Trump won! Now what? In this video, we'll break down 3 major changes you can expect under President Trump's leadership and what they mean for real estate investors.
3 Real Estate Changes Under Trump
1. Lower Interest Rates
First, you can expect lower interest rates. Why? President Trump has pledged to cut energy prices in half in the first six months by opening up oil drilling, a move that could reduce inflation and facilitate lower interest rates. The Federal Reserve has also signaled upcoming rate reductions as we enter the new year. So, no matter how you slice it, rates are coming down. With the potential reduction of interest rates, we can expect to see housing demand increase.
2. Deregulation
Second, Trump's administration is poised to push for deregulation. Trump has made it very clear that over regulating has handcuffed developers from being able to build in this country. As a developer himself, he is expected to push for policies that reduce bureaucratic constraints and Elon Musk's appointment to head the Department of Government Efficiency underscores this commitment. Recently, Elon made a bold statement on his Platform X:
“America is a nation of builders. Soon, you will be free to build”.
If that doesn't give you the foresight into what the future will look like under this administration, I don't know what will!
And speaking of real estate, this shift could also impact the Justice Department’s attack on the National Association of Realtors and the Buyer's Agent Commission. Nonetheless, investors can expect deregulation to be at the forefront under this administration.
3. Real Estate Tax Incentives
Lastly, you can expect the return of significant real estate tax incentives. During Trump's first term, the Tax Cut and Job Act of 2017 introduced the Bonus Depreciation Deduction, allowing investors to accelerate their depreciation schedules at the time of purchase and depreciate most of the improvements made on investment properties in the first year. This benefited real estate investors in two major ways.
Created Huge Tax Incentives at the Time of Purchase: For example, I did a cost segregation study on a commercial building I owned after I bought it in 2021. By leveraging bonus depreciation, I was able to accelerate that depreciation schedule, which in return gave me a tax reduction of $28,000 against my taxable income for the year, even though the property still cash flowed. This is why people who invest in real estate can offset the amount of taxes they pay each year. As the saying goes, “It's not how much you make, it's how much you keep”.
Incentivized Property Owners to Make Improvements: Since most of the improvements were fully tax deductible in the same year, this gave property owners more confidence and reasons to reinvest their hard-earned money back into their properties. Phil has great tips and tricks here: Little Known Shortcut to Real Estate Freedom.
Although this Act was set to phase out by 2027, the re-election of President Trump with a Republican-controlled House and Senate raises the possibility that 100% bonus depreciation could be reinstated and become a permanent fixture.
Looking Forward
Recapping these potential changes:
- Investors can anticipate lower interest rates leading to better cash flow and more buyers.
- Deregulation, so our nation is free to build again.
- And renewed tax incentives encouraging property reinvestment.
At Freedom Mentor, we see these shifts as encouraging for the real estate sector. In fact, we think 2025 will be a great year for real estate investing, but we want to hear from you. How do you think the Trump presidency will impact real estate? Share your thoughts in the comments below or text FREEDOM to 305-315-8030.
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