Top 10 Real Estate Trends | Federal Tax Changes Could Shift Real Estate Strategy in Seattle-Bellevue
Top 10 Real Estate Trends Series: 3 of 10
The “One Big Beautiful Bill,” signed into law on July 4, 2025, introduces a series of tax policy changes that could have notable implications for both residential and commercial real estate in the Seattle-Bellevue metropolitan area. While the legislation ends a prolonged political deadlock, its most immediate impacts may be felt in the form of new tax incentives and deductions aimed at property owners, developers, and investors.
SALT Deduction Expansion in High-Tax States
One of the more significant provisions is the increase in the state and local tax (SALT) deduction cap—from $10,000 to $40,000—for households earning under $500,000 in adjusted gross income, with a planned 1% annual increase through 2029.
For homeowners in Washington State—where property taxes are relatively high despite the lack of state income tax—this change may offer some financial relief. The increased deduction could enhance cash flow for higher-income households, particularly in areas like King and Snohomish Counties, and may encourage greater mobility among potential home sellers.
100% Bonus Depreciation & Section 179 Expensing
The bill reinstates 100% bonus depreciation for qualified property improvements, such as roofing, appliances, and HVAC systems, made between 2025 and 2029. Additionally, it expands Section 179 expensing rules, allowing for immediate write-offs of certain renovation and capital expenditures.
These provisions may incentivize property owners and developers to initiate or accelerate value-add projects. In the commercial sector, this could lead to renewed investment in older buildings or infrastructure and potentially support construction activity tied to industrial developments like data centers and manufacturing facilities.
Permanent QBI Deduction for Pass-Through Entities
Another notable change is the permanent extension and slight expansion of the 20% Qualified Business Income (QBI) deduction for pass-through entities, including LLCs, S-Corps, partnerships, and many rental property businesses.
For landlords and real estate investors operating in the Puget Sound area, this could improve after-tax income and returns on investment. It may also encourage those previously hesitant to enter or expand within the rental property market to revisit their plans.
Mortgage Interest and Insurance Deductions
The bill maintains the mortgage interest deduction on up to $750,000 of mortgage debt and reinstates the deduction for mortgage insurance premiums. These measures provide ongoing tax benefits for homebuyers and homeowners, which could help preserve some level of housing affordability amid persistently high home prices in the region.
1031 Exchanges and Opportunity Zones
The legislation retains existing rules around 1031 like-kind exchanges, a key strategy for deferring capital gains taxes on property sales. It also preserves Opportunity Zone incentives, with some adjustments aimed at stimulating long-term development.
While the Seattle-Bellevue metro area has fewer designated Opportunity Zones than other parts of the country, surrounding areas could see increased investor attention under the revised terms.
Higher Estate and Gift Tax Threshold
The estate and gift tax exemption has been increased to $15 million per individual. For families with significant real estate holdings, this may reduce the need for asset liquidation during generational transfers and could encourage longer-term planning or early gifting of property assets.
Considerations and Limitations
Several limitations are worth noting:
Income limits apply: SALT cap increase only affects households under $500K AGI.
Temporary boosts: Bonus depreciation and SALT expansion are set to phase out by 2029/2030.
Macro risks: Increased federal deficits may drive interest rates higher in the future, which could dampen real-estate demand.
The final take: For investors, developers, and high-earning property owners in the Seattle–Bellevue region, the tax provisions in this legislation may improve the economics of owning and upgrading property over the next several years. However, the temporary nature of several incentives and the broader fiscal implications of the bill suggest that a measured, strategic approach will be necessary.
The legislation also brings a degree of clarity to the regulatory environment following months of uncertainty. As the second half of 2025 unfolds, market participants who had delayed decisions due to policy ambiguity may begin to reengage, potentially leading to increased activity in both residential and commercial real estate sectors.
Information was obtained from sources deemed reliable but cannot be guaranteed. Readers are encouraged to perform independent due diligence prior to relying on information contained herein.
Sources include:
Key insight: SALT deduction cap raises from $10K to $40K (2025–2029) for incomes under $500K, with a 1% annual increase: Bipartisan Policy Center | Fidelity | H&R Block | Kiplinger
Key insight: Benefit to homeowners in high-tax, no-income-tax states (WA); Mortgage interest deduction becomes permanent (up to $750K); Temporary expansion of low-income housing credits (LIHTC): Kiplinger
Key insight: Estate & gift tax exemption raised to $15M individual / $30M couple; Standard deduction doubled and made permanent; various other homeowner benefits | The Week
Key insight: Tax relief weighed against increased national debt & spending cuts | MoneyWeek
Key insight: Political branding shifts and public skepticism | The Washington Post