2025 Real Estate Tax Updates: What the New Law Means for You
Big Wins in the 2025 Real Estate Tax Updates
Big wins just rolled out for real estate professionals, investors, and homeowners. In this article, we’ll explore the 2025 real estate tax updates and highlight everything you need to know about the newly passed Big Beautiful Bill—and how it affects your bottom line.
1. Bigger Tax Deductions for Real Estate Professionals and Investors
One of the most impactful changes is the increase in the Qualified Business Income (QBI) deduction, which is now permanent and increased from 20% to 23%.
What this means:
- As a result, real estate agents operating as LLCs or S-corps can keep more of their income.
- In addition, real estate investors can deduct more income from rental properties.
- Moreover, high earners benefit from a smoother phase-out—no more sudden drop-offs.
Therefore, these 2025 real estate tax updates are especially beneficial for independent contractors and full-time investors seeking to maximize profitability.
2. Mortgage Interest & SALT Deductions Expanded
The mortgage interest deduction remains unchanged—offering stability and predictability. Meanwhile, the State and Local Tax (SALT) cap increases from $10,000 to $40,000 for the next five years.
What this means:
- As a result, homeownership becomes more appealing, especially in high-tax states like Florida, California, and New York.
- Additionally, buyers can deduct more from federal taxes—making upscale homes more attractive.
Altogether, these changes mark one of the most homeowner-friendly shifts in the 2025 real estate tax updates.
3. Higher Loan Limits for Renovations and ADUs
Loan limits under FHA Title I have increased. As a result, financing renovations and additions is easier than ever.
New caps include:
- $150,000 for renovations
- $195,000 for manufactured or modular homes
What this means:
- Consequently, financing for Accessory Dwelling Units (ADUs), remodels, and energy-efficient upgrades is more accessible.
- Furthermore, “renovation-ready” homes become more marketable to buyers.
If you’re planning a remodel, these 2025 real estate tax updates create new financing opportunities for both buyers and sellers.
4. Bonus Depreciation Is Back
In a major win for investors, 100% bonus depreciation is reinstated through 2029 on qualifying real estate improvements. Not only does this provide immediate tax relief, but it also boosts ROI for high-volume investors.
What this means:
- As a result, investors can immediately write off large capital expenditures.
- In turn, this leads to higher ROI on both commercial and residential properties.
Among the most talked-about provisions, this is a game-changer for investors.
5. New Incentives for Rural and Affordable Housing
New measures target underserved areas with strong tax incentives:
- Lenders receive a 25% tax break on rural loan interest income.
- Opportunity Zones and the Low-Income Housing Tax Credit (LIHTC) programs are revived and expanded.
- Rural and tribal developers may qualify for bonus tax perks.
What this means:
- Accordingly, there are more incentives for affordable housing and sustainable growth in rural markets.
- In fact, these programs make investment in underserved areas more attractive than ever.
As such, the 2025 real estate tax updates clearly aim to stimulate growth in rural and low-income housing sectors.
6. 1031 Exchanges & Business Interest Deductions Preserved
To the relief of many investors, some key provisions have remained untouched:
- 1031 like-kind exchanges remain intact.
- Real estate businesses can still deduct interest on business loans.
What this means:
- Thus, investors can continue deferring capital gains taxes when trading properties.
- Moreover, commercial buyers retain tax advantages on new project financing.
On the other hand, this portion of the 2025 real estate tax updates provides stability, ensuring real estate remains a powerful wealth-building tool.
What Should Buyers, Sellers, and Agents Do Now?
Whether you’re planning to:
- Sell your home in Sarasota, Lakewood Ranch, or Siesta Key
- Invest in multifamily or commercial real estate
- Renovate, refinance, or build an ADU
- Explore rural investment opportunities
Now is the time to take action. After all, the 2025 real estate tax updates provide powerful incentives to move forward with your plans today.
Want to Learn More?
Schedule a private consultation with our expert real estate advisors.
📞 Call us at (941) 404-4737
🌐 Visit: www.thecoffeygroup.com
