For high-net-worth families with significant real estate portfolios, the One Big Beautiful Bill Act (OBBBA) — recently signed into law — introduces meaningful shifts in tax policy that directly affect succession planning. As real estate specialists and legal advisors, our boutique firm views both the opportunities and complexities presented by these new rules. Here’s what HNW families should know — and how to adapt.
- Permanent Increase in Estate & Gift Tax Exemption
One of the most headline-grabbing provisions of the OBBBA is the permanent increase of the federal estate, gift, and generation-skipping transfer (GST) tax exemption to $15 million per individual (and $30 million per married couple), indexed for inflation.
For families with substantial real estate holdings, this increased exemption threshold offers a more flexible and less urgent timeline for wealth transfers. Assets well above previous thresholds can now pass to heirs with greatly reduced estate-tax risk, allowing for more strategic generational transfer planning without the pressure of an impending deadline.
- Permanence of Key Tax Rates
The Act also makes permanent the TCJA-era lower individual income tax rates, including top brackets, as well as long-term capital gains rates. For real estate families, especially those who realize gains through sales, refinancings, or other dispositions, this stability decreases the risk of future tax increases on capital gains — a key factor when planning exit strategies or legacy transfers.
- SALT Deduction Cap Raised Temporarily
From 2025 through 2029, the OBBBA increases the state and local tax (SALT) deduction cap from $10,000 to $40,000 for most filers, although the increase gradually phases out for high-income taxpayers above a certain threshold. While much of real estate succession planning focuses on capital gains and estate taxes, SALT is also important—especially for families in high-tax states. This temporary relief could influence the types of trust structures you choose or where you place certain entities to maximize deductibility during this period.
- Trust & Dynasty Planning Becomes Even More Attractive
With a higher, permanent estate tax exemption, trust-based succession strategies, especially dynasty trusts, become more appealing. Keeping assets in a long-term trust permanently reduces estate-tax exposure for future generations and helps ensure the smooth transfer of property. For families already utilizing trusts, it is wise to review the funding, trustee structure, and timing in light of the OBBBA. For those who have not yet used trusts, now may be an ideal time to consider them.
- Real Estate Gains & Carried Interest: Stability, Not More Favor
Importantly for real estate investors, the Act does not significantly alter the treatment of real estate–related carried interest: carried interest continues to receive capital gains treatment (rather than ordinary income), provided the relevant holding period is met. This is critical for family offices and operating real estate businesses that rely on partnership structures. The permanence of favorable pass-through and capital gains treatment under OBBBA helps preserve powerful incentives for real estate investment vehicles.
- Risks & Strategic Considerations for Succession Structures
While the Act provides significant room for estate and succession planning, there are strategic risks to navigate:
- Inflation risk: Although the exemption is indexed to inflation, long-term portfolios may still outpace these adjustments, especially in real estate with high appreciation rates.
- Lock-in effects: For very large estates, timing of gifts or sales may matter more than ever — transferring too early or too aggressively could leave some part of your portfolio exposed if values continue to climb.
- Coordination with state-level planning: Federal changes don’t erase state-level estate or transfer taxes. Real estate portfolios often span multiple states, so cross-state trust and ownership structures may need to be revisited.
- Action Steps for HNW Real Estate Families
Given the new landscape, here are a few steps real estate families should consider now:
- Reassess your current trust and entity structure (LLCs, family limited partnerships, dynasty trusts), considering the $15 million exemption.
- Model different gift/sale scenarios to see how far the exemption buffer stretches, especially if multiple generations are involved.
- Explore the use of dynasty or irrevocable trusts to lock in value while minimizing estate exposure.
- Use the temporary SALT cap increase (2025–2029) to optimize how you allocate income and expenses across entities.
- Continue to structure real estate investment through long-term private partnership or operating business structures to preserve capital gains treatment.
Conclusion: A Generational Planning Moment
The One Big Beautiful Bill Act significantly reshapes the succession planning horizon for real estate–rich families. By permanently expanding the estate and gift tax exemptions, locking in favorable rates, and offering temporary SALT relief, the law provides a more flexible and predictable foundation for generational wealth strategies. But it also demands strategic reassessment: legacy structures should be revisited, trust planning revisited, and entity design optimized.
For more on this topic, contact Leonard Rifkind, General Counsel, at 415-308-8269, or [email protected].