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Author: Mark Ainely | Partner GC Realty & Development & Co-Host Straight Up Chicago Investor Podcast
Most real estate investors do not lose money on taxes because they are reckless. They lose money because the rules move, the details pile up, and they assume their CPA or their old strategy already has it covered. This Tuesday Tip gets right to that problem. Aaron Zimmerman breaks down what the Big Beautiful Bill actually changes for real estate investors, business owners, house hackers, parents, W2 earners, and people who are trying to be proactive instead of reactive.
What makes this episode useful is that it is not just a list of random tax updates. Aaron walks through the items that actually matter in day-to-day life if you own rentals, run a real estate business, pay vendors, use cost segregation, house hack, pay private school tuition, fund a 529, or are trying to figure out whether your current tax setup is still doing the job. Some of these items are permanent. Some create new planning opportunities. Some close doors that used to be open. And a few are the kind of changes that can quietly cost people money if nobody catches them.
For Chicago landlords and investors, this is one of those episodes where it pays to slow down and listen twice. The tax code is not something you want to approach with assumptions, especially when the conversation touches depreciation, 1099 thresholds, mortgage insurance deductions, SALT deductions, and planning around kids, daycare, and education. If your strategy is still based on what was true two years ago, there is a decent chance you are missing something now.
Housing Provider Tip of the Week
Before getting into taxes, the team opened with a practical housing provider tip around rent reporting services.
The idea is simple. There are now more services that allow landlords to report tenant rent payments to the credit bureaus, helping tenants build their credit history. Even when these services do not report negative payments, they can still create a strong behavioral benefit. Once a tenant signs up and starts viewing rent as part of their credit profile, they often become more motivated to stay current and keep a clean payment record. It becomes one more tool to encourage good habits while also giving residents a real benefit.
Questions We Answer in This Episode
Q: What is one of the first major tax items Aaron highlights from the bill?
A: He starts with the qualified business income deduction, which is especially relevant for real estate professionals, operators, and anyone with an active business inside real estate. Aaron explains that the rules here are basically the same as they have been since 2017, but now they have been made permanent. That matters because it removes some of the uncertainty people had about whether those rules might disappear or shift soon.
Q: What does he say about the pass-through entity tax election?
A: Aaron points out that this is more applicable to operating businesses, especially those structured as S corps or multi-member LLCs that have income flowing through them. The key idea is that the business can elect to pay state tax at the entity level instead of leaving that entirely at the personal level. For the right business setup, that can create a planning advantage that business owners should not ignore.
Q: What is the biggest tax item for real estate investors in this conversation?
A: Bonus depreciation. Aaron calls that out as the big one for real estate investors. Under the new rules, bonus depreciation is back to 100% at the federal level. He also immediately points out an important caveat for Illinois investors, which is that Illinois does not conform to that federal treatment the same way. So investors need to separate federal planning from Illinois planning instead of assuming they work the same way.
Q: Who qualifies for the new 100% bonus depreciation treatment?
A: Aaron explains that the property generally needs to be purchased after January 19, 2025 to clearly fall under the new 100% bonus depreciation setup. The conversation also touches on the fact that older properties can still have cost segregation studies applied and that prior-year rules still matter depending on when the deal was purchased and placed in service. His point is that this is not a one-size-fits-all answer. The date you bought and the date you actually placed the property into service matter.
Q: What happens if someone already owned a property from earlier years?
A: Aaron says those properties may still be eligible for different bonus depreciation treatment based on the rules in place when they were acquired. In other words, if somebody bought in 2022, 2023, or 2024, the answer is not automatically the same as someone buying today. That is why he stresses talking with a CPA if you are trying to catch up depreciation through a cost segregation study or figure out how a 2024 purchase treated in 2025 should work.
Q: What is changing with opportunity zones?
A: Aaron explains that new opportunity zones are expected to roll out starting in 2027. He frames them as a continuation of the original concept from the 2017 law, where the goal is to encourage investment in areas that need economic development. The fact that they are bringing those back tells you lawmakers saw value in keeping that tool alive.
Q: Are there any changes to 1031 exchanges?
A: No. Aaron says there are no changes there. That is actually valuable in itself because 1031 exchanges are one of those things investors are always nervous could get chipped away over time. In this conversation, the takeaway is that they remain intact.
Q: What happened to the 1099 threshold?
A: This is one of the cleaner practical changes in the episode. Aaron says the old $600 threshold is moving up to $2,000 beginning in 2026, and then it will be indexed for inflation going forward. For landlords and rental owners paying vendors for turnovers, landscaping, repairs, and services, this matters because it changes when 1099 reporting kicks in. But the broader message stays the same: you still need good records, W-9s, and a clear process.
Q: What does Aaron say landlords should still be doing with vendor records?
A: He explains that landlords should be collecting W-9s from vendors, including name, address, tax ID information, and how the vendor is taxed. He also clarifies that whether a 1099 is required depends in part on the vendor’s tax classification. That means this is not just a matter of how much you paid someone. It is also about who they are on paper and how they are taxed.
Q: What changed on mortgage-related deductions for owner-occupants?
A: Aaron highlights two things. First, the mortgage interest deduction still only applies up to the debt limit that exists for a primary residence, and second, mortgage insurance premiums become deductible again starting in 2026 as an itemized deduction. That is especially relevant for owner-occupants and house hackers who are already itemizing because of mortgage interest, property taxes, and other deductions.
Q: Why is the mortgage insurance premium deduction especially relevant for house hackers?
A: Because house hackers often buy with lower down payments, which means PMI or mortgage insurance is part of the deal. Aaron and the team point out that if someone is living in the property, itemizing, and carrying mortgage insurance, this can become a real tax benefit that was not available in the same way before. It is one of those items that can be easily missed if someone just glances at last year’s return and assumes the same rules apply now.
Q: What does Aaron say about tax brackets and the standard deduction?
A: He says the tax bracket structure remains in place from 10% to 37%, rather than moving back to the older 39.6% top rate. He also notes that the standard deduction remains larger and will continue adjusting over time. That means some people will still be better off taking the standard deduction, while others, especially in Illinois and other higher-tax situations, may find itemizing more useful again depending on the new SALT rules.
Q: What are some family-related benefits investors and business owners should know?
A: Aaron goes through several. He says the child tax credit rises to $2,200 and will continue adjusting over time. He also talks about dependent care benefits, especially for people paying for daycare through an FSA, where the dependent care FSA limit increases from $5,000 to $7,500. For parents paying serious childcare costs, that is meaningful.
Q: What changed with 529 plans?
A: This is one of the more eye-opening parts of the episode. Aaron explains that the annual amount that can be used for K through 12 expenses increases from $10,000 to $20,000. That matters because many people still think of 529 plans as being only for college. In this discussion, he makes it clear that private grade school, private high school, and similar education expenses can now be covered at a higher annual level.
Q: What Illinois-specific angle does Aaron mention with 529 plans?
A: He notes that Illinois offers a state deduction tied to 529 contributions, and that can create a state-level savings opportunity when someone funds one of those accounts. It is another reminder that planning should not stop at the federal return because Illinois treatment can create its own opportunities.
Q: What are the “no tax on tips” and “no tax on overtime” provisions about?
A: Aaron says these were major headline items and explains that both now create deductions, subject to income phaseouts. He also makes an important clarification on overtime. For someone earning time-and-a-half, it is the overtime portion, not the entire paycheck, that creates the extra tax benefit. The broader point is that these changes can be meaningful for workers in trades, service industries, maintenance roles, and other jobs where overtime is common.
Q: Why did the team think the overtime provision was such a big deal?
A: Because they have seen real-world cases where workers turned down overtime because the tax hit made the extra hours feel less worthwhile. In their view, this change could make extra shifts or emergency work more attractive because more of that marginal income stays with the worker.
Q: What is the vehicle loan interest deduction Aaron mentions?
A: He says that up to $10,000 of interest on a new US-assembled vehicle may be deductible, subject to income phaseouts. He is careful not to frame this as a reason to go buy a truck you do not need. Instead, he presents it as something to be aware of if you already need a vehicle and your income falls in the right range.
Q: What is the new “Trump account” he discusses?
A: Aaron explains that for children born after December 31, 2024, there is a new account setup where the government provides $1,000 of seed money. Families can then contribute additional money each year. He describes it as a way to start building wealth very early, with the long time horizon doing the heavy lifting through compounding. Whether someone likes the branding or not, his point is that it is real money and worth understanding if you have a child in that age range.
Q: What happened to the SALT cap?
A: This is a major one for Illinois listeners. Aaron says the state and local tax deduction cap goes from $10,000 up to $40,000, which is a big deal for homeowners and taxpayers in high-tax states. He also explains that there is a phaseout once income gets high enough, and by the time someone is significantly above the threshold, they may effectively be back to the old limit. Still, for many people in the middle of that range, this creates real new room for deductions.
Q: What if someone does not itemize?
A: Aaron notes that starting in 2026, even people who do not itemize can deduct a limited amount of charitable contributions. That gives some taxpayers a small benefit that previously may not have been available if they were taking the standard deduction.
Q: What is changing with clean energy and vehicle credits?
A: Aaron says those credits are going away after the applicable deadlines, which means anyone waiting to take advantage of clean energy or clean vehicle incentives may miss the window. He also says that kind of policy could come back someday under a different administration, but it is not something to count on now.
Q: What was his warning for gamblers?
A: Aaron closes one section of the conversation with a warning that gambling losses are no longer as fully useful in offsetting winnings as some people might assume. His example shows that a person can still end up paying tax even if their gambling activity produced an overall net loss. The takeaway is simple: if you are gambling heavily, do not assume the tax treatment will be intuitive.
Q: What is Aaron’s overall advice for people feeling overwhelmed by all of this?
A: His advice is to start by reviewing your 2025 return carefully and then have an actual planning conversation with your CPA. Not just a filing conversation. A planning conversation. He says people should be looking at what they did recently, what they intend to do next, and where the new law creates opportunities or problems. If someone is not confident their current CPA is the right fit, he says this is a great time to interview CPAs and make that decision before year-end planning gets rushed.
Top 15 Timestamps
00:24 Aaron jumps into the first major item, the qualified business income deduction
00:47 Pass-through entity tax election and why it matters for operating businesses
01:06 Bonus depreciation returns to the center of the conversation for real estate investors
01:24 Clarifying which purchases actually qualify for the new 100% bonus depreciation rules
02:16 Opportunity zones and what is coming next starting in 2027
02:36 No changes to 1031 exchanges and the jump in the 1099 threshold
03:33 Mortgage interest limits and the return of deductible mortgage insurance premiums
04:12 Why house hackers should pay close attention to the mortgage insurance change
05:23 Child tax credit, dependent care, and family-related deductions
05:58 529 plans and the expansion of K through 12 usage from $10,000 to $20,000
06:55 No tax on tips and no tax on overtime provisions
08:27 Vehicle loan interest deduction for new US-assembled vehicles
09:15 Senior deduction and the new “Trump account” seed money for children
10:47 SALT cap expansion and why that matters so much in Illinois
12:40 Aaron’s final advice on tax planning, CPA review, and missed opportunities
Takeaways for Chicago Landlords and Investors
Tax strategy changed again, and assuming your old setup still works is a mistake.
Bonus depreciation is back to 100% federally, but Illinois still has to be handled separately.
House hackers may quietly benefit from the return of deductible mortgage insurance premiums.
The new $2,000 1099 threshold is easier than the old rule, but landlords still need strong recordkeeping.
Illinois investors should pay especially close attention to the bigger SALT deduction opportunity.
Parents now have more room to use 529 money for K through 12 expenses, not just college.
Overtime and tip-related deductions could meaningfully affect planning for service workers and trades.
Vehicle financing, childcare, and kids’ accounts are now more connected to tax planning than many people realize.
Some clean energy windows are closing, so waiting may cost you.
A good CPA should not just file your return. They should help you plan around decisions before the year is over.
Guest info
Guest Name: Aaron Zimmerman,
Guest Company: Brick House CPAs
Because finding good tenants and property management shouldn’t feel like online dating.
Dear Investor,
If you are an investor in either the city or suburbs of Chicago, I would love to speak with you about how we can help you on your real estate journey. At GC Realty & Development LLC, we help hundreds of Chicagoland real estate owners and brokers each year manage their assets with both full service property management and tenant placement services.
We understand that every investor’s goals are unique, and we love learning about each client’s individual needs. If there is an opportunity to help you buy back your time by managing your rental property or finding quality tenants, please check us out.
Best Investing,
Founder, Partner, Podcast Co-Host, and Investor
