. <\/span><span data-preserver-spaces=\"true\">And<\/span><span data-preserver-spaces=\"true\"> their inventory is in states with landlord-friendly laws and <\/span><span data-preserver-spaces=\"true\">better<\/span><span data-preserver-spaces=\"true\"> overall tax profiles.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Whether you&#8217;re just getting started or trying to grow a $5 million portfolio without the headaches of rehabs and local teams, RTR helps make that possible and ensures you&#8217;re buying with all the <\/span><span data-preserver-spaces=\"true\">important<\/span><span data-preserver-spaces=\"true\"> factors of real estate investing in mind.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">2025 might be the last year of \u201ctax rules as we know them.\u201d And while we can\u2019t predict what Congress will do, one thing is clear: The best investors don\u2019t just buy properties; they buy time, options, and act wisely.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Take<\/span><span data-preserver-spaces=\"true\"> advantage of what we still have, and prepare for what\u2019s ahead.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>It\u2019s not exactly breaking news: Taxes change. But what\u2019s brewing for 2025 could be the biggest shake-up in real estate tax policy in a generation. And whether you\u2019re a long-time [&hellip;]<\/p>\n","protected":false},"author":613755,"featured_media":183143,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[7378],"tags":[],"class_list":["post-183149","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-tax-laws"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183149","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/613755"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=183149"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/183149\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/183143"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=183149"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=183149"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=183149"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}