The Big Beautiful Tax Advantages in CRE: Empowering High-Income Investors & Developers

By Adam Zweibel, Hudson Atlantic Realty

As we approach 2026, it’s not surprising that the Northeast commercial real estate (CRE) landscape—from bustling urban centers in New York and New Jersey to revitalizing markets in Pennsylvania and beyond—is buzzing with renewed optimism, thanks to a suite of tax incentives revitalized by the One Big Beautiful Bill Act (OBBBA) of 2025. For high-income individuals and developers, these “big beautiful” advantages offer powerful tools to offset income, defer taxes, and accelerate wealth building. From the reinstatement of 100% bonus depreciation to enhanced Opportunity Zones, CRE investments are more attractive than ever, enabling savvy players to minimize tax liabilities while fueling economic growth in underserved areas.

At the forefront is the triumphant return of 100% bonus depreciation, made permanent under OBBBA for qualified property placed in service after January 19, 2025. This provision allows high-income earners to immediately deduct the full cost of eligible assets, such as building improvements, equipment, and certain interior fixtures in commercial properties.

For instance, a physician or executive earning over $500,000 annually could purchase a multifamily building in New Jersey, conduct a cost segregation study to identify depreciable components, and offset a substantial portion of their ordinary income in the acquisition year. Unlike standard depreciation over 39 years for non-residential real estate, bonus depreciation supercharges cash flow by front-loading deductions. Paired with Section 179 expensing—now inflated to $2.5 million with a $4 million phase-out threshold—this creates a tax shield that can reduce effective rates dramatically. Developers benefit too, as it lowers the after-tax cost of new constructions or renovations in sectors like industrial warehouses or mixed-use projects, making ambitious ventures more feasible amid rising interest rates.

Opportunity Zones (OZs), another cornerstone from the 2017 Tax Cuts and Jobs Act, have been supercharged and made permanent by OBBBA, with current designations sunsetting at the end of 2026 and states able to redesignate every 10 years. These designated lowincome census tracts—now with expanded rural incentives and a lowered income threshold to 70% of median family income—offer developers and investors enhanced benefits. Key perks include temporary deferral of capital gains taxes on amounts reinvested into Qualified Opportunity Funds (QOFs) until 2026 or later, a 10% to 30% basis step-up for holdings of five to seven years (enhanced for rural investments), and complete exclusion of post-investment gains after a 10-year hold. For developers, this translates to subsidized capital for revitalizing retail centers, multifamily housing, or medical properties in OZs across the Northeast, such as urban pockets in Newark or Elizabeth. High-income individuals can roll over gains from stock sales into OZ projects, offsetting up to millions in taxes while supporting community development.

These incentives are poised to create surging demand for Northeast CRE by attracting a wave of high-income buyers and developers seeking tax-optimized returns. With lower effective costs and deferred liabilities, more capital will flow into acquisitions and developments, intensifying competition for prime properties in high-density markets like New York City and New Jersey suburbs. This could drive up property values, spur new multifamily and mixed-use projects in OZs, and accelerate rural revitalization in upstate New York or Pennsylvania, ultimately boosting inventory turnover and economic vitality in the region.

Beyond these headliners, CRE offers additional tax gems for high earners. The permanent 20% Qualified Business Income (QBI) deduction for pass-through entities like LLCs reduces taxable income on rental profits. Interest expense deductions remain robust, allowing leverage without full tax hits. Non-mortgage expenses—property taxes, management fees, and repairs—are fully deductible against rental income, often creating passive losses that real estate professionals can use to offset W-2 earnings. And don’t overlook 1031 like-kind exchanges, which defer gains indefinitely by swapping properties, preserving capital for reinvestment.

Looking ahead to 2026, these incentives position Northeast CRE as a strategic haven for tax optimization. High-income professionals can acquire income-producing assets to slash brackets, while developers leverage OZs for transformative projects. However, success demands expert guidance—consult tax advisors to navigate rules like basis adjustments and holding periods. As the Northeast market rebounds, embracing these advantages isn’t just smart; it’s essential for building lasting wealth.

Adam Zweibel, president of Hudson Atlantic Realty, is a seasoned CRE expert consistently ranks among the top performing commercial real estate investment brokers with a specialty in New Jersey multifamily sales. Over the last 13 years, Adam has closed over $2 billion in sales transactions and 10,000+ apartment units.

Disclaimer: This article is for informational purposes only and does not constitute tax, legal, or accounting advice. The author is not a licensed tax attorney or accountant.

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