How the One Big Beautiful Bill Changes Homeownership and Rental Income
- Brainz Magazine
- 4 days ago
- 7 min read
Updated: 10 hours ago
Candace is well-known when it comes to financial wellness for homeownership and rental income. She is the founder of The Income Care Unit™, a financial consultancy specializing in rental income for first-time homebuyers and rentalpreneurs.
Do you feel like tax law keeps changing just when you finally understand it? Like every year, there’s a new rule, new limit, or new phaseout that quietly reshapes your financial plan. You’re not imagining it. The One Big Beautiful Bill Act, signed into law on July 4, 2025, permanently reshaped large parts of the tax landscape that directly affect homeownership and rental income.
Whether you’re buying your first home, converting a property into a rental, managing multiple units, or owning property across borders, this legislation quietly influences how much cash you keep, how much you qualify for, and how efficiently you can grow. In this article, you’ll find a practical breakdown of what the One Big Beautiful Bill means for homebuyers, homeowners, landlords, rentalpreneurs, and global rental owners, and how these changes show up in real financial life.
What is the One Big Beautiful Bill?
The One Big Beautiful Bill Act permanently extends many provisions from the Tax Cuts and Jobs Act while introducing new deductions, expanded credits, and structural changes that affect income, deductions, and long-term planning. While much of the public conversation focused on workers and families, the law also reinforced or modified several rules that directly affect real estate ownership, rental income, and investment strategy.
At its core, the bill locks in lower individual tax rates, preserves a higher standard deduction, adjusts itemized deduction limits, and refines how rental activity is taxed. These changes influence affordability, cash flow, and tax efficiency for anyone tied to property ownership.
Why the OBBB matters for real estate owners
Real estate decisions are rarely just about purchase price. They’re shaped by interest deductibility, income thresholds, depreciation, loss limitations, and long-term exit strategies. The OBBB matters because it permanently sets many of these rules instead of letting them sunset.
By removing uncertainty around tax rates, deductions, and thresholds, the law changes how buyers qualify, how owners plan, and how rental income is evaluated year over year. For some, this creates opportunity, for others, it quietly closes doors that once existed.
Who is affected by the OBBB in real estate?
The impact of the OBBB shows up differently depending on where you sit in the property journey:
Homebuyers planning affordability and mortgage strategy
Homeowners balancing itemized deductions versus the standard deduction
Landlords navigating rental losses, interest limits, and depreciation
Rentalpreneurs treating real estate like a business
Global rental owners coordinating U.S. tax rules with foreign property income
Understanding which category you fall into determines whether the bill works for you or against you.
Signs the OBBB may already be affecting your finances
You may already be feeling the effects if you’ve noticed that rental losses aren’t fully deductible, interest deductions don’t flow the way you expect, or itemizing no longer produces meaningful tax savings. Others notice it through tighter cash flow, higher taxable income despite owning property, or confusion around whether a rental qualifies as a trade or business.
These outcomes aren’t accidental, they're the result of how the OBBB coordinates existing tax rules rather than replacing them.
12 ways the One Big Beautiful Bill affects homebuyers and rental owners
1. Mortgage interest limits
The One Big Beautiful Bill permanently maintains the $750,000 cap on mortgage interest deductions for loans taken out after December 15, 2017. This removes uncertainty for homebuyers who were waiting to see whether the higher $1 million cap would return. While this cap does not prevent borrowing, it directly affects how much interest can reduce taxable income. Buyers in higher-priced markets may feel this impact more acutely. From a planning perspective, this makes loan structure and down payment strategy more important than ever.
Understanding how much of your interest is actually deductible can change affordability calculations. This permanence encourages long-term planning rather than speculative waiting.
2. PMI deduction returns
Mortgage insurance premiums become deductible again beginning after 2025, treating PMI similarly to mortgage interest. This is particularly meaningful for first-time buyers who rely on lower down payment programs. PMI has often been viewed as a “lost cost,” but deductibility helps soften its financial impact. While income phaseouts still apply, this change improves after-tax affordability for many households. Buyers using FHA or conventional low-down-payment loans stand to benefit the most. This adjustment supports access to homeownership without requiring perfect financial positioning. It also rewards strategic timing when purchasing or refinancing.
3. Standard deduction shift
The permanently higher standard deduction reshapes how homeowners benefit from tax deductions. Many homeowners no longer itemize, even with mortgage interest and property taxes. As a result, owning a home does not automatically translate into tax savings the way it once did. This shift often surprises new homeowners who expected deductions to lower their tax bill. For some, the benefit of homeownership is now more about stability and equity than immediate tax relief. This makes tax planning more nuanced rather than automatic. Knowing whether itemizing actually benefits you is now essential.
4. SALT cap changes
The OBBB temporarily increases the SALT deduction cap through 2029, with income-based phaseouts for higher earners. While this offers relief for some homeowners, it is not universal. The cap reverts to $10,000 in 2030, creating a planning window rather than a permanent fix. Many homeowners assume this change applies equally to all property owners, which is not the case. High-income earners may see limited benefit due to phaseouts. This temporary expansion encourages proactive timing decisions. Waiting too long may mean missing the window entirely.
5. Rental property taxes
Property taxes paid on rental properties remain fully deductible as business expenses. Unlike personal residences, rental property taxes are not subject to the SALT limitation. This preserves one of the strongest tax advantages of rental ownership. For homeowners converting properties into rentals, this distinction becomes especially important. It often improves cash flow and reduces taxable rental income. Many owners overlook this benefit when comparing personal versus rental property taxation. Proper classification ensures this deduction is fully preserved.
6. Passive loss limits
The OBBB does not eliminate passive activity loss limitations for rental properties. Rental losses may still be suspended if income exceeds certain thresholds. These losses are not lost but carried forward until they can be used. Many landlords mistakenly believe losses should offset all income immediately. Understanding when losses can be used prevents frustration and misplanning. Active participation and real estate professional status remain key factors. Loss strategy is just as important as income generation.
7. Interest deduction rules
Business interest deductions for rental properties follow ordering rules under Section 163(j). This determines how much interest can be deducted in a given year. For leveraged properties, this can delay or limit deductions. The OBBB refined how these rules interact with passive loss limitations. This affects owners with high debt levels or portfolio growth strategies. Interest deductibility directly impacts cash flow projections. Proper structuring can prevent surprises at tax time. Ignoring these rules often leads to overstated expectations.
8. Excess loss restrictions
Excess business loss limitations are now permanent under the OBBB. Large rental losses may be capped annually and converted into net operating losses. This primarily affects higher-income rentalpreneurs and investors. While losses still provide value, they may not offset income immediately. Planning for timing becomes critical. Many investors discover this rule only after filing. Understanding this limitation helps align expectations with reality. Strategic pacing of growth can mitigate negative effects.
9. QBI eligibility rules
Rental income may qualify for the Qualified Business Income deduction if it rises to the level of a trade or business. This requires regular, continuous, and substantial activity. Not all rentals qualify automatically. Documentation and operational consistency matter. The OBBB preserved QBI but tightened how eligibility is evaluated. For qualifying owners, this deduction can significantly reduce taxable income. For others, assumptions lead to disappointment. Proper classification and planning are essential.
10. Energy credit phaseouts
Residential clean energy credits begin phasing out after 2025. This shortens the window for homeowners and landlords planning upgrades. Many credits disappear sooner than expected. Timing improvements become more strategic than aesthetic. Owners must act intentionally to capture remaining benefits. Waiting may eliminate eligibility entirely. These credits can materially reduce upgrade costs. Planning ahead protects both tax savings and property value.
11. Inheritance and basis planning
The One Big Beautiful Bill preserves stepped-up basis rules for inherited real estate, making inheritance planning a critical part of long-term ownership strategy. When property passes to heirs, the tax basis is generally adjusted to fair market value, which can significantly reduce or eliminate capital gains if the property is later sold. This is especially impactful for rental properties that have been held for decades and carry substantial appreciation. While federal estate tax thresholds remain high, income tax exposure at transfer is often misunderstood and underestimated. For families with property in multiple countries, U.S. basis rules, foreign inheritance laws, and reporting obligations can collide in costly ways. Without intentional planning, heirs may inherit property along with unexpected tax consequences. Coordinating inheritance, entity structure, and timing allows real estate to function as a legacy-building asset rather than a financial burden.
12. Global ownership impact
Global rental owners face layered complexity under the OBBB. Foreign income exclusions, MAGI calculations, and rental classification interact with U.S. thresholds. These interactions can trigger unexpected phaseouts. Income earned abroad still affects U.S. tax outcomes. Currency, depreciation, and reporting rules compound complexity. Many owners underestimate how interconnected these rules are. Coordinated planning is essential to avoid overpaying tax. Global ownership rewards strategy, not assumptions.
Start planning with clarity, not assumptions
Navigating tax changes like the One Big Beautiful Bill can feel overwhelming, especially when real estate, rental income, and cross-border rules are involved. But you don’t have to figure it out alone. Whether you’re buying your first home, managing rental properties, or owning real estate in the U.S. and abroad, understanding how today’s tax rules apply to you can change the entire trajectory of your financial future. If you’re ready to understand how this affects you, book a consultation to review your tax situation. I’m here to help you move past uncertainty, understand how the rules apply to you, and build a tax strategy that supports your long-term real estate goals.
Read more from Candace Greene
Candace Greene, Rentalpreneur Financial Consultant
Candace is a trusted voice in financial wellness for homeownership and rental income. She is the founder of The Income Care Unit™, a financial consultancy focused on helping first-time homebuyers and rentalpreneurs stabilize credit, optimize cashflow, and build financially sound rental portfolios. Through an integrated approach to credit, bookkeeping, and taxes, Candace helps clients strengthen their financial foundation before, during, and after property acquisition.
