Investors, Partners, and Friends,

The "One Big Beautiful Bill Act" (OBBBA), Trump’s landmark policy objective, is now law. In this month’s Rockview Review, we break down what the Bill changes, how it was structured, and the most actionable takeaways for real estate investors and operators. We hope you find this edition of The Rockview Review valuable.

What the Bill Changes for Consumers

1. The Bill Locks in Lower Taxes for the Middle Class. Permanently.

The bill cements into law what had previously been temporary: lower tax rates, wider income brackets, and a much larger standard deduction. These were all originally passed under the 2017 Tax Cuts and Jobs Act (TCJA) but were set to expire in 2026.

• The standard deduction is now $31,500 for joint filers and $15,750 for single filers (income you don’t pay federal tax on).
• The Child Tax Credit rises to $2,200 per child, with $1,400 refundable, meaning you receive it even if you owe no tax.
• A new $6,000 senior deduction gives additional relief to taxpayers aged 65 and older.

Why it matters: This prevents a scheduled tax hike on tens of millions of households. Families now keep more of their income, which is especially important in an inflationary environment where cost-of-living pressures remain high.

Source: US House Committee on Ways & Means​

2. The Bill Temporarily Raises the Cap on State and Local Tax Deductions (SALT)

For tax years 2025 through 2029, households can deduct up to $40,000 in state and local taxes from their federal taxable income, up from the previous $10,000 cap.

• This cap, imposed by the 2017 Tax Cuts and Jobs Act, was one of its most controversial provisions, especially for residents of high-tax states like California, New York, New Jersey, and Illinois. The new bill also includes a phase-out for households earning over $500,000.

Why it matters: For upper-middle-class homeowners in high-cost markets, this is a meaningful tax break.

3. The Bill Eliminates Federal Income Tax on Tips and Overtime (Through 2028)

The bill exempts up to $25,000 of tipped wages and overtime pay from federal income tax for eligible workers. This provision is set to last from 2025 through 2028.

• It's a new approach aimed at boosting take-home pay for hourly and service-sector workers without placing new burdens on employers.

Why it matters: This is effectively a temporary raise for millions of lower-wage workers, especially those in high-tipping sectors like hospitality across the country and in hospitality-heavy metros like Las Vegas. It increases disposable income without changing base wages, potentially supporting consumer spending and helping renters in service-heavy industries better keep up with rising costs.

II. What the Bill Changes for Real Estate Investors

1. The Bill Reinstates 100% Bonus Depreciation for Real Estate Assets

Investors can now fully deduct the cost of qualifying property (including improvements, systems, and equipment) in the year it’s placed into service. This applies to both residential and commercial real estate.

• Originally introduced in the 2017 tax law, 100% bonus depreciation began phasing out in 2023 and was scheduled to drop to 20% by 2026. The new bill reverses course and restores the full deduction, indefinitely.

Why it matters: The reintroduction of 100% bonus depreciation raises after-tax returns for real estate investments. For deals using cost segregation, the tax benefits can front-load returns and improve IRRs—especially in the first few years of ownership.

2. The Bill Makes The 20% Pass-Through Deduction Permanent

Many real estate investors hold properties in pass-through entities like LLCs or partnerships. These entities “pass through” income to the owner’s personal tax return.

• The bill makes permanent the Section 199A deduction, which allows investors to deduct 20% of qualified business income.

Why it matters: This is a long-term win for sponsors, syndicators, and independent operators. It lowers the effective tax rate on rental income and improves the net return profile, especially in lower-leverage deals where income is a key driver of value.

3. The Bill Keeps Opportunity Zones Open

The federal Opportunity Zone (“OZ”) program, which defers and reduces taxes on capital gains invested in designated areas, is now permanent.

• New eligibility rules begin in 2027, outlining which zones qualify.
• Investors can continue to roll over capital gains into OZ deals for favorable tax treatment.

Why it matters: This is a durable tool for tax-advantaged deployment of capital, particularly for long-term holds or development deals in emerging areas.

III. Potential Headwinds

While the bill delivers beneficial tax treatment and increases after-tax returns for investors, it also introduces policy choices that carry longer-term risks, especially for labor markets and development pipelines.

1. Immigration Policy May Tighten Labor Supply

The bill directs $170 billion toward enhanced border enforcement, expanded detention capacity, and biometric tracking infrastructure. This could slow the inflow of working-age residents, especially in construction, hospitality, and service sectors.

Why it matters: A constrained labor force, particularly in construction trades, risks pushing wages higher (inflation) and extending project timelines.

2. Tariffs Amplify Development Cost Pressures

The return of 25% tariffs on building materials, including steel, aluminum, lumber, cabinetry, and appliances, raises the cost of both ground-up construction and unit renovations.

Why it matters: This makes it harder for new development and value-add deals to pencil, which is a challenge for developers, but a strength for existing asset owners as it increases replacement costs and may bolster asset values.

IV. Putting it All Together

One Big Beautiful Bill is beneficial for real estate investors as it:

• Increases after-tax returns through 100% bonus depreciation, expanded Section 179 expensing, and permanent pass-through income deductions
• Lowers effective taxes on lower- and middle-income households, increasing purchasing power for rent, goods, and services
• Raises the cost of new construction via tariffs and labor constraints, widening the gap between existing asset pricing and replacement cost
• Maintains tax-advantaged avenues for capital gains through the permanent extension of the Opportunity Zone program
• Provides structural clarity by removing sunset risks that previously limited long-term planning

We anticipate these provisions will increase demand for real estate investment, both immediately and over the long term. These shifts all strengthen real estate’s long-term attractiveness as a stable, tax-efficient, and supply-constrained asset class.

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Until next time,

Rockview Capital LLC