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ept. 15, 2025 – Sponsored by Ernst Capital
Ernst Capital Group of Sioux Falls reports that the newly enacted One Big Beautiful Bill delivers a suite of tax advantages for commercial real‑estate investors. “The legislation adds compelling reasons to include real‑estate holdings in a portfolio,” says partner Chris Daugaard. “Investors should recognize the fresh benefits now available.”
**Permanent bonus depreciation**
The bill makes the first‑year bonus depreciation deduction permanent. Investors can claim 100 % depreciation on most tangible personal property with a 20‑year or shorter recovery period, and on other qualified assets. Daugaard explains that the firm collaborates with local accountants to isolate depreciable components, enabling larger upfront tax deductions that can offset partnership income for several years.
**Qualified Opportunity Zones (QOZs) extended**
QOZs—designated economically distressed areas—are now permanent. Investors who channel capital gains into QOZs receive multiple tax incentives if the investment is held for ten years. Governors will name a new cohort of QOZs on July 1, 2026, effective January 1, 2027, each lasting a decade. Ernst Capital has already invested in three QOZ projects: Aspen Commons, The Yukon at Benson in northwest Sioux Falls, and The Union in Box Elder near Ellsworth Air Force Base. “These are long‑term ventures, so we’re still in the early stages,” Daugaard notes. The legislation also improves data reporting and adds rural‑area benefits, reinforcing the firm’s commitment to QOZ opportunities.
**Business interest limitation relaxed**
The bill permanently reinstates the favorable adjusted taxable income calculation for determining the business interest expense limitation, effective after December 31, 2024. This change lifts recent restrictions, expanding the deductible interest pool for real‑estate enterprises.
**Qualified business income deduction made permanent**
The 20 % QBI deduction is now permanent, lowering the top tax rate on pass‑through income from 37 % to 29.6 %. Ernst Capital structures all holdings as LLCs, so investors receive pass‑through income or loss directly. “These new deductions can benefit many investors, though applicability varies by individual circumstances,” Daugaard says.
**Sioux Falls market outlook**
Ernst Capital continues to focus on new multifamily developments in Sioux Falls. “Occupancy remains around 95 % this year,” Daugaard reports, noting that the city’s demand persists despite recent construction. With construction costs easing and interest rates stabilizing, “new projects are returning to a more predictable, business‑as‑usual environment.” The firm sees significant opportunity in the healthy market, ongoing city growth, and the limited number of new permits issued this year and last.
To learn about upcoming opportunities, visit Ernst Capital’s website.
