2026 real estate outlook: An unparalleled tax opportunity in an uncertain world
In an era of uncertainty, more investors should turn to real estate as a safe harbor due to its unparalleled tax benefits. The tax efficiencies of the industry continue to offer considerable opportunities to grow wealth — an advantage that should remain in place for the foreseeable future.
However, looking forward to 2026, the specifics of how and where real estate firms are deploying capital are changing. Over the next year, look to see trends like more investors operating on longer-term horizons and a greater emphasis on building walkable, sustainable communities. And with the greatest wealth transfer in history already underway, wise family-owned firms will also lean heavily into succession planning.
Keep reading to learn more about how the real estate market is moving and what’s happening next.
What are some of the top real estate trends for 2026?
Look for several key trends and opportunities to develop as we move into 2026. These include a push towards building more sustainable, walkable communities, a shift away from downtown hubs and more low-risk, longer-term deals.
Key factors and trends affecting real estate in 2026 should include:
- Sustainable communities: While the return-to-office push has reduced the number of people working remotely, there are still more people working from home than there were before the pandemic. This has helped contribute to a growing demand for more dense, walkable communities where people can access groceries, pharmacies and restaurants within a 15-20 minute walk of where they live. And with roughly 10,000 baby boomers retiring every day, senior living communities that share this design philosophy will also be in demand.
- Longer investment horizons: Historically, the real estate industry has tended to think in three to five-year timelines. However, this is starting to shift towards seven to 10 years, as investors grow more risk-averse in the face of overall economic and political uncertainty. Longer deals offer more stability, in part because there is a greater opportunity to build community buy-in and help ensure the success of a project.
- Opportunity zones: The tax and budget bill that Congress passed in summer 2025 made the opportunity zones program permanent. This program should continue to offer real estate investors a safe, long-term investment opportunity that also provides significant tax benefits.
Each of these elements should influence where and how capital is invested over the next 12 months. But there is another factor here that you should consider, not as an investment opportunity, but a business one: succession planning.
For family-owned real estate firms, it’s time to get serious about succession planning
Baby boomers are the wealthiest generation in human history, with a collective net worth that reaches almost $80 trillion. Yes, that’s trillion with a T.
A significant amount of that wealth is tied up in real estate assets held by family-owned firms. This means that as the current generation of owners retires and passes on, ownership of those firms and assets will be changing hands.
To prepare for this generational shift, family-owned firms need to get serious about succession planning now rather than later. This involves identifying the next generation of leaders for a firm and making sure these people are prepared to step into their new roles when the time comes.
Succession planning is especially important for family-owned firms because the business and the owner are often so intertwined. How (or even if) the leadership of a business will transfer to the owner’s heirs can be a complex process, and it’s one that will get even messier if you attempt it on a shortened timeline.
Starting to implement an effective succession planning strategy now allows your firm to prepare for the future while also becoming stronger in the present. Succession planning helps you actively attract, retain and develop talent, reassure investors of long-term continuity and avoid chaos in the event that a transition happens earlier than anticipated.
Although conversations around succession can be uncomfortable, especially for family real estate businesses, leaders who recognize the opportunity here will be putting their firms on better footing than those who delay.
Where could the real estate business run into trouble in 2026?
Are there red flags for investors to watch out for over the next 12 months? Here are some potential obstacles to consider.
- Broad uncertainty: While interest rates are expected to remain stable or even decline, the overall market is still operating within a climate of political and economic uncertainty. No one knows exactly what’s going to happen, but firms should consider this element in their strategic planning.
- Personal asset exposure: Driven in part by uncertainty, more banks are requiring real estate investors to use personal assets to guarantee loans. While bank funding is still usually the best method for financing a deal, investors are elevating their risk levels by securing loans this way.
- Overconfidence in AI: There’s no doubt that AI is dramatically changing the business world. But in real estate, at least, don’t make the mistake of overvaluing its capabilities. Investors (or their outside accounting firms) who have been leaning on AI to do cost-segregation studies, for example, often find that the work may only be 80 to 90% accurate — which might sound acceptable to you but most definitely won’t be to the IRS.
- Fraud and cyberattacks: Powered in part by AI, fraud and cybercrime continue to get more effective. Virtually all companies larger than a lemonade stand should expect that a cyberattack is a matter of when, not if — and prepare accordingly.
- Outdated legacy systems: Real estate firms looking to maintain profitability as they grow are often held back by legacy, spreadsheet-based accounting systems that make it impossible for leaders to gain real-time visibility into business performance. Potential investors or M&A partners also increasingly look for more modern systems in the firms they choose to do business with.
Consider consulting an outside advisor to help you assess your specific vulnerabilities or opportunities for improvement here. An advisor can help you notice issues your internal team may not spot and then recommend and help you implement solutions.
Why real estate remains an unparalleled tax opportunity
Real estate remains one of the most tax-friendly investment opportunities on the planet. For investors looking to build wealth, investing in real estate doesn’t just provide the confidence that comes from owning real property, but major tax advantages via strategies like bonus depreciation, 1031 exchanges and opportunity zones.
To put it simply: The effective tax rate for real estate is usually a fraction of what you might otherwise pay. You’re frequently able to defer gains, strategically time income, write off more expenses and otherwise minimize your exposure to taxation in ways that are less possible with other types of investments.
If you haven’t yet, consult with your tax advisor on the financial opportunities available through real estate investing, and learn more about how this approach can strengthen your overall tax strategy.
How Wipfli can help
We help real estate investors and firms to develop their businesses and grow wealth. Let’s talk about your goals, tax strategy and business performance to map out where you want to go and how to get there. Start a conversation.
Let’s talk about succeeding at real estate
