The Real Estate Roundtable (RER) wrote to the Treasury Department this week, urging guidance to ensure the One Big Beautiful Bill (OB3) Act’s restored 100 percent bonus depreciation provision is successful in spurring real estate investment, job creation, and economic growth. (Letter, Oct. 17)

Background

• The Tax Cuts and Jobs Act of 2017 capped taxpayers’ ability to deduct their interest expense on business debt. At the same time, the law created an exception that allows real estate businesses to fully deduct their interest expense if they make a “real property trade or business (RPTOB) election.”

• Taxpayers who make the RPTOB election are subject to the alternative depreciation system and ineligible for bonus depreciation.

• By modifying the business interest limitation rules, the OB3 Act made it easier for property owners to fully deduct their business interest and qualify for bonus depreciation. However, the legislation did not expressly clarify that existing property owners could revoke or reverse a prior RPTOB election.

• Guidance is needed to ensure taxpayers’ ability to change a RPTOB election and claim the full benefit of the bonus depreciation provision. (Letter, Oct. 17)

Why It Matters

• The restoration of 100 percent expensing for capital expenditures, including tenant and nonresidential property improvements, is among the most significant provisions in the OB3 Act.

• The Tax Foundation estimates bonus depreciation will boost long-run GDP by 0.6 percent and generate the equivalent of 145,000 jobs. (Tax Foundation, July 4)

• In the absence of additional tax guidance, however, many taxpayers will not qualify for bonus depreciation with respect to their property improvements.

RER Recommendations & Perspective

• Ample precedent and authority exist for Treasury to clarify that, in light of the changes made in the OB3 Act, taxpayers can amend and change their prior RPTOB elections. (See Revenue Procedure 2020-22, issued following passage of the CARES Act of 2020)

• With clear implementing rules, bonus depreciation “will facilitate the modernization and repurposing of real estate assets, including underutilized office buildings, shopping centers, hotels, and mixed-use properties,” the RER submission stated.

• “Small businesses will benefit from the ability to immediately expense their leasehold improvements,” the letter continued. “The capital expenditures spurred by expensing will create new spaces for commerce to flourish, boost property values, and strengthen communities by increasing local tax revenue critical for public services like schools and law enforcement.”

The submission from RER President and CEO Jeffrey DeBoer was addressed to Treasury Assistant Secretary for Tax Policy and Acting IRS Chief Counsel Kenneth J. Kies. RER’s Tax Policy Advisory Committee (TPAC) is continuing to review and develop recommendations for Treasury with respect to the implementation of the monumental tax legislation signed into law this summer.

The U.S. Senate passed the Renewing Opportunity in the American Dream (ROAD) to Housing Act of 2025 (S. 2651) on Oct. 9, as part of its version of the National Defense Authorization Act (NDAA)—marking the first bipartisan, comprehensive housing package advanced in more than a decade. (MultiFamily Dive, Oct. 15)

ROAD to Housing Act

• Introduced by Senate Banking Committee Chair Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-MA), the bipartisan bill passed the committee 24–0 in July before its inclusion in the NDAA. (CRE Daily, Oct. 14)

• The legislation builds on years of bipartisan committee work, stakeholder engagement, and multiple hearings. It focuses on streamlining regulations, incentivizing construction, modernizing housing finance and disaster-recovery programs, and supporting vulnerable populations such as veterans and the homeless. (HousingWire, Oct. 10)

• RER submitted a comment letter in support of the ROAD to Housing Act ahead of the committee’s first bipartisan housing markup in over a decade in July. (Roundtable Weekly, Aug. 1)

• The bill incentivizes states and cities to boost housing supply by cutting red tape, streamlining federal inspections, and eliminating duplicative regulations. (The Hill, July 29)

• Key pillars of the bill focus on expanding and preserving supply, improving affordability and access, enhancing accountability and fiscal responsibility, and strengthening oversight of federal housing programs. (Press Release, Oct. 9 | Roundtable Weekly, Aug. 1)

• The legislation contains more than 40 provisions contributed by every committee member and reflects a coordinated effort to modernize housing policy at the federal level. (Politico, July 29 )

• Sen. Warren said, “This landmark legislation—the first of its kind in more than a decade—takes important steps to boost the nation’s housing supply, improve housing affordability, and increase oversight and efficiency of federal regulators and housing programs. I look forward to working with my colleagues in the House to get the bill to the President’s desk.” (Press Release, Oct. 9)

What’s Next

• The bill now heads to the House of Representatives for consideration before going to the President’s desk to be signed into law.

Roundtable on the Road

• This week, RER President and CEO Jeffrey D. DeBoer was a featured speaker at NYU Stern’s Chen Institute National Apartment Finance & Investment Summit, where he was interviewed by Gregg Gerken (Former Head of Commercial Real Estate and Executive Vice President, TD Bank) on national policy outlook, housing affordability, housing finance reform and agency privatization, and capital availability.

• “Safe, affordable housing is essential to strong communities and a healthy economy,” said DeBoer. “The nation’s chronic underbuilding has created an affordability crisis that demands coordinated action. The ROAD to Housing Act that recently passed reflects the kind of public-private collaboration needed to address the housing shortage by aligning federal incentives with local action to unlock private capital, expand supply, and strengthen communities nationwide.”

RER will continue engaging with policymakers and industry leaders to promote bipartisan solutions and regulatory reforms that expand housing supply, improve affordability, and strengthen economic stability.

The federal government remains shut down for a second week as partisan gridlock over spending and health care continues in Washington. (Punchbowl News Oct. 15, 17 | Roll Call Oct. 14)

State of Play

• Republicans and Democrats remain deadlocked, with no signs of progress toward reopening the government. The Senate on Thursday failed for the 10th time to advance a short-term funding bill passed by the House since the shutdown began Oct. 1. (NPR, Oct. 16)

• In a 51–44 vote, senators again rejected a GOP-led continuing resolution (CR) that would have funded the government through Nov. 21. (CNBC, Oct. 15)

• Democrats continue to insist that any funding measure must include an extension of enhanced Affordable Care Act (ACA) subsidies that are set to expire at the end of the year.

• GOP leaders also remain at a standstill until the government reopens—Speaker Mike Johnson (R-LA) refusing to recall the House without a funding deal, and Senate Majority Leader John Thune (R-SD) said discussions on health care tax credits can begin only after the shutdown ends. (NPR, Oct. 9 | PoliticoPro, Oct. 6)

• The Trump administration’s plan to lay off more than 10,000 federal employees during the shutdown has been temporarily blocked after a judge ruled the firings likely exceeded executive authority. (Roll Call, Oct. 15 | Bloomberg, Oct. 16)

Path Forward

• As the shutdown enters its third week, lawmakers are weighing several potential exit paths, including a short-term CR, a handful of Democrats could defect to advance the GOP bill, a Trump–Schumer compromise, or a bipartisan “dual-vote” plan led by Sen. Jeanne Shaheen (D-NH) to reopen the government and extend ACA subsidies for one year. (Punchbowl News, Oct. 16 | Bloomberg, Oct. 14)

• The White House appears prepared for a prolonged shutdown, redirecting funds to sustain key programs and betting that public pressure will eventually force Democrats to adjust strategy. (Punchbowl News, Oct. 16)

• Lawmakers on both sides warn the economic fallout will deepen if the impasse stretches into November, threatening programs vital to housing, infrastructure, and financial markets.

CRE Impact

• Economy: Each week the government remains shut down is projected to cost the U.S. economy roughly $7 billion, according to EY-Parthenon Chief Economist Gregory Daco. (BisNow, Oct. 12)

• GDP: U.S. gross domestic product could fall by 15 to 20 basis points for each week the shutdown persists, according to Marcus & Millichap, which noted that the immediate impact on CRE remains limited for now. (Marcus & Millichap)

• Housing: The U.S. Department of Housing and Urban Development (HUD) reportedly has confirmed federal funding for rental voucher assistance is available through the end of 2025, consistent with HUD’s contingency plan for certain programs to continue operations during the shutdown. (NAHRO, Oct. 16 | Roundtable Weekly, July 25)

• Energy: EPA’s Portfolio Manager building energy benchmarking tool remains up and running. However, the agency’s website explains that ENERGY STAR resources “will not be updated regularly” during the lapse in appropriations and “many services may not be available.”

• NFIP: The lapse of the National Flood Insurance Program (NFIP) continues to delay property closings and financing in flood-prone regions. While existing claims can still be paid, new policies and renewals cannot be issued, complicating sales and dampening confidence in affected markets. (Roundtable Weekly, Oct. 10)

• Sen. John Kennedy (R-LA) is urging GOP leaders to hold a stand-alone vote to reopen the NFIP. Speaker Johnson and Majority Leader Steve Scalise (R-LA) have resisted, saying the program will be reauthorized once the government reopens. (PoliticoPro, Oct. 16)

• RER supports a long-term, sustainable NFIP reauthorization to avoid recurring market disruptions. (Roundtable Weekly, Sept. 19)

RER continues to urge Congress to act responsibly to reopen the government and restore critical housing, insurance, and economic programs essential to real estate investment and growth.