How the Trump-Era Tax Reform Will Impact Multifamily Investors in 2025 and Beyond

Written By Oluwanifemi Aderinto

A Tax Shift That’s Redefining Returns

In July 2025, a critical piece of the 2017 Trump-era Tax Cuts and Jobs Act (TCJA) was reinstated: 100% bonus depreciation. For multifamily investors, this isn’t just a tax adjustment — it’s a return to one of the most powerful tax strategies in commercial real estate.

At Aderinto Group, we view this as a pivotal opportunity to improve cash flow, enhance investor returns, and drive portfolio-level performance in a changing economic climate.

Here’s what you need to know.

Key Tax Reform Provisions That Impact Multifamily Investors

While the TCJA covered a wide array of sectors, several components specifically affect real estate — especially multifamily. The reinstatement of these measures creates a favorable environment for both individual and institutional investors:

1. 100% Bonus Depreciation — Fully Reinstated

This is the headline reform.

Bonus depreciation allows property owners to immediately deduct the full cost of qualified improvements and personal property in the year it’s placed in service, rather than depreciating it over time.

For multifamily, this includes:

  • Appliances and mechanical systems

  • Cabinetry, flooring, lighting

  • Site improvements like parking lots or fencing

With 100% bonus depreciation now fully reinstated as of July 4th, 2025, the ability to shield income and enhance first-year returns is once again back in full effect.

2. Cost Segregation: The Engine Behind Bonus Depreciation

Investors who want to fully benefit from the tax reform must utilize cost segregation studies. These studies reclassify portions of the property to shorter depreciation schedules — unlocking massive upfront deductions.

Example:
On a $12 million acquisition, a cost segregation report might identify $2.5–$3 million in assets eligible for immediate write-off. That deduction can drastically reduce taxable income, improving year-one cash flow and total after-tax IRR.

3. Lower Corporate and Pass-Through Rates (Still in Effect)

The TCJA reduced the corporate tax rate from 35% to 21%, and introduced a 20% deduction for qualified business income (QBI) for pass-through entities — including many real estate partnerships and syndications.

While discussions around modifying these rates continue, these provisions remain in effect for now, giving sponsors and investors more after-tax earnings to reinvest.

4. Limits on Interest Deductions and Like-Kind Exchanges (Still Worth Watching)

The TCJA introduced new limitations on interest deductions for businesses with gross receipts over $30 million, but most real estate companies are exempt through the real property trade or business election.

Meanwhile, 1031 exchanges remain protected, allowing investors to defer capital gains taxes by rolling profits into new multifamily acquisitions — a key strategy we continue to utilize to preserve capital and build long-term wealth.

What This Means for Our Investors and Capital Partners

These tax reform changes — particularly the reinstatement of 100% bonus depreciation — have meaningful implications for those investing with us:

Enhanced After-Tax Returns

More depreciation upfront means better cash-on-cash and internal rate of return (IRR) profiles from the beginning.

Greater Tax Shielding

Passive income and capital gains can be offset using accelerated depreciation — reducing or eliminating tax liability.

Stronger Equity Positioning

Deals offering bonus depreciation become more attractive to high-income investors and family offices seeking shelter — making capital easier to raise, faster to deploy.

Strategic Advantage Over Non-Optimized Operators

Firms not actively leveraging cost segregation or bonus depreciation are leaving value on the table. This gives experienced, tax-aware sponsors like Aderinto Group a competitive edge in capital markets and investor loyalty.

A Short Window — A Long-Term Impact

While the return of 100% bonus depreciation is a major win, it’s important to remember:
It’s temporary.

As of now, there is no guarantee it will remain in place beyond the next few years. That means the time to act is now — to structure acquisitions, complete renovations, and lock in tax benefits while they’re available.

In Summary: The Trump-Era Tax Reform’s Second Wind

With bonus depreciation fully restored and other favorable tax measures still in place, the multifamily landscape has once again tilted in favor of those who know how to leverage the code.

At Aderinto Group, we’re building around this moment — incorporating cost segregation into every qualifying asset, educating our investors on the implications, and structuring our deals to deliver maximized after-tax outcomes.

Looking to take advantage of the new tax environment?
Let’s talk. We’re actively deploying capital in markets where strategy, scale, and tax efficiency align.

Oluwanifemi Aderinto