I’ve
seen a lot of legislation in my decades as a commercial real estate broker—but
few come with a name as audacious as the “One Big Beautiful Bill.” It sounds
like something you’d hear shouted over the din of a campaign rally or stitched
onto a souvenir T-shirt. But behind the marketing glitz lies a bill that, if
passed, could reshape the commercial property business—particularly for those
of us who live and work in the golden state of California.
Let’s break it down.
At its core, the bill proposes a return to 100% bonus
depreciation. In plain English: property owners and developers would once again
be able to expense the entire cost of certain building improvements in the year
those costs are incurred. Think HVAC upgrades, lighting retrofits, or a
full-blown tenant improvement package. For owners sitting on aging assets or
brokers like me helping clients reposition their properties, this is a
game-changer. It’s fuel for reinvestment—and it arrives just when many buildings
need a refresh to stay competitive in a post-pandemic world.
But wait, there’s more. The bill also boosts the Qualified
Business Income (QBI) deduction for pass-through entities—including many real
estate partnerships—and raises the cap on the SALT deduction for individuals
earning less than $500,000. For Californians, who have long borne the brunt of
SALT limitations, that’s more than a footnote. It’s meaningful tax relief that
could free up capital for additional investment.
Of course, every rose has its thorn. And this one comes in
the form of Section 899—a “revenge tax” aimed at foreign investors from
countries with so-called discriminatory tax laws. The details are still fuzzy,
but the risk is clear: if foreign capital dries up, so too may some of the
momentum behind major commercial developments, especially in coastal markets.
And then there’s the rollback of green energy incentives.
As someone who’s witnessed the growing appetite for ESG (Environmental, Social,
Governance)-friendly buildings, this move feels like a step backward. Cutting
179D deductions and other sustainability carrots might please certain
constituencies, but it runs the risk of dulling progress just when tenants and
investors are demanding greener spaces.
As of this writing, the bill has passed the House and is
under active consideration in the Senate. With several provisions drawing
bipartisan attention—both supportive and critical—the coming days will
determine whether this sweeping legislation becomes law, gets trimmed down, or
stalls altogether. CRE stakeholders are watching closely.
So, is this bill truly beautiful? That depends on where you
stand. For investors, developers, and brokers who appreciate certainty, tax
relief, and pro-growth measures—it’s attractive. For those relying on foreign
capital or green incentives—it’s a mixed bag.
Like any piece of sweeping legislation, the devil is in the
details. But if you work in commercial real estate—or if you occupy a building,
own one, or hope to invest in one—this bill deserves your attention.
Because love it or hate it, “beautiful” bills don’t come
around every day.
