How the Trump Capital Gains Tax Plan Could Reshape Real Estate Investing

Are you prepared for the biggest tax shift real estate investors have seen in years?

If you invest in real estate or plan to, the proposed changes to the Trump capital gains tax could open a rare window of opportunity from 2025 through 2029.

These changes could allow investors to keep more of their profits, write off property costs faster, and maximize long-term returns. But like most tax laws, the details matter—and most investors aren’t prepared.

👉 Don’t want to read the full breakdown? Watch the video now for a simplified overview of how this tax proposal could boost your real estate returns.

Let’s break down what’s proposed, how it compares to past laws, and what actions you should consider taking today.

What Is the Trump Capital Gains Tax Plan?

The proposed Trump tax plan—part of a broader legislative effort—does not drastically change long-term capital gains rates. Instead, it focuses on strategic adjustments that create a more favorable tax environment for real estate investors and high-income earners. This includes:

• Preserving the 0%, 15%, and 20% long-term capital gains tax brackets

• Raising the income thresholds that determine who qualifies for lower tax rates

• Reintroducing 100% bonus depreciation for qualified property purchases

• Expanding Opportunity Zones and improving tax treatment of value-add investments

In short, the core capital gains rate stays intact, but the rules around when and how gains are taxed shift to favor investors with large, long-term holdings.

Capital Gains Basics Before the Trump Administration

To understand the impact, you need to know how the capital gains tax worked before.

Long-term capital gains

Long-term capital gains (assets held over a year) were taxed at lower rates than ordinary income, typically at 0%, 15%, or 20%, depending on your income level.

Short-term capital gains

Short-term capital gains were taxed at your ordinary income rate, which could be as high as 37%.

Net Investment Income Tax (NIIT)

In 2013, a 3.8% Net Investment Income Tax (NIIT) was added for high earners, making the effective top capital gains tax rate nearly 23.8% for many investors.

The Trump-era tax reforms, primarily through the Tax Cuts and Jobs Act (TCJA) of 2017, didn’t eliminate this structure, but they did adjust the thresholds for who pays which rate and simplified other related deductions.

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How 100% Bonus Depreciation Changes the Game

The real headline-grabber is the return of 100% bonus depreciation. This allows investors to deduct the entire cost of qualified property in the year it’s placed in service, rather than over 27.5 or 39 years.

If you’ve done a cost segregation study, you know this means you can write off 25–35% of the property’s purchase price in year one.

Related: What is Cost Segregation? A Real Estate Investor’s Guide

For example:
Let’s say you invest $200,000 in a mobile home park syndication. With bonus depreciation and cost segregation, you may generate $60,000 in paper losses that same year.

If you’re in the 37% tax bracket, that’s a $22,000 tax savings—an 11% return in tax benefits alone.

Adjusted Income Thresholds Mean More Investors Pay Less

The tax plan raises the income thresholds that determine which capital gains tax rate applies. That means more middle- and upper-middle-income investors can sell appreciated assets and still pay the 15% rate instead of 20%.

These thresholds will adjust slowly for inflation, and while that creates some complexity, it also gives investors more breathing room before jumping into higher brackets.

Section 179 Deduction Expanded for Real Estate Improvements

In addition to bonus depreciation, the Section 179 deduction is getting a boost. This allows immediate expensing of certain property improvements.

The deduction limit would rise from $1.16 million to $1.29 million, letting you write off things like electrical upgrades, landscaping, or clubhouse renovations right away.

For investors working on value-add projects—think RV parks, mobile home communities, or commercial buildings—this could result in massive upfront tax savings.

Opportunity Zones 2.0: A Second Wave of Tax-Free Growth

The proposal includes a new wave of Opportunity Zones, scheduled to run from 2027 through 2033. These allow investors to defer capital gains by reinvesting them in designated areas, and potentially eliminate taxes on appreciation if held for 10 years.

Let’s break it down:
You sell stocks and owe tax on a $300,000 capital gain. Instead of paying $71,400 in tax (at a 23.8% combined rate), you reinvest that $300,000 into a qualified Opportunity Zone fund. If that investment grows to $648,000 over 10 years, you could avoid taxes on the $348,000 of appreciation.

Preserving the 37% Top Income Rate Helps Maximize Deductions

One overlooked part of the Trump tax discussion is the preservation of the 37% top marginal income rate. Without the proposed extension, it would revert to 39.6%, increasing tax burdens for high earners.

Why does this matter?
Because when you use strategies like bonus depreciation, every dollar in deductions is more valuable at a higher tax rate. Keeping the rate at 37% still allows for significant tax optimization, especially for real estate investors using pass-through entities.

Enhancing the Qualified Business Income (QBI) Deduction (Section 199A)

The plan proposes increasing the QBI deduction from 20% to 23%, and making it permanent. This deduction applies to many LLCs, partnerships, and pass-through real estate entities, reducing taxable income on qualified earnings.

An investor earning $100,000 in qualified real estate income would save an additional $1,100 per year under the proposed change.

SALT Deduction Cap Increase

High earners in states like California and New York could benefit from the proposed SALT deduction cap increase. The cap would rise from $10,000 to $40,000 for households with income under $500,000.

That’s a big shift. It won’t impact everyone, but for those affected, it could free up thousands in cash to reinvest.

Excess Business Loss Limits Made Permanent—Plan Accordingly

Currently, there’s a cap (around $289,000) on how much you can deduct in business losses in a single year. The Trump plan would make this limitation permanent, meaning large real estate losses might need to be carried forward.

Instead of making one large investment, consider spreading your capital across multiple deals over several years to ensure you can use all the available tax benefits.

Economic and Policy Implications Beyond Real Estate

From an economic standpoint, these tax proposals aim to encourage long-term investment, support economic growth, and increase capital market activity. But critics argue that the benefits heavily favor high-net-worth individuals and could widen income inequality.

Still, for active investors, the key takeaway is this: tax policy is a tool—and understanding how to use it gives you an edge.

Looking Ahead: What Should Real Estate Investors Do Now?

Even though the Trump capital gains tax plan is still a proposal, savvy investors should start preparing. That means:

• Talking to a CPA or tax strategist now to assess your exposure

• Mapping out your capital gains timeline to know when to sell or reinvest

• Building relationships with real estate operators or syndicators

• Exploring Opportunity Zone fund managers ahead of the 2027 launch

Because once this window opens in 2025, the best-prepared investors will already be positioned to take advantage.

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