First Half of 2026 Outlook: Real Estate's whirlwind of a few months

Residential and commercialproperties have been hit with some uneven headwinds over the last few months between interest rates, inflation, and modest rent growth.

The first half of 2026 has been a period of whiplash with interest rates falling, to go back up to 2025 levels. Inflation continues to effect costs in the trade services, helping drive repairs costs higher, all with modest gains in rent.

Interest Rates: A tale of peek-a-boo

EVeryone was expecting interest rates to start to decrease in 2026. They did, but within the span of a few months, they climbed a little more than .5%, furthering the crunch on investors looking to make deals on refinancings on deals they made at higher rates, as well as putting the back against the wall for investors who were due to refinance at the end of their commercial property loans which likely were likely originated in the lower interest rates of 2021.

Depreciation: 100% Bonus is back

100% bonus depreciation is back, as the President had promised, but only for property that was placed in service after January 19th. As exciting as this is for investors, remember that Illinois does not allow this bonusing. Another reminder as well; Just because it's there, doesn't mean that you should make property purchasing decisions or capital expenditure decisions based soley on the question "How much of this property can I 100% bonus?"

Leases: Illinois residential leases now require a new disclosure

Starting on January 1st, Illinois required all new residential leases to have the State's summary of Rights on the first page of every written lease, as well as tenants must have a written acknoledgement on the bottom of each page of this summary. In the grand sceme of issues, not that hard to rectify and impliment, but if you don't, it could lead to potential damages against the landlord.

Download the Full Report

For a few more insights covering rent growth, short-term rental sales tax, and repair costs, download the free PDF here:

Real Estate Operator First Half 2026 White Paper - Pathfinder Accounting & tax.pdf

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