What the One Big Beautiful Bill Act Means for Commercial Real Estate Investors

Written by September 26, 2025

On July 4, 2025, the “One Big Beautiful Bill Act” was signed into law, bringing a range of economic policy changes, including some that may affect commercial real estate investors.1

What’s Staying The Same

Notably, section 1031 remains largely unchanged. A 1031 exchange will still allow for tax deferral on the sale of real property by reinvesting the proceeds into new property. With the preservation of section 1031, we anticipate that, as real estate transaction volumes grow, so too will the demand for DST investments as replacement property.

Section 721, which allows partners to contribute property to a partnership in exchange for operating units in the partnership, also remains unchanged. This is critical for potential exchangers who are considering DSTs that plan to undergo a 721 UPREIT transaction.

What’s Changing

The Qualified Opportunity Zone (QOZ) program that was originally introduced as part of the Tax and Jobs Act (2017) is being extended indefinitely. However, while the original rules remain in effect for now, several changes will be implemented beginning January 1, 2027, including:

• QOZ maps will be redrawn. New zones can be designated every 10 years
• The basis step-up provision is back. Under the original rules, investors’ basis would step-up by 10% after five years and 15% after seven years from when the program was instituted. The new legislation retains the 10% step-up after a 5-year hold
• New step-up for rural investments. A new incentive has been introduced: a 30% basis step-up for investments held at least 5 years in Qualified Rural Opportunity Zones (QROZs)
• Rolling five-year hold period. The required five-year hold period to receive the 10% step-up will now apply on a rolling basis
• What qualifies as a Qualified Rural Opportunity Zone. QROZs will be defined as areas outside cities or towns with populations over 50,000, and not adjacent to urbanized areas

Final Thoughts

We view this bill as an overall win for commercial real estate investors. Preserving sections 1031 and 721 is crucial, as they will continue to be powerful tools for investors seeking to defer taxes related to the sale of real property.

Importantly, indefinitely extending the opportunity zone program provides necessary clarity for the future of this powerful strategy. It will enable both fund sponsors and prospective investors to plan with greater confidence over a long time horizon. The addition of the QROZ 30% step-up could also prove beneficial.

If you have questions about how this legislation might impact your portfolio, upcoming exchange, or QOZ investment, we’re here to help. Talk to one of our advisors today.

1. https://www.congress.gov/bill/119th-congress/house-bill/1/text