A new set of tax rules is reshaping the housing market. If you’re a homeowner, buyer, or investor, understanding the impact of the “One Big Beautiful Bill” could influence your next step. The recently signed law reduces the after-tax cost of homeownership for many Americans, directly affecting homeowners and prospective buyers.
What the BBB Means for Your Home and Finances
The One Big Beautiful Bill Act (or BBB) was signed on July 4, 2025, with most housing-related provisions taking effect immediately for the 2025 tax year. The bill extends portions of the 2017 Tax Cuts and Jobs Act while introducing new housing-related tax benefits.
What’s Actually in the BBB for Housing?
Here are the key changes affecting homeowners:
- SALT deduction expansion: The state and local tax (SALT) deduction cap jumps from $10,000 to $40,000 for households earning under $500,000, effective through 2029. Homeowners in high-tax states like California, New York, and New Jersey are positioned to benefit most.
- Mortgage benefits made permanent: Current mortgage interest deduction rules have become permanent, and mortgage insurance premiums are once again deductible—offering long-term certainty for homeowners and future buyers.
- Itemization changes: The Pease limitation, which previously reduced itemized deductions for high earners, is repealed. However, the BBB introduces new phase-outs: the expanded SALT deduction starts phasing out above $500,000 in household income, and other caps may apply.
- Expanded deductions apply to all properties: If you own more than one home, property taxes across all your homes—including investments and vacation homes—can count toward the $40,000 SALT limit. This encourages diversifying or expanding a real estate portfolio.
Looking for other ways to save on the cost of homeownership? Schedule a quick mortgage review.
Who Actually Benefits?
Here’s the important nuance: These benefits only help homeowners who itemize their deductions. With the 2025 standard deduction set at $31,500 for married filing jointly and $15,750 for single filers, many homeowners won’t see any benefit unless their itemized deductions exceed these amounts.
For example:
- A single homeowner would need more than $15,750 in combined mortgage interest, property taxes, and other itemizable expenses to benefit
- A married couple would need to exceed $31,500 in itemized deductions
This makes the BBB most valuable for:
- Homeowners with large mortgages and higher interest payments
- Residents of high-tax states who benefit from the expanded SALT cap
- Households with substantial deductible expenses, including investment or second properties
- Real estate investors using multiple property tax bills to reach the deduction threshold
The Market Impact: More Complex Than It Seems
While these tax changes provide relief for some homeowners, they create several market dynamics worth noting:
- Increased demand: The tax benefits are expected to make homeownership more attractive, particularly in higher-cost markets. This additional demand, without corresponding supply increases, typically pushes prices up.
- Regional ripple effects: High-tax and high-cost states stand to see the most market action, as local buyers (and investors) get a larger after-tax boost.
- Stiffer competition: More buyers with stronger financial positions (due to tax savings) means increased competition, especially in the mid-to-upper price ranges where these benefits have the most impact.
When it comes to mortgage rates, don’t expect a sharp drop. With greater government spending in the BBB and no matching revenue increases, federal deficits are likely to climb. That pressure on Treasury yields—closely linked to mortgage rates—could keep rates around 6.6 percent into 2026, based on current forecasts.
If you’re a potential buyer, here’s what to consider:
- Calculate your real savings: If you plan to itemize, factor in the mortgage interest deduction and potential SALT benefits into your affordability calculations.
- Prepare for competition: More qualified buyers with tax-enhanced purchasing power means you’ll face stiffer competition, especially in markets where SALT deductions matter most.
- Refinance in the future: Buying now and refinancing later when rates drop may be smarter than waiting for ideal market conditions that may never come.
If you’re a current homeowner, here’s how to maximize these changes:
- Make strategic renovations: With the SALT deduction reverting to $10,000 in 2030, homeowners in high-tax states have a limited window to take advantage. Look into planning major home improvements before this window closes.
- Refinance in the future: Monitor rate changes closely; when rates do drop, the combination of lower payments and maintained deductions creates a powerful wealth-building opportunity.
- Purchase another property: The expanded SALT deduction particularly benefits owners of multiple properties or investment real estate, as property taxes across all properties count toward the $40,000 limit. This could make real estate investment more attractive in high-tax markets.
For everyone: These changes create a more complex tax landscape. Professional guidance becomes more valuable, not less, in navigating these new rules and making the most of your savings.
Here’s What We Know for Certain
Once again, the housing market has shifted. Successfully navigating it requires strategy and timing—and that’s where we come in. Whether it’s moving up, downsizing, refinancing, or renovating, your Cornerstone loan officer is here to provide local guidance and review your options.
Sources deemed reliable but not guaranteed. For educational purposes only.