How Trump’s “Big Beautiful Bill” Shifts the Commercial Multifamily Landscape
Dear Friends,
The “One Big Beautiful Bill” (OBBBA), signed July 4, 2025, marks a tectonic shift in tax and spending policy — $3.4 trillion in impact, sweeping tax breaks, $100B+ border/defense funding, yet sharp Medicaid and SNAP cuts. As a commercial real estate investor, I’m spotlighting how these provisions reshape commercial multifamily investment — both upside and downside.
1. Permanent 100% Bonus Depreciation ✅
Pros:
Immediate expensing of qualified, short-lived property: lights, HVAC, appliances, finishes — no phase-down.
Paired with interest deduction on leveraged debt, it turbocharges early cash flow and significantly improves DSCR metrics.
Cons:Accelerated front-loading may compress taxable basis early on; long-term depreciation schedules yield less future shelter.
Not applicable to structural components — careful cost-seg planning needed.
2. Maintained Interest Deductibility & 1031 Exchanges ✅
Interest deduction remains intact, supporting acquisition-driven multifamily strategies.
1031 like-kind exchanges and Opportunity Zone rollovers preserved—continues enabling tax-deferred growth.
Cons: Depreciation recapture upon sale becomes more punitive given front-loaded deductions.
3. SALT Cap Raised to $40k, Expanded Deductions ✅
Broader provisions benefit high-income operators in high-tax states — though direct benefit to CRE structure less pronounced
Cons: The wealthy see outsized gains, potentially fueling demand in competitive coastal markets and driving valuations.
4. Clean-Energy Tax Break Rollbacks ⚠️
Removal of IRA credits could hinder investments in solar PV, energy efficiency, EV charging — long-term operating cost control strategies jeopardized.
Cons: Developers reliant on green premiums may see reduced cap rates or tenant interest.
5. Social Program Cuts (Medicaid ⬇ SNAP) ⚠️
Medicaid cuts (~$1T savings) and stricter work rules threaten coverage for 11M+—that demographic could see strains in housing affordability.
Cons: Elevated housing instability among assisted tenants; potential operational challenges in Section 8 and MSA-regulated portfolios.
6. Broader Fiscal & Macro Impacts
Debt surge (+$2.4–2.8T by 2034) and rising deficits may pressure interest rates in coming cycles.
Pros: Enhanced capex incentives may uplift sector fundamentals; Cons: Persistent fiscal deficits and geopolitical tensions could drive borrowing rates.
Summary Table
Let’s break this down into a summary table below that shows the strategic lever, opportunities, and risks of the bill.
Bottom line: The bill empowers creative financial stuctures that take advantage of new tax levers to minimize tax exposure, but underwriting sensitivities for tenant affordability and sustained debt service are critical and should be on the conservative scale.
🔥 Call to Action
Curious how to structure new deals—or optimize legacy assets—to benefit from depreciation, interest deductibility, and fiscal strategy under the OBBBA? Or wondering how tenant risk from social cuts might impact your model?
Subscribe to this newsletter or schedule and join our investors circle below. Let’s connect and tailor a CRE playbook that capitalizes on new tax levers while strengthening resilience in today’s evolving macro environment.
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Looking forward to connecting,
Manny Del Val
Del Val Investment Group | Level 7 Investors