Disclaimer: This blog post is not meant to take the place of the guidance of an accountant or tax professional. For specific tax or accounting advice, consult a certified accountant.
Since 2018, property managers have been able to take advantage of various tax breaks authorized by the Tax Cuts and Jobs Act (TCJA). However, many of those tax breaks are set to expire by the end of 2025 unless Congress extends them.
No matter what happens, now’s the time to prepare for what could change in 2026 and beyond. That means estimating future tax liabilities, reducing uncertainty, and protecting your profitability.
But which TCJA provisions impact property managers? And of those, which are at risk of sunsetting at the end of the year? In this article, we’ll break down the relevant sections of this giant tax law and what you can do to protect your business moving forward.
What Is the Tax Cuts and Jobs Act?
The Tax Cuts and Jobs Act is a major overhaul of the U.S. tax code passed in 2017 under the first Trump administration. It took effect in 2018 with the goal of stimulating economic growth and creating new jobs by lowering taxes on individuals and businesses.
While some of the TCJA provisions are permanent, such as reducing the corporate tax rate from a top rate of 35% to a flat 21%, others are temporary and set to expire between 2025 and 2028 (unless extended through new legislation).
The Expiring TCJA Provisions That Impact Property Managers
The TCJA has offered a range of tax breaks for property managers—from deductions on income to accelerated write-offs on improvements. Here’s a look at which ones are set to phase out after 2025.
Qualified Business Income Deduction
Also known as the Section 199A deduction, the qualified business income deduction applies to pass-through entities (sole proprietorships, LLCs, partnerships, and S-corporations), under which most property management businesses fall.
It lets you deduct up to 20% of your qualified business income (QBI), which the IRS defines as “the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business.” This excludes any capital gains or losses, certain dividends, and interest income.
For example, if you earn $100,000 in QBI from your property management business, you could deduct $20,000 ($100,000 x 0.2). This is on top of any other business deductions and applies whether or not you itemize deductions.
However, the QBI deduction is set to expire on December 31, 2025 (unless extended). This means you may face a higher taxable income for your property management business moving forward. Consult a tax professional to see how the change could impact your finances.
Bonus Depreciation on Business Assets
The TCJA lets you immediately deduct 100% of the cost of qualifying new or used business assets in the year they are placed in service, instead of depreciating them over time. Prior to the TCJA, bonus depreciation was capped at 50% and applied only to new property.
That said, bonus depreciation has already started to phase out, with the allowance decreasing by 20% per year starting in 2023 and set to fall to 0% by January 1, 2027 (unless extended).
Other TCJA Provisions for Property Managers That Are Not Expiring
That said, not all of the TCJA provisions relevant to property managers are set to expire. The following were permanent additions to the tax code:
Lower Corporate Tax Rate
The TCJA permanently reduced the corporate income tax rate from a top rate of 35% to a flat rate of 21%. That means if your property management business is structured as a C-corporation, you can expect your corporate tax rate to remain 21%.
Lower Individual Tax Rates
Most property management businesses are pass-through entities, meaning income is passed directly to owners, shareholders, or investors. In this case, your business income is taxed at the individual level according to federal income tax rates.
The TCJA lowered income tax rates for individuals at almost all levels and shifted the thresholds of many income tax brackets. Here are the income tax rates for a single-taxpayer in 2025:
| Tax rate | Taxable income… | Up to… |
| 10% | $0 | $11,925 |
| 12% | $11,926 | $48,475 |
| 22% | $48,476 | $103,350 |
| 24% | $103,351 | $197,300 |
| 32% | $197,301 | $250,525 |
| 35% | $250,526 | $626,350 |
| 37% | $626,351 | And up |
Higher Section 179 Deduction Limits
Under Section 179 of the tax code, property managers can deduct up to $1.22 million for qualified business assets in 2024. However, the deduction limit is reduced by the amount by which the cost of the property exceeds $3.05 million (the phaseout threshold).
The TCJA originally raised the Section 179 deduction limit from $500,000 to $1 million and the phaseout threshold from $2 million to $2.5 million. Since then, both the limits and phaseout thresholds have increased annually for inflation and are set to continue increasing each year.
Higher Car Depreciation Deduction
The TCJA raised the depreciation limit for passenger vehicles used for business. If you don’t use bonus depreciation or the standard mileage rate ($0.67/mile in 2024), you can deduct up to:
- $10,000 for the first year,
- $16,000 for the second year,
- $9,600 for the third year, and
- $5,760 for each later taxable year in the recovery period.
If you claim bonus depreciation, you can write off up to $18,000 in the first year, and up to the same deduction limits listed above for later years. These limits won’t phase out under the TCJA. If anything, they may be raised to account for inflation.
How to Prepare for the Potential Phaseout of TCJA Provisions
Though some TCJA provisions are set to expire, time will tell if property managers will be impacted. After all, President Trump (who signed the original bill into law in 2018) and a Republican-led Congress may vote to extend the relevant tax provisions.
Still, it’s best to be prepared. Should the expiring TCJA tax provisions revert to pre-2017 levels, you may want to consider:
- Restructuring your pass-through entity into a C-corporation to take advantage of its 21% flat tax rate. This becomes more attractive the more income your business generates. For example, if you make $626,351 or more in 2025, you’ll fall into the 37% income tax bracket. However, remember that C-corporations must also deal with double taxation.
- Accelerating capital expenditures before the end of 2026 to take advantage of bonus depreciation while it lasts. For example, you could invest in a new company vehicle, office computers, or property management software like Buildium. After 2026, bonus appreciation may no longer be available.
Ultimately, your best bet is to consult a licensed tax or legal professional who can help you fortify your property management business against potential tax code changes.
Tools and Resources to Prepare for Potential Tax Changes
You’re not on your own when it comes to property management tax strategy and preparing for tax changes later down the road. Here are some helpful tools and resources to explore:
- Buildium’s comprehensive tax reporting guide: Learn about property management deductions, bonus depreciation, tax credits, tax filing and deadlines, 1099 filing, 1031 exchanges, the tax implications of the Inflation Reduction Act (IRA), and much more. This guide explains it all in simple terms you can understand.
- Buildium’s 1099 e-Filing for property managers: Start the year off right by e-filing your 1099-MISCs and 1099-NECs through Buildium. Our platform automatically tracks all the payments you’ve made to property owners and vendors so that you can file accurate and timely 1099 forms and send free copies to recipients.
- Buildium’s property management accounting features: Buildium makes bookkeeping easier by tracking rent, fees, and deposits as well as payments to your company, property owners, and vendors. Its central platform seamlessly integrates online payments, reconciles bank accounts, and ensures you comply with accounting standards.
Use Buildium to Protect Your Property Management Business From Future Tax Changes
No matter what happens to the U.S. tax code in the coming years, you can’t go wrong investing in robust accounting software. At Buildium, our purpose-built property management platform is designed to keep your business finances organized.
That way, if the tax code changes and you need to adjust your business operations, you’ll have a detailed view of your income, operating costs, profits, and other financial metrics.
See how Buildium handles real-world tasks with our free, 14-day trial—no credit card required. If you prefer a more structured walkthrough, you can also schedule a free demo. We’re more than happy to guide you through every feature you’d like to see in action.
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