If you’re a multifamily investor, or thinking about becoming one, there’s a powerful shift in your favor you need to understand: the current U.S. tax code. While many aspects of tax reform have evolved since the original Tax Cuts and Jobs Act of 2017, the spirit of that law remains very much alive. And in 2025, smart investors are still reaping the benefits.

Now, before I dive in, let me be crystal clear: always consult your CPA or a seasoned syndication attorney before making tax-related decisions. The tax code is complex and subject to change. But from a strategic investor’s perspective, here are two major areas where the law has created massive opportunity for those investing in commercial multifamily real estate.

What Tax Changes Benefit Multifamily Investors?

1. Lower Taxes Through Pass Through Deductions

For most multifamily operators, especially those structured as LLCs, partnerships, or S-Corps, the pass through deduction (Section 199A) remains one of the most investor friendly benefits on the books.

Here’s what it means: You may be eligible to deduct up to 20% of your qualified business income (QBI) on your federal tax return.

Let’s break that down:

• Qualified Business Income generally includes rental income from real estate activities where there is material participation.

• The deduction does not apply to capital gains, dividends, or interest.

• High-income earners may face limitations based on income levels and W-2 wages paid.

So, if your multifamily operation produces $200,000 in qualified income, you could deduct up to $40,000 before even touching other deductions. That’s a real, bottom-line benefit that boosts your cash flow and keeps more money in your pocket.

And for those operating inside a C-Corp structure, the corporate tax rate is still a flat 21% as of 2025—down from 35% pre-2017. For some investors running larger operations or syndications, that remains a powerful lever.

Bottom line: When structured right, multifamily ownership is one of the most tax-advantaged investment vehicles in the country.

2. Bonus Depreciation and Immediate Expensing

One of the best tools in the investor toolbox is depreciation. But under the tax reform rules, you don’t just have to depreciate improvements over 27.5 or 39 years. You may be able to accelerate deductions through bonus depreciation or immediately expense certain improvements under Section 179.

What changed?

• Under bonus depreciation (100% in prior years, stepping down as of 2023-2026), you can deduct the full cost of qualifying property improvements in the year they are placed in service.

• Section 179 allows for immediate expensing of up to $1.22 million (2025 threshold, indexed for inflation) of eligible improvements.

Improvements like:

For real estate syndicators executing value-add strategies, this is massive. Imagine buying a 100-unit apartment building, upgrading the HVAC and roofs, and being able to deduct the entire capital expense in year one.

It turns tax liability into fuel for expansion.

What Should Multifamily Investors Do About These Tax Changes?

Work with a Real Estate Savvy CPA:

You need someone who understands real estate, bonus depreciation, cost segregation, and current IRS guidance.

Consider Cost Segregation:

This study breaks down your property into components so you can accelerate depreciation. Even on older properties, it could uncover hundreds of thousands in deductions.

Revisit Your Entity Structure:

Whether you operate as a sole proprietor, LLC, or C-Corp can have a major impact on your net tax liability.

Stay Compliant with the IRS:

When using bonus depreciation or offering syndication shares, ensure you’re in alignment with the SEC and IRS rules. Syndication attorneys can help you structure it properly.

How Do These Laws Impact Your Multifamily Investing Strategy?

Let’s say you’re looking at a value-add deal.

• You buy a 75-unit property for $7M

• You invest $700K in roof replacements, appliances, and new HVAC

• With bonus depreciation and Section 179, you may be able to write off all $700K this year

• Combine that with your 20% pass through deduction, and you might shave six figures off your tax bill

That means more returns for you and your investors and more velocity to reinvest in your next deal.

This is how the top operators build wealth. It’s not just about cash flow or appreciation. It’s about strategy, structure, and execution.

Final Thoughts From Rod

Tax law doesn’t build your business, you do. But if you understand how to play the game, the tax code becomes your most powerful business partner.

Multifamily investing offers unmatched advantages in today’s economic climate. These tax incentives are just the icing on the cake.

Want to go deeper? My free book, How to Create Lifetime CashFlow Through Multifamily Properties, includes a full breakdown of tax strategies and legal structures you can use to scale your portfolio.

Download it now and take your next step toward financial freedom.

And if you’re ready to go even further, join my Multifamily Coaching Program where you’ll get access to world-class training, deal analysis, investor connections, and mentorship from me and my team.

FAQs About the Tax Law and Multifamily Investing

Q: Is bonus depreciation still available in 2025?

A: Yes, but it’s stepped down from the full 100%. For 2025, bonus depreciation is 60% and set to phase down annually unless extended by Congress.

Q: Can I combine cost segregation and bonus depreciation?

A: Absolutely. Cost segregation identifies components that qualify for bonus depreciation, making it one of the most powerful tax strategies available to real estate investors.

Q: Do these tax benefits apply if I invest passively in a syndication?

A: Yes. As a limited partner, you can still receive the benefits of depreciation and expense write-offs passed through from the property.

Q: What’s the difference between Section 179 and bonus depreciation?

A: Section 179 has dollar limits and applies to specific assets. Bonus depreciation has no cap (though it’s phasing down) and covers most depreciable property with less than a 20-year life.

Q: Should I use an LLC or C-Corp for my real estate investments?

A: It depends on your goals and scale. Most investors prefer LLCs for flexibility, but consult your CPA and attorney to determine the best structure for your strategy.

Remember: tax law is always evolving. Stay educated, stay aligned with professionals, and always operate with integrity. When you do that, your real estate business becomes not just a source of income, but a vehicle for lasting wealth and impact.

Disclaimer: This article was written with the help of AI and edited by Rod and his team. Always do your own research.