OBBB Act Prompts Big Beautiful Interest in Alternatives

Ever since the One Big Beau­ti­ful Bill Act (OBBB) was signed into law on July 4, 2025, there has been a surge in ques­tions regard­ing how OBBB would affect alter­na­tives. The inter­est and ques­tions come from across the coun­try in blue and red states and alter­na­tive real estate invest­ments specif­i­cal­ly designed to take advan­tage of the favor­able tax reforms and shift­ing mar­ket dynam­ics. 

July 20, 2025

By Al DiNi­co­la, AIF®
1031 Tax Deferred Exchange Spe­cial­ists & DST Advi­sor
NAMCOA® — Naples Asset Man­age­ment Com­pa­ny®, LLC
Secu­ri­ties offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC

We will attempt to pro­vide a few advan­tages with sev­er­al not­ed alter­na­tives (but not all alter­na­tives).  We will pro­vide an overview in this arti­cle and con­tin­ue with fol­low-up arti­cles that will dive into a lit­tle more detail.

Here are a few items pro­vi­sions of what the Bill does for real estate investors.

• Inter­est deduc­tion rules have revert­ed to a more gen­er­ous EDITDA- based cal­cu­la­tions mak­ing debt inter­est deductible.
• The Oppor­tu­ni­ty Zone pro­gram is now per­ma­nent with a rolling 10-year des­ig­na­tions start­ing in 2026 and enhanc­ing incen­tive.  Changes to take effect in 2027 with a spe­cial Rur­al OZ incen­tive.
• The 20% qual­i­fied busi­ness income deduc­tion (199A) and REIT div­i­dend tax ben­e­fits remain per­ma­nent. 
• §1031 Tax Deferred Exchanges stay intact for defer­ring cap­i­tal gains via like-kind exchanges.
• Bonus depre­ci­a­tion and sec­tion 179 expens­ing are extend­ed and enhanced- help­ful for rede­vel­op­ment, ren­o­va­tion and equip­ment invest­ments.

These changes indi­vid­u­al­ly and col­lec­tive­ly bol­ster tax effi­cien­cies for investors, espe­cial­ly in niche or alter­na­tive real estate assets.

Investor Inter­est in alter­na­tives asset class­es con­tin­ue to rise. Alter­na­tive invest­ments are not for all investors.  Many alter­na­tives are lim­it­ed to accred­it­ed investors. Pri­vate cred­it linked to real estate has increased as banks pull back from lend­ing on com­mer­cial real estate.  This is due to the tighter cred­it con­di­tions and ris­ing inter­est rates. There are niche real estate asset class­es such as med­ical office build­ings, senior hous­ing, stu­dent hous­ing, cold stor­age, self-stor­age and last mile logis­tics.  Many of these may be offered as indi­vid­ual offer­ings or secu­ri­tized in a Delaware Statu­to­ry Trust (DST). Data Cen­ters and life sci­ence infra­struc­ture con­tin­ue to become avail­able.  There has been a lot of report­ing on the need for data cen­ters dri­ven by the Arti­fi­cial Intel­li­gence (AI) demand and dig­i­tal growth. Oppor­tu­ni­ty cones invest­ments made per­ma­nent and expand­ed rur­al incen­tives are in place to take place in 2027. Cur­rent oppor­tu­ni­ty Zones will be reduced by over 20% (esti­mat­ed) with many urban zones to be elim­i­nat­ed.  This may be based on the suc­cess in cer­tain urban areas.  We will expand in future arti­cles on strate­gies to use cur­rent iden­ti­fied zones.  Investors are also con­tin­u­ing to ask ques­tions on how to com­bine strate­gies.  There have been requests on how to com­bine Sec­tion 121 (per­son­al res­i­dence deduc­tion) and §1031 exchanges.  How and why to com­bine Sec­tion 121 with oppor­tu­ni­ty zones? Can you use of Oil and Gas strate­gies in oppor­tu­ni­ty zone invest­ments (and oth­ers) and how does that ben­e­fit investors?

Why is the inter­est in Alter­na­tive Real Estate climb­ing.

There are tax tail­winds that will enhance depre­ci­a­tion, inter­est deductibil­i­ty, per­ma­nent pass-through and REIT perks.  There is an indi­ca­tion of mar­ket dis­lo­ca­tion with tra­di­tion­al com­mer­cial real estate under pres­sure that may open the room for niche seg­ments.  There con­tin­ues to be a demand and yield dri­vers.  Pri­vate cred­it and spe­cial­ized real estate may offer high­er yield or struc­tur­al advan­tages. Insti­tu­tion­al allo­ca­tors are increas­ing­ly tar­get­ing a less crowd­ed, high val­ue sec­tor.

With the tax enhance­ments from the One Big Beau­ti­ful Bill Act, espe­cial­ly for debt-heavy and long-hori­zon real estate strate­gies, com­bined with evolv­ing mar­ket con­di­tions, investor appetite for alter­na­tive real estate assets—and pri­vate cred­it tied to real estate—is accel­er­at­ing. These struc­tur­al shifts cre­ate com­pelling oppor­tu­ni­ties but require investor sophis­ti­ca­tion and patience.

We will attempt to take a shal­low dive into each of the requests for addi­tion­al infor­ma­tion on these top­ics and oth­ers as inter­est and ques­tion con­tin­ue.  We are not offer­ing tax advice and are not CPAs.  We always sug­gest investors seek tax con­sul­ta­tion.  We are always avail­able for a com­pli­men­ta­ry con­ver­sa­tion based on your ques­tions on the OBBB or oth­er top­ics includ­ing 1031 exchange, DSTs, and Oppor­tu­ni­ty Zones.

NAMCOA® is a SEC reg­is­tered invest­ment advi­so­ry firm that pro­vides com­pre­hen­sive port­fo­lio man­age­ment, finan­cial plan­ning, and fidu­cia­ry deci­sion-mak­ing ser­vices on behalf of retire­ment plan spon­sors. Our Dif­fer­ence is sum­ma­rized by our fidu­cia­ry approach which enables us to bet­ter meet port­fo­lio and retire­ment plan objec­tives, result­ing in stronger risk adjust­ed returns for investors and peace of mind for Clients. We also focus on alter­na­tive real estate invest­ment. Many real estate investors are seek­ing tax deferred solu­tions uti­liz­ing §1031 exchanges or Oppor­tu­ni­ty Zones.

DSTs are not for all investors.  The acqui­si­tion of a DST is for accred­it­ed investors only.  Con­tact your invest­ment advis­er for addi­tion­al details on how a DST may be a solu­tion to your 1031 Exchange and suit­ed for your invest­ment future. For more infor­ma­tion on how to prop­er­ly set up an IRC 1031Tax Deferred Exchange or if you are an accred­it­ed investor and would like addi­tion­al infor­ma­tion on a DST con­tact Al DiNi­co­la at 239–691-8098 or email adinicola@namcoa.com.

This is not an offer to pur­chase or solic­i­ta­tion to pur­chase any secu­ri­ty, as such be made only through an offer­ing mem­o­ran­dum or prospec­tus.  Invest­ing in secu­ri­ties, real estate, or any invest­ment, whether pub­lic or pri­vate, involves risk, includ­ing but not lim­it­ed to the poten­tial of los­ing some or all of your invest­ment dol­lars when you invest in secu­ri­ties. You should review any planned finan­cial trans­ac­tions that may have tax or legal impli­ca­tions with your per­son­al tax or legal advi­sor.   NAMCOA, LLC is a Reg­is­tered Invest­ment Advi­sor, reg­u­lat­ed by SEC (Secu­ri­ties and Exchange Com­mis­sion). Our cor­po­rate office is locat­ed at 999 Van­der­bilt Beach Road, Suite 200, Naples Flori­da 34108. Secu­ri­ties Offered through MSC-BD, LLC, Mem­ber of FINRA/SIPC. 5 Cen­ter­pointe Dri­ve, Ste. 400 Lake Oswego, OR, 97035MSC-BD, LLC and NAMCOA are inde­pen­dent­ly owned and are not affil­i­at­ed.

Thank you.