How New Tax Reform Could Boost the Real Estate Market in 2025

by Gemma Peterson

May 22, 2025 | Real Estate Taxes, SALT Deduction, Mortgage Interest, 1031 Exchange

The U.S. House of Representatives just passed a major tax reform bill—the One Big Beautiful Bill Act—that could bring significant benefits to real estate professionals, investors, and homeowners. Backed by the National Association of REALTORS® (NAR), this legislation includes several pro-real estate tax provisions that aim to boost the housing market and improve affordability for American families.

What’s in the New Tax Reform Bill for Real Estate?

Here are the key real estate tax wins you should know about:

✅ 1. Bigger Tax Breaks for Independent Contractors and Agents

Qualified Business Income (QBI) Deduction Increased

The QBI deduction rises from 20% to 23%, permanently.
This helps independent contractors and small business owners, which includes over 90% of real estate agents.
A huge win for REALTORS® and small businesses alike.

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✅ 2. SALT Deduction Increased to $40,000

State and Local Tax (SALT) Deduction Expansion

The SALT deduction cap jumps from $10,000 to $40,000 for households earning under $500,000.
It grows by 1% annually for the next 10 years.
Helps offset high state and local taxes—especially important for homeowners in states like California and New York.

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✅ 3. Lower Income Tax Rates Made Permanent

Helping Buyers and Homeowners

Keeps the current lower individual tax rates and ties them to inflation.
This helps Americans keep more of their income—boosting affordability for homebuyers.

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✅ 4. Mortgage Interest Deduction Protected

Homeownership Just Got a Bit Easier

The Mortgage Interest Deduction (MID) remains intact and permanent.
A key tax break that encourages homeownership and supports property values.

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✅ 5. 1031 Like-Kind Exchanges Stay Safe

Great News for Real Estate Investors

Section 1031 exchanges—a crucial tool for deferring taxes on investment property sales—are untouched.
Also preserves business SALT deductions for most real estate professionals.

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Bonus Wins for the Real Estate Market

Low-Income Housing Tax Credit enhanced to support affordable housing.
Child Tax Credit increased to $2,500 through 2028—helps with family housing budgets.
Estate Tax Exemption locked in at $15 million, supporting generational wealth through real estate.
Opportunity Zones renewed to encourage investment in underserved communities.

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What Does This Mean for the Housing Market?

This tax package could stimulate housing demand, support first-time homebuyers, and provide more breathing room for real estate professionals and investors. With popular provisions like expanded tax deductions and the protection of homeownership incentives, experts believe the bill will have a positive ripple effect across the U.S. housing market.

According to a national survey commissioned by NAR:

91% support the mortgage interest deduction
83% back tax breaks for small businesses
92% favor tax-free savings accounts for first-time buyers

What Happens Next?

The bill now heads to the Senate for review. While changes are possible, real estate professionals can feel optimistic. NAR has pledged to keep pushing for policies that promote homeownership, investment, and stronger communities.

“This bill gives real financial relief to everyday Americans while strengthening the housing economy,” says Shannon McGahn, NAR’s Chief Advocacy Officer. “We’ll keep fighting for homeowners and the American Dream.”

Bottom Line:
This 2025 tax reform could bring major benefits to the real estate industry. Whether you’re an agent, investor, homeowner, or first-time buyer, these changes could impact your bottom line—and your ability to build wealth through real estate.