Hey fellow investors,
I’ve been following the early chatter around the proposed Big Beautiful Bill Act—and while details are still emerging, it’s clear that this could have a major impact on real estate investing, especially in how we structure deals, manage tax strategies, and approach asset holding in the coming years.
Here are a few questions I’ve been mulling over:
Depreciation changes? Could this act reshape how we take depreciation or even limit bonus depreciation benefits that many of us rely on?
LLC and S-Corp structures: Will entity taxation or flow-through treatment come under new scrutiny?
Cost segregation studies: If incentives tighten, will these become less favorable—or even more critical to do early?
Capital gains treatment: Is the Act going to redefine short vs. long-term horizons, or increase rates?
If you're holding multiple properties, using leverage, or actively involved in developments or syndications, these shifts could really move the needle.
I am curious how others are planning for this. Are you making moves now in anticipation of possible tax code revisions? Holding off on acquisitions? Re-structuring your entities? Or just waiting for more clarity?
Would love to hear how you're thinking about it—whether you're a seasoned investor, a CPA, or someone just getting started in the space.
Great breakdown. As a CPA and investor, I have been thinking through many of the same questions with my clients.
A few things I am keeping a close eye on:
• Bonus depreciation. If it phases out faster or gets limited, modeling ROI on flips and BRRRRs becomes more challenging. Planning ahead for capital expenses is even more important.
• Entity structure. If pass-through benefits change, it could shift the balance between S-Corps and LLCs for active investors. We have already had to rethink how cash flows between entities.
• Cost segregation studies. I actually think these might become more urgent to complete now while the current rules still apply. Waiting could mean leaving value on the table.
I am encouraging investors to run a few “what if” models now instead of waiting, especially if they are scaling, taking on new debt, or holding assets long term.
Curious to hear how others are planning around this. Has anyone started adjusting strategy yet?
Regardless of whether or not bonus depreciation reverts back to 100%, 50% on newly constructed properties only as was the case prior to the Tax Cuts & Jobs Act (TCJA), or 0%, depreciating assets according their CORRECT class lives via cost segregation on properties held for a minimum of three to five years to minimize the effects of depreciation recapture upon sale is still beneficial depending on the taxpayers' circumstances. Cost segregation is a time value of money play so taking large losses upfront in the form of bonus depreciation makes the most sense when rental income and the property owner's tax rate is highest. It is also important to note that straight-line depreciating short-lived (5-, 7-, and 15-year) assets associated with a building over 39- or 27.5-years is considered an impermissible method of accounting. Cost segregation is an acceptable method of CORRECTLY classifying short-lived assets and complying with the Tangible Property Regulations (i.e., when removing and disposing assets). Besides CORRECT asset classification and compliance, there is a benefit to spreading out the expense (loss) resulting from a cost segregation study vs. taking all the expense (loss) upfront in the first year in the form of bonus depreciation. An example would be a taxpayer who acquires a property that has high turnover/low occupancy (income) and anticipates low turnover/higher occupancy (income) in the next few years. For properties that qualify for 100% bonus depreciation (purchased or constructed and placed into service from 2018 to 2022), many of our cost segregation clients either carry forward large losses until absorbed or, in some instances, elect out of bonus depreciation by asset class to avoid the large carryforward. Disclaimer: This does not constitute tax advice. Consult with a licensed tax practitioner.
I think this bill is a bit too early in its infancy. There's a long road ahead for this bill to become law. House has a small majority and senate has a pretty fair margin. There's going to be reconciliation between the two bills.
with that caveat out of the way, bonus depreciation is by far going to be a big benefit and seems to have broader support. This is going to be huge for real estate investors buying and selling properties. There will be significant tax benefits.
There's some other items that may be pertinent to a broader audience but will keep my comments to real estate
Investor & Property Manager | St. Petersburg, FL
Great topic, Matthew—this kind of proactive thinking is exactly what separates reactive landlords from strategic investors. While we’re still waiting on concrete legislative language around the Big Beautiful Bill Act, I’ve been having similar conversations with my CPA and legal team about how to stay flexible and prepared.
Here are a few thoughts based on what’s currently being floated:
If they phase out or cap bonus depreciation (especially for short-lived assets), it could reshape how we time acquisitions and improvements. I’ve started front-loading rehab plans on current assets to take advantage of current rules before any rollback.
If you’re planning to do a cost segregation study, this might be the year to fast-track it.
I wouldn't be surprised to see pass-through entities face tighter rules—especially for high-income earners using aggressive deductions. That said, entities like LLCs and S-Corps still provide critical liability and operational advantages, so I’m not making structural changes just yet.
What I am doing: having my CPA model out a scenario with higher pass-through taxation, just in case.
There’s definitely chatter about raising long-term capital gains rates or extending the holding period. For me, that means reassessing planned exits and possibly accelerating sales of low-performing assets this year, especially in states where I'm already facing high tax exposure.
If you're in a strong equity position, it might be time to either sell now or refi and hold long—depending on your market and goals.
Personally, I’m staying active—but more selective. We’re underwriting with higher exit taxes in mind, and exploring more mid-term rental strategies that create flexibility. Not pausing acquisitions, but being more conscious of holding periods and cash flow resiliency.
Always open to sharing what’s working and learning from others—this is one of those rare moments where staying a few steps ahead could save (or make) you six figures.
Let me know if you want to connect offline about entity strategy or bonus depreciation—we’ve been digging deep on it this quarter.
Thanks, Kyle Wheeler
Great breakdown. As a CPA and investor, I have been thinking through many of the same questions with my clients.
A few things I am keeping a close eye on:
• Bonus depreciation. If it phases out faster or gets limited, modeling ROI on flips and BRRRRs becomes more challenging. Planning ahead for capital expenses is even more important.
• Entity structure. If pass-through benefits change, it could shift the balance between S-Corps and LLCs for active investors. We have already had to rethink how cash flows between entities.
• Cost segregation studies. I actually think these might become more urgent to complete now while the current rules still apply. Waiting could mean leaving value on the table.
I am encouraging investors to run a few “what if” models now instead of waiting, especially if they are scaling, taking on new debt, or holding assets long term.
Curious to hear how others are planning around this. Has anyone started adjusting strategy yet?
One of the biggest proposals in the Big Beautiful Bill Act is the return of 100% bonus depreciation, and what’s especially interesting is that it’s being discussed as retroactive. If that holds, it could allow investors to amend 2023, 2024, and even 2025 tax returns (once filed), to claim the full 100% bonus depreciation—instead of the reduced rates we’ve had (80% in 2023, 60% in 2024, and so on).
This could potentially generate significant tax refunds for those who placed eligible property or improvements into service during those years. It might also breathe new life into cost segregation studies that had previously looked marginal.