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93 Worth Street, #802 (Corcoran) | https://www.cityrealty.com/nyc/tribeca/93-worth-street/52438/802/dnrfeqmwF
It's tax season again, and the first time that taxpayers will be filing since the passage of President Trump's One Big Beautiful Bill Act (OBBBA). Since few people have read the bill, which is close to 1,000 pages long, this article breaks down what New York City’s homeowners, investors, and developers will gain and lose in light of OBBBA’s changes.
In this article:
New and expanded tax breaks for middle-income homeowners
The SALT cap deduction hasn’t been lifted, but it has increased. While it is still capped, the federal deduction for state and local taxes, including property taxes, has risen from $10,000 to $40,000 through 2029. Still, not all homeowners will benefit. The full benefit of the higher cap is available only to filers whose modified adjusted gross income (MAGI) does not exceed $500,000 for single and joint filers ($250,000 for married-filing-separately filers). Above these thresholds, the $40,000 cap is reduced. For joint filers, this means that every dollar of income over $500,000 will be reduced by 30 cents, though never below the established $10,000 floor.
New and expanded tax breaks for small landlords and investors
While higher income earners may not be able to take advantage of the SALT cap changes, there are plenty of other OBBBA changes that will work to the advantage of landlords and real estate investors.
The 20% pass-through deduction on rental incomes from LLCs and partnerships that was set to expire this year has been permanently renewed. This means that local landlords will continue to enjoy a significant tax break on income earned from their rentals.
In addition, capital-gains thresholds have been adjusted. As a result, in the future, anyone who sells a property and realizes a gain will be able to make more before they are pushed into the top 20% tax bracket—this should directly translate into a lower tax bill on profits from the sale of investments. There is also good news for anyone inheriting luxury properties: under OBBBA, the estate tax exemption has increased to $15 million for individuals and $30 million for married filers.
Another welcome change under OBBBA is related to depreciation—landlords can now deduct the full cost of certain property improvements (e.g., appliances or landscaping) in the first year rather than spreading the cost over a depreciation schedule that can range from 5 to 15 years, depending on the asset type. To take full advantage of this, landlords will typically need to carry out a cost segregation study to identify which assets qualify for immediate deduction, though some standalone purchases like a single appliance may not require one. While the process may prove onerous for some small landlords, the permanent restoration of the 100% bonus depreciation is another significant tax break for anyone who owns and rents units.
There is also good news on the horizon for investors. Under OBBBA, investments made in a qualified Opportunity Zone (i.e., “an economically distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment”) after December 31, 2026, will enjoy a 5-year capital gains tax deferral, a 10% basis step-up after five years, and tax-free appreciation on investments held for 10 or more years. While these enhanced benefits won’t take effect until 2027, investors who are planning ahead will want to plan any Opportunity Zone investments accordingly in 2026.
New and expanded tax breaks for developers
Real estate developers will also benefit from several of OBBBA’s changes to the tax law. The ability of developers to deduct 100% of qualifying improvements immediately will no doubt be welcome as it represents a major tax shield for new construction and renovations. Developers also stand to benefit from the Opportunity Zone extension. For family-owned businesses, changes to estate taxes will also be welcome since it will now become possible to transfer a development company across generations with a lower tax penalty.
Another notable tax break for developers introduced under OBBBA is the expansion of tax credits related to the construction of affordable housing units. The law increases the amount of Low-Income Housing Tax Credits (LIHTC) available and lowers the bond financing threshold required to qualify for certain credits. These changes make it easier to finance affordable housing developments.
Tax changes that will negatively impact local property owners
While many OBBBA-related tax changes will benefit homeowners, landlords, investors, and developers, there is one area where taxpayers stand to lose—tax deductions related to clean energy. The good news is that the changes aren’t immediate. Under OBBBA, wind and solar energy projects that start after July 4, 2026, but before the end of 2027, must be placed in service by the 2027 deadline to retain ITC and PTC benefits. In New York City, where coops and condos are racing to meet the City's new Local Law 97 requirements, which require most buildings over 25,000 square feet to meet strict greenhouse gas emissions limits, this change simply means that now is the time to start and put any proposed solar project into service.
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93 Worth Street, #802 (Corcoran Group)
Would you like to tour any of these properties?
Just complete the info below.
Or call us at (212) 755-5544
Would you like to tour any of these properties?
Contributing Writer
Cait Etherington
Cait Etherington has over twenty years of experience working as a journalist and communications consultant. Her articles and reviews have been published in newspapers and magazines across the United States and internationally. An experienced financial writer, Cait is committed to exposing the human side of stories about contemporary business, banking and workplace relations. She also enjoys writing about trends, lifestyles and real estate in New York City where she lives with her family in a cozy apartment on the twentieth floor of a Manhattan high rise.
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