How the “One Big Beautiful Bill” Just Reshaped Homeownership

With President Trump’s recent signing of the “One Big Beautiful Bill,” Americans are now adjusting to a sweeping package of tax and policy changes. While the bill touches a wide range of issues, several provisions will have a direct and lasting effect on real estate decisions, particularly for current homeowners, potential buyers, and those looking to sell.

This article walks through the key changes and what they could mean for individuals navigating the housing market.

Mortgage Interest and SALT Deduction Caps Become Permanent

One of the most widely felt impacts comes from the solidification of two tax provisions that were originally set to expire in 2025:

• Mortgage interest deduction cap: Homeowners can continue deducting interest on mortgage debt, but only up to $750,000, rather than the previous $1 million cap.

• State and Local Tax (SALT) deduction limit: A new cap—$40,400 for most joint filers—is now permanent and gradually phases out for higher earners.

Implications:

• Buyers may find that the after-tax cost of owning a more expensive home has increased slightly, especially in higher-tax areas.

• Sellers in regions with steep property taxes or premium home prices may face slightly softened demand, as buyers adjust to reduced tax offsets.

• Homeowners, particularly in states like Connecticut, where property taxes are above the national average, could feel this in their annual returns.

Energy Efficiency Incentives Repealed

The bill also ends several federal tax credits aimed at promoting residential energy upgrades. This includes incentives for installing solar panels, energy-efficient windows, insulation, and advanced HVAC systems.

Implications:

• Buyers might now face higher up-front costs for green home features.

• Sellers may find that eco-friendly improvements offer less of a financial incentive for prospective buyers.

• In colder states like Connecticut, where heating bills drive energy upgrades, this change may slow the pace of home retrofits unless state or utility incentives are expanded to fill the gap.

Casualty Loss Deductions Remain Restricted

The bill also extends the rule that allows deductions for personal property losses only if they occur in a federally declared disaster area. This limits the potential for tax relief following events like fires, floods, or wind damage unless those events trigger an official disaster designation.

Implications:

• Homeowners and sellers in storm-prone or wildfire-prone areas must ensure they have robust insurance, as tax relief won’t be available for uncovered losses outside of declared disaster zones.

• Buyers evaluating risk-prone areas may place a higher premium on newer homes with resilient construction or comprehensive insurance protections.

What This Means for the Market

None of these changes are expected to cause sudden disruptions. However, they do reinforce some ongoing market trends:

• Tax-sensitive buyers may shift preference toward homes in lower-tax regions or below deduction caps.

• Home improvements could be more value-driven than incentive-driven going forward.

• Price growth in high-cost markets could moderate slightly as buyers recalculate long-term affordability.

In Connecticut and similar states, the combined impact of capped deductions and repealed green incentives could have a more pronounced effect on tax planning, home valuations, and energy upgrade decisions.

Bottom Line

The “One Big Beautiful Bill” may not have been targeted specifically at real estate, but its effects will be felt by millions of homeowners, buyers, and sellers. The permanence of key tax limits brings clarity, while the removal of energy credits shifts the financial calculus for many households.

Whether you’re navigating your first purchase, considering upgrades, or planning to sell, understanding how these changes affect your bottom line is essential.

Need help analyzing how these new rules affect your plans? Contact us below for expert guidance on buying, selling, renting, or managing your property under the updated framework.