Part-Time BRRRR Investors — This New Bill Just Made Things Better

[Brian Teeter]

Politics aside — what’s done is done. But there’s some good news for investors buried in the recently passed federal bill (nicknamed the One Big Beautiful Bill) that could seriously benefit your investing strategy. Whether you're doing this part-time while juggling another job or you're all-in as a full-time Real Estate Professional (REP), as I see it, there are some real wins to pay attention to.

Im an investor and also work with investors in Little Rock, Arkansas. I find that everyone always likes to focus on Cash Flow and Appreciation. BUT, I find my average investor doesnt always fully appreciate the tax advantages and factor those into their numbers when analyzing a deal. 

Two Big Wins for Part-Time BRRRR Investors:

1. 100% Bonus Depreciation — Still a Win (with Limits)
If you're rehabbing properties post-acquisition, you can now fully depreciate many capital improvements (roofs, HVACs, appliances, flooring, etc.) in year one.
Part-Time Investor Caveat:
If you're not classified as a Real Estate Professional by the IRS, these depreciation losses are considered passive. That means they can only offset passive income (like rental profits), not your W-2 or other active income.
Tip: Coordinate timing of renovations with your CPA to maximize use of passive losses — especially if you have other rental income to offset.

REP Advantage:
If you are a Real Estate Professional (i.e., spend 750+ hours/year and over half your working time in real estate), these losses can be used to offset active income like W-2 wages or business income — significantly increasing your tax savings.

2. Increased Business Interest Deductibility — A Huge Boost for Leveraged Deals
Real estate businesses can now deduct up to 40% of adjusted taxable income for interest expenses (up from 30%).
This is a huge help for BRRRR investors — especially those using DSCR loans, hard money, or other leverage-heavy strategies.
Part-Time Friendly: Even if you're not full-time, you can qualify for this benefit as long as you're structured as a real estate business (LLC, S-Corp, etc.).
Electing out of Section 163(j) is still an option but would require you to use the longer ADS depreciation method — worth a strategic discussion with your tax advisor.

Quick Recap:

For Part-Time BRRRR Investors:

• Bonus Depreciation: YES — offsets passive income only.
• Interest Deduction (163(j)): YES — as long as you’re structured as a business.

For Full-Time REPs:

• Bonus Depreciation: YES — can offset both passive and active income.
• Interest Deduction (163(j)): YES — with potentially bigger impact due to larger active income deductions.

This bill opens doors for both sides of the fence — whether you’re scaling a few rentals on the side or fully immersed in real estate. The difference is in how you can apply these benefits — and smart planning can help you get the most from them either way.

Is anyone here adjusting their acquisition or renovation timelines to take advantage of this? Or changing how they’re structured for tax purposes?

Would love to hear what your CPAs or tax strategists are recommending.

Let’s compare notes!