2025 Tax Breaks That Benefit LBI Buyers & Investors
The One Big Beautiful Bill Act
The One Big Beautiful Bill Act (OBBBA), which was signed into law on July 4, 2025 includes two major tax changes that could significantly benefit Long Beach Island real estate investors and high income buyers: the return of 100% bonus depreciation and an increase to the SALT cap.
I’ll break down what both changes mean for you and walk through a real world LBI property example so you can visualize how these tools could save you tens of thousands of dollars.
Key Takeaways
SALT deduction boost: The SALT cap jumps to $40,000, reducing federal taxes for NJ's high property tax bills.
100% bonus depreciation: Deduct qualifying rental property costs (like appliances) in year one, increasing cash flow.
100% Bonus Depreciation Explained
We can all agree knowing your tax bill has been reduced is one of the most satisfying feelings, whether it’s because you claimed mileage deductions or marketing costs. Depreciation is one of those deductions that can significantly lower your tax bill. To understand the new bonus depreciation, let's first look at standard depreciation. Standard depreciation has been the process of deducting the value of the asset and any improvements against your taxes. Residential properties can be depreciated over what is considered its useful life, 27.5 years.
Now with bonus depreciation you can deduct 100% of certain property expenses in full during the first year. This applies to assets placed in service from January 19, 2025-2030. Some of the property expenses include furniture, landscaping, fencing, outdoor lighting, etc. In turn, this will provide immediate tax savings which reduce current year tax liability, tax savings for reinvestment, and improve IRR on capital projects.
To take advantage of it, some investors order a cost segregation study that breaks down the value of each component.
The SALT deduction Explained
The SALT deduction allows you to write off state and local taxes, including NJ property taxes and income taxes on your federal tax return. In 2018, the deduction was capped at just $10,000, which hurts many LBI and NYC area taxpayers.
Under the OBBBA, the SALT cap increases to $40,000 for households with income under $500,000 ($250,000 if married filing separately). The deduction phases out by 30 cents per dollar earned over the cap. Households with MAGIs above $600,000 in 2025 are limited to a $10,000 SALT deduction.
That means LBI buyers who live and pay income tax in New Jersey (and also pay 5-figure property tax bills on their homes) could finally get full federal deduction credit.
Let’s put it all together
Imagine you buy a $2M beach house in 2025 to rent out short-term, qualifying as a real estate professional. For the example we’ll say two-thirds ($1.33 million) is non-depreciable land, the remaining $667,000 covers the building. A cost segregation study shifts $200,000 into fast-track assets (e.g., appliances, fencing), deductible in 2025 under bonus depreciation. The rest ($467,000) depreciates over 27.5 years, adding $16,969 in year-one deductions. Total deduction: $216,969, saving $80,279 at a 37% tax rate. Plus, let's say you have $15,000 in property taxes, the new SALT cap saves you $5,550. That’s over $85,000 in federal tax savings, cash you can use to make improvements to your new home
Final Thoughts
If you’re planning to invest in LBI real estate, these tax changes are worth discussing with your CPA. A cost segregation study plus the new SALT rules could help you unlock newfound savings.
Want to run the numbers for a specific property on LBI? I’ll help you find the right opportunities and work with your tax team to explore the upside.
