Author: abigail_grenadier

New Tax Law to Spur Housing Construction and Property Improvements as Congressional Leaders Explore Options for Next Tax Bill

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President Donald Trump signed the One Big Beautiful Bill Act (OBBB Act) into law on July 4, the culmination of months of work by congressional Republicans to reshape federal tax and spending policies. The legislation included provisions long advocated by The Real Estate Roundtable (RER), such as a significant expansion of affordable housing tax incentives, accelerated depreciation for property improvements, and reform of tax accounting rules for condominium construction.

RER Summary of Real Estate Related Provisions

Affordable Housing Boost

  • The OBBB Act enacts landmark changes to address the nation’s housing shortage through enhancements to long-standing development incentives. (Roundtable Weekly, July 3)
  • The OBBB Act expands the Low-Income Housing Tax Credit (LIHTC) by permanently increasing state LIHTC allocations by 12% and reducing the private activity bond financing requirement for 4% LIHTC projects from 50% to 25%. The latter provision will allow more affordable housing projects to receive tax credits without a direct allocation from the state.
  • The bill’s overhaul of tax provisions is projected to support the development of up to 1.2 million affordable rental units over the next decade. (PoliticoPro, July 9)
  • These changes to the LIHTC represent “the single largest increase in affordable housing development resources in at least 25 years,” said Peter Lawrence, chief public policy officer at Novogradac. (PoliticoPro, July 9)

Other OBBB Tax Changes Will Stimulate Housing Construction, Property Upgrades, and Real Estate Investment

  • Bonus Depreciation: The new tax law permanently restores immediate 100% expensing of qualifying capital expenditures, including appliances, fixtures, leasehold improvements, and interior improvements to nonresidential property. The provision will encourage capital investment and spur real estate improvements by reducing the after-tax cost of modernizing and upgrading existing properties. (RER Summary of Real Estate Related Provisions)
  • Condominium Construction: OBBB ends a discriminatory tax accounting rule that unfairly created phantom income for condo developers with respect to the pre-sale of units. The prior rule requiring condo developers to use the percentage of completion method of accounting raised hurdles for construction financing and discouraged new housing construction. OBBB will allow developers to use the completed contract method, aligning tax liability with actual receipts.
  • Opportunity Zones (OZs): OBBB permanently extends the Opportunity Zones (OZ) tax incentives, establishes a new designation of OZ census tracts every 10 years, and going forward, creates a 5-year rolling deferral period for capital gains invested in opportunity funds. Since their enactment in 2017, OZs have attracted over $120B in capital for low-income communities, with most investment going towards new housing and other productive real estate development. (Joint Committee on Taxation, 2024; Novogradac, Feb. 2025; Economic Innovation Group, March 2025)
  • On the latest episode of the Walker Webcast’s Most Insightful Hour in CRE, RER member Willy Walker (Chairman and CEO, Walker & Dunlop) and economist Dr. Peter Linneman (Principal, Linneman Associates) discussed the OBBB Act, tariffs, impacts on construction costs, affordable housing, single and multifamily supply, CRE markets, and much more. (Watch Webcast) (ConnectCRE, July 9)

State-Level Initiatives Strengthen Federal Housing Efforts

  • Rising construction costs and ongoing affordability challenges have prompted states to complement federal initiatives like LIHTC.
  • States such as Tennessee, Georgia, and Michigan have introduced innovative financing programs—including state-level tax credits and tax increment financing (TIF), leveraging future tax revenues generated by increased property values to sustainably fund and accelerate housing projects. (GlobeSt. July 11)
  • This week, RER member David O’Reilly (CEO, Howard Hughes Holdings) appeared on CNBC to discuss interest rates, housing market, and consumer demand.
  • Florida will eliminate its longstanding tax on commercial rents effective Oct. 1, 2025, becoming the first and only state to repeal the tax. The move is expected to reduce costs for tenants across office, industrial, and retail sectors, enabling businesses to reinvest capital into operations, local communities, and real estate. (GlobeSt. July 10)

Looking Ahead

  • Senate Finance Committee Chair Mike Crapo (R-ID) said this week that Republicans are eyeing a second party-line reconciliation package this fall to pursue policy priorities left out of the final OBBB Act.
  • “I’ve always been in favor of a three-bill strategy and there’s a ton of things that we need to do,” Sen. Crapo said (Politico, July 9).
  • GOP leaders have discussed reworking provisions flagged by the Senate parliamentarian during OBBB Act negotiations, potentially reviving items such as additional tax reforms and deeper spending cuts.
  • House Speaker Mike Johnson (R-LA) and House Budget Chair Jodey Arrington (R-TX) are also pushing for fall action, though Sen. Crapo cautioned that timelines remain fluid. (Politico, July 8 | Fox News, July 6)
  • “We’ve been planning a second reconciliation bill for the fall attached to the next fiscal year, and then potentially one in the spring,” Speaker Johnson said on Fox News Sunday. “That’s my plan. Three reconciliation bills before this Congress is over. I think we can do that.” (Fox News, July 6)

“Revenge Tax” Provision

  • The final OBBB Act excluded a provision opposed by The Roundtable that would have raised taxes on foreign investment that originated in countries deemed to have unfair tax policies. Proposed Section 899 could reappear, however, if international tax talks to exempt US companies from a global tax deal falter. (Roundtable Weekly,  June 27)

The G7 agreement to agreement is still only a “statement of intent,” with implementation details unresolved, raising the risk that Section 899 could return in a future reconciliation package, according to Tax Notes. “Republicans made clear they’d bring it back if G7 partners slow-walk the deal,” said Danielle Rolfes of KPMG. (Tax Notes, July 10)

OBBB Act Signed Into Law: Energy Policy and CRE Impacts

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Sustainable Renewable Energy Concept With Wind Turbines, Solar Panels And City Buildings Background.

President Trump signed the “One Big Beautiful Bill Act” (OBBB) into law on July 4, enacting a sweeping overhaul of tax policy with far-reaching implications for energy, real estate, and investment. The legislation, followed by a companion executive order this week, includes provisions that scale back the Inflation Reduction Act (IRA), tax credits, and modifies rules for solar and wind development.

Clean Energy Tax Incentives

  • While the OBBB Act pares down many energy tax incentives from the Inflation Reduction Act, a number of important elements remain relevant to CRE:
  • The Act does not include a proposed excise tax on solar and wind projects that would have penalized facilities using materials from China and other designated foreign entities. (WSJ, June 29; CBS News, July 1; POLITICO, July 1)
  • 100% Expensing Provisions: Building owners may now fully write off the costs of clean energy projects, including solar installations when placed in service, regardless of tax credit eligibility or availability. Accelerated depreciation significantly enhances return on investment for such projects.
  • Tariffs and Duties: High tariffs remain in place on imported solar components, especially from Southeast Asia, as part of ongoing trade enforcement and reshoring efforts. These tariffs apply independently of any tax credit eligibility. (Solar Power World, May 20)
  • Cost-Effectiveness of Renewables: Despite the policy changes, utility-scale solar and onshore wind remain the most cost-effective new-build energy sources even without tax subsidies, according to Lazard’s 2025 Levelized Cost of Energy report.

New Executive Order

  • The EO directs the Treasury Department to:
  • Strictly enforce the termination of clean electricity production and investment tax credits under Sections 45Y and 48E, and to more narrowly define when a project is deemed to have started construction. (Bloomberg, July 7)
  • Issue updated guidance within 45 days (August 18) that tightens the definition of when clean energy projects begin construction, curtailing reliance on the long-standing “5% safe harbor” provision that allowed developers to qualify for tax credits by incurring just 5% of project costs. (PoliticoPro, July 10)
  • Restrict the use of broad safe harbors unless a “substantial portion” of a project is actually built.
  • The guidance also requires projects to demonstrate “continuous construction,” a threshold they can meet by completing the project within four years. (PoliticoPro, July 10)
  • The move creates a layer of uncertainty for companies planning solar and wind projects that have relied on the 5% rule under IRS Notice 2021-41. Additional guidance is expected from Treasury to clarify the scope and enforcement.

ENERGY STAR

  • The ENERGY STAR program long supported by real estate, manufacturing, and consumer tech industries, remains intact following the OBBB Act’s funding rescissions.
  • RER continues to lead coalition efforts to preserve the program, including spearheading a June 6 letter to Congress signed by more than 30 organizations, urges continued support for ENERGY STAR as a voluntary public-private partnership. (Roundtable Weekly, June 6)

RER will work closely with Congress, federal agencies, and coalition partners to shape practical guidance and protect real estate’s role in the clean energy transition.

Congress Delivers Historic Tax and Budget Package to Trump’s Desk for July 4th Signing

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After months of high-stakes negotiations, Congress this week passed the sweeping One Big Beautiful Bill Act, a comprehensive reconciliation package that overhauls tax policy, restructures federal spending, and advances numerous Real Estate Roundtable (RER) priorities as it heads to President Trump’s desk for signature. (Roll Call, July 3)

State of Play

  • The House passed the final version of the One Big Beautiful Bill Act this afternoon, following a narrow vote of 218–214, capping off weeks of negotiations and delivering a legislative victory to Republican leaders ahead of the July 4 deadline. In the end, two Republicans—Reps. Thomas Massie (R-KY) and Brian Fitzpatrick (R-PA)—joined all Democrats in opposing the bill. (The Hill, July 3)
  • “With one big, beautiful bill, we are gonna make this country stronger, safer, and more prosperous than ever before, and every American is going to benefit from that,” said House Speaker Mike Johnson (R-LA). “Today we are laying a key cornerstone of America’s new golden age.” (Politico, July 3)
  • The Senate passed the sweeping budget bill in a 51-50 vote on Tuesday, after almost 24 hours of debate, amendments, and a “vote-a-rama” that ended with Vice President JD Vance casting the tiebreaking vote in favor of passage. Three GOP senators—Rand Paul (R-KY), Thom Tillis (R-NC), and Susan Collins (R-ME) voted no. (Axios, July 2)
  • In an interview after the bill’s Senate passage, Senate Majority Leader John Thune (R-SD) acknowledged that the decision to make the measure’s business tax cuts permanent impacted its savings and overall strategy. “We really believed that permanence was the key to economic growth because it creates certainty,” he said. “All the models that we saw showed that you got more growth with permanence.” (PoliticoPro, July 1)

Roundtable Advocacy

  • The final legislation advances a broad array of policies that support capital formation, real estate investment, and housing development, while repealing harmful proposals like Section 899 and preserving longstanding tax rules vital to CRE.
  • “This legislation represents a meaningful step toward strengthening communities, expanding housing opportunities, and supporting long-term economic growth,” said Jeffrey DeBoer, President and CEO of RER. “By advancing policies that encourage investment and preserve small business tax parity, Congress is helping to revitalize neighborhoods, create jobs, and ensure all Americans benefit from a stronger built environment.
  • DeBoer added, “We are, of course, disappointed that the overall bill is predicted to increase the deficit and national long-term debt. However, we hope that the pro-growth aspects of the bill will narrow both by significantly growing the economy and providing revenues greater than those now projected.  Likewise, we are concerned with predictions by some regarding the impact of spending cuts on research and needed health care for Americans.”
  • RER’s advocacy efforts were particularly successful in eliminating several provisions that would have severely impacted CRE, including Section 899, known as the “revenge tax,” and harmful limitations on state and local tax deductions for pass-through businesses.
  • Speaking to Bisnow regarding the impact of the tax provisions on real estate, Ryan McCormick, RER’s SVP and Counsel, said, “From the bill’s investment in housing and low-income communities to its fair treatment of entrepreneurial and pass-through businesses, the legislation strikes the right balance … it should spur job-creating capital investments in commercial properties across the nation.” (BisNow, July 1)

Tax Policy

  • The final legislation includes several tax provisions that will provide significant benefits to commercial real estate and support long-term economic growth:
  • Permanent Business Tax Cuts: The bill makes permanent several business tax deductions from the 2017 Tax Cuts and Jobs Act (TCJA), including the Section 199A deduction for pass-through businesses and interest deductibility rules under Section 163(j).
  • Section 899: Late last week, lawmakers removed the Section 899 provision known as the “revenge tax” from the bill after the Treasury Department secured an international tax agreement with G7 countries. RER strongly advocated for changes to the measure, warning that the tax would have deterred foreign investment in U.S. commercial real estate and weakened capital formation.  (Roundtable Weekly, June 27) (BisNow, July 1) (Commercial Property Executive, July 1)
  • Opportunity Zones: OZs are now a permanent feature of the tax code, though deferral periods for eligible gains are shortened through the end of 2026—a technical issue that RER will continue to address in discussions with Congress and Treasury.
  • Low-Income Housing Tax Credit (LIHTC): The bill preserves and enhances the LIHTC program, supporting the construction of affordable housing nationwide.
  • Bonus depreciation & expensing: Full expensing and 100% bonus depreciation for qualifying property are restored and made permanent, providing significant cash flow benefits for property owners undertaking capital improvements.
  • SALT workarounds preserved: The final bill drops proposed changes to state and local tax deductibility on pass-through business income, preserving current law that allows deductibility through state pass-through entity tax regimes.
  • Condominium construction tax accounting: The legislation includes provisions the RER has advocated for since 2015, allowing condo developers to use the completed contract method of accounting, aligning tax liability with actual receipts.
  • Excess business losses: The revised Senate bill avoids a controversial proposal from earlier drafts that would have permanently siloed active pass-through business losses, instead opting to extend current law under Section 461(l) without restricting taxpayers from using those losses against wages and investment income. This approach preserves flexibility for entrepreneurs, start-ups, and two-earner households and avoids undermining the principle of measuring true net income.

Energy Tax Credits

Sustainable Renewable Energy Concept With Wind Turbines, Solar Panels And City Buildings Background.
  • For months, clean energy tax incentives enacted under the Inflation Reduction Act (IRA) have been a point of contention in both the House and Senate, with several Republican lawmakers urging leadership to take a more targeted approach to scaling back the IRA’s provisions—while maintaining incentives that support both traditional and renewable energy sectors. (RW, April 25) (CBS News, July 1)
  • Ultimately, the final legislation significantly scales back the IRA’s clean energy tax incentives by accelerating the phase-out of wind and solar credits, while dropping a controversial excise tax on projects using foreign components and preserving eligibility for already planned or approved developments that begin construction before mid-2026. (PoliticoPro, July 1) (Bloomberg, July 1)
  • The Section 48E Investment Tax Credit (ITC) for wind and solar projects remains in the tax code, but projects that begin construction 12 months after the bill’s enactment must be placed in service by the end of 2027.
  • The Section 179D deduction for energy-efficient commercial building construction and retrofits is now limited to projects that begin construction by June 30, 2026.
  • Similarly, the 45L tax credit for energy-efficient new residential construction expires for homes “acquired” after June 30, 2026.
  • Importantly, ENERGY STAR’s current budget for FY2025 was not affected by any of the funding rescissions in the final bill.
  • At this week’s BOMA International Conference, RER’s SVP and Counsel Duane Desiderio joined John Boling (VP, Advocacy & Building Codes, BOMA International) for a panel discussion on ENERGY STAR Portfolio Manager, highlighting the program’s legal foundation, bipartisan economic appeal, and importance to real estate stakeholders. (Commercial Property Executive, July 2)
  • RER will continue engaging with lawmakers through the annual appropriations process to ensure that FY2026 federal funding bills (for spending starting October 1) support ENERGY STAR. (Commercial Property Executive, July 2)

What’s Next

  • With the One Big Beautiful Bill Act heading to the president’s desk, attention now turns to the appropriations process and additional reconciliation opportunities.
  • Speaker Mike Johnson has expressed interest in pursuing additional budget reconciliation efforts, a process that Congress can undertake at the end of the fiscal year.
  • In an interview on Fox News Tuesday, Johnson said, “This is just a step in a sequence of events. We’re intending to do more reconciliation work. The plan is to do one in the fall for FY26 budget year and we can also squeeze in a third one for FY27 before this Congress is up.” (Politico, July 2) (Punchbowl News, July 2)

RER will continue to provide in-depth analysis in the coming days and weeks on the reconciliation bill’s implications for commercial real estate, including technical implementation, market impacts, and policy recommendations.

Roundtable Statement on Senate Passage of the One Big Beautiful Bill Act

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Statement by Real Estate Roundtable President and CEO Jeffrey D. DeBoer

(WASHINGTON, D.C.) —“The Real Estate Roundtable supports the Senate Amendment to H.R. 1, the One Big Beautiful Bill Act. We urge its final passage and speedy enactment. This legislation will spur needed investment in our nation’s housing supply, strengthen urban and rural communities, and grow the broader economy to the benefit of all Americans.”

# # #

Fed Chair Powell Testifies on Monetary Policy Outlook, Proposal to Ease Bank Capital Requirements, and Basel III Endgame

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In a busy week for Fed policy, Federal Reserve Chair Jerome Powell delivered his semiannual monetary policy report to Congress, testifying at a pair of House and Senate hearings on the state of the U.S. economy. Powell also fielded questions from policymakers on a new proposal unveiled this week to ease capital requirements for large banks and the state of Basel III Endgame.

Policy Outlook

  • In testimony before the House Financial Services Committee and Senate Banking, Housing, and Urban Affairs Committee, Chair Powell defended the Fed’s decision to hold interest rates steady last week. (Roundtable Weekly, June 20)

  • With consumer confidence weakening and inflation risks from tariffs and Middle East tensions rising, the Fed faces competing pressures that could challenge price stability.
  • On Capitol Hill this week, Chair Powell reiterated the Fed’s wait-and-see approach, saying, “For the time being, we are well positioned to wait to learn more about the likely course of the economy before considering any adjustments to our policy stance.” (Federal Reserve, June 24)
  • Two Trump-appointed Fed officials, Vice Chair for Supervision Michelle Bowman and board member Christopher Waller, signaled support for cutting interest rates as soon as July. Their public stance diverges from the majority of Fed officials, seven of whom do not anticipate any rate cuts this year, highlighting an unusual divergence among Fed leadership. (Axios, June 24)

The Fed’s New Proposal

  • On Wednesday, the Fed advanced a proposal to reform the enhanced supplementary leverage ratio (SLR) in a 5-2 vote, which would reduce capital requirements for relatively low-risk assets, like U.S. Treasury markets. (Reuters, June 25)
  • The SLR was originally designed as a backstop to risk-based capital requirements to ensure that large banks hold a sufficient amount of capital, regardless of the riskiness of those assets. (ABA Journal, June 23)
  • Sen. Tim Scott (R-SC), Chair of the Senate Banking, Housing, and Urban Affairs Committee, noted at the Senate hearing with Chair Powell, the backstop has “too often” acted as a binding requirement for U.S. banks, which could harm the effective functioning of U.S. Treasury markets during periods of distress and discourage banks from engaging in low-risk activity.
  • The proposed modifications are intended to make it less expensive for large banks to hold less risky assets, so that more capital is freed up for banks to invest in Treasuries and other low-risk markets.

  • Vice Chair Bowman touted the proposal as an “important first step in balancing the stability of the financial system and Treasury market resilience, while preserving safety and soundness and restoring the SLR as a backstop.” (PoliticoPro, June 25)

  • Chair Powell similarly highlighted the benefits of the reform proposal, noting that “it will not in any way diminish the safety and soundness of the financial system.” (Senate Hearing, June 25)

  • The Fed published a notice of proposed rulemaking on the proposal, opening it for public comment.
  • RER plans to comment on the proposal and its implications for the commercial real estate industry.  The organization’s Real Estate Capital Policy Advisory Committee (RECPAC) is working on a response to the notice of proposed rulemaking and welcomes member input.

Basel III Endgame

The Federal Reserve in Washington, DC
  • Chair Powell was also asked about the Fed’s plans for Basel III Endgame, which stalled after the proposal was met with widespread criticism from policymakers and industry associations last year.

  • Chair Powell told policymakers that the Fed would take a “fresh start” at Basel III in light of the feedback it received. He agreed that the original proposal’s capital requirements were excessive and “very significantly exceeded” the Basel requirements, suggesting that it will be further revised. (American Banker, June 25)

  • RER strongly opposed the original Basel III proposal, pointing out the significant economic costs it would incur without clear benefits to the economy, recommending that it be withdrawn and only reissued after further study.
  • Bowman, the newly appointed Vice Chair for Supervision at the Federal Reserve, is actively involved in reviewing and potentially reforming the Basel III endgame proposal to make it more capital-neutral for U.S. banks.
  • Tighter capital requirements and higher costs would come at a time when the commercial real estate industry is facing a wave of maturing loans, undermining the ability of owners and developers to restructure debt and fill the equity gap. So it is important for the Agencies to recalibrate their proposal accordingly to avert increased borrowing costs and reduced credit capacity for real estate and the overall economy.

Chair Powell’s term at the Fed isn’t up until May 2026—but reports indicate that President Trump is considering announcing his pick to succeed Powell far in advance, potentially a candidate who is more amenable to lowering interest rates on an accelerated timeline.

Senate Republicans Race to Resolve Policy Disputes in One Big Beautiful Bill

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Senate Republicans are racing to rewrite significant portions of their sweeping reconciliation bill in an effort to vote before the July 4 recess. Parliamentarian rulings, unresolved tax and Medicaid issues, and opposition from fiscal hawks and House conservatives are testing the goal of delivering the legislation to President Trump’s desk by the holiday.

State of Play

  • “We’ll have you out of here by the Fourth of July,” Senate Majority Leader John Thune (R-SD) told reporters Thursday.
  • Parliamentarian Elizabeth MacDonough has ruled that several provisions violate reconciliation rules, including proposed changes to Medicaid financing and certain tax offsets.
  • Republicans must now revise or replace those sections while managing disagreements over state provider taxes, energy tax incentives, and the deductibility of state and local taxes (SALT).
  • The earliest a Senate vote could begin is Saturday, followed by a “vote-a-rama” and potential final passage on Sunday. The House has pledged a 48-hour notice before any floor vote, meaning the earliest action could occur Monday evening. (Roll Call, June 24)
  • “I remain very optimistic that there’s not going to be a wide chasm between the two products, what the Senate produces and what we produce. We all know what the touchpoints are, the areas of greatest concern,” House Speaker Mike Johnson (R-LA) said.

Energy Tax Incentives

  • Several Senate Republicans are pushing to soften proposed rollbacks to the Inflation Reduction Act’s (IRA) energy tax credits. (PoliticoPro, June 23)
  • The Senate Finance Committee’s current version seeks to phase out IRA credits faster than Democrats’ 2022 law but retains more favorable provisions than the House bill, including construction-based eligibility rules. (PoliticoPro – Analysis, June 24)
  • Sen. Lisa Murkowski (R-AK) said Thursday that she was focusing on ensuring Senate Finance language allowing projects to receive credits based on when they begin construction remains in the bill. Conservatives are seeking to return to more restrictive language passed by the House that would determine eligibility based on when those projects start producing electricity. (PoliticoPro, June 27)
  • “I want to make sure ‘commence construction’ is in place versus ‘placed in service.’ That’s really important,” said Sen. Murkowski.
  • However, fiscal conservatives remain opposed to extending energy subsidies, and Democrats continue to warn that weakening IRA incentives could threaten grid reliability as demand surges from data centers and AI-related power needs. (NYT, June 26)

RER Homeland Security Task Force Engaged Amid Iran Conflict

  • RER’s HSTF is actively coordinating with public and private partners in response to heightened geopolitical risks stemming from the conflict with Iran.
  • Under the oversight of the HSTF, the RE-ISAC, serves as the primary conduit of terrorism, cyber and natural hazard warning and response information between the government and the commercial facilities sector. (RW, June 13)
  • Through the HSTF and RE-ISAC, RER remains engaged in preparedness efforts, emphasizing resilience across the industry and monitoring evolving threats that could affect the nation’s infrastructure and operations.

Congress is expected to work through the weekend as Senate leaders try to finalize the reconciliation package and set up potential floor votes before the July 4 recess.

Real Estate Industry Mobilizes for Pro-Growth Tax Provisions in Megabill

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As Congress works to meet a July 4 deadline for sweeping reconciliation legislation, The Real Estate Roundtable (RER) and partner organizations are calling on Senate leaders to align with House-passed tax measures that strengthen Main Street businesses by expanding the Section 199A deduction, protecting the Opportunity Zones program, and advancing a lower capital gains rate to drive long-term investment.

Section 199A

  • RER and nearly 100 other organizations sent a letter to Senate Finance Committee Chair Mike Crapo (R-ID), calling for the Senate to follow the House’s lead in expanding the Section 199A deduction from 20% to 23%. (PoliticoPro, June 26)
  • The Senate version originally would have made the deduction permanent but limited SALT deductibility, resulting in higher effective tax rates for many pass-throughs. But in a positive development announced today by Punchbowl News, Senate Republicans plan to entirely drop those new limits as part of a pending deal with the House GOP.
  • The House approach would maintain tax parity with C corporations and help ensure that small businesses—including real estate partnerships—can continue to invest, grow, and hire.
  • “Expanding Section 199A will help preserve tax parity between pass-through businesses and larger public corporations while helping ensure the Senate bill does not raise taxes on millions of Main Street businesses,” the coalition wrote. (Letter, June 25 )

Opportunity Zones

  • Using the “current policy baseline,” the Opportunity Zone program is now projected to generate $66 billion in savings rather than costing $7.5 billion under traditional estimates, making it appear as a revenue raiser rather than a tax cut. (PoliticoPro, June 27)
  • Senate Budget Committee Chair Lindsey Graham (R-SC) said,  “We need a current policy baseline to make tax cuts permanent, and we need Opportunity Zones to help urban and rural poor areas, so we’ll just press on — no matter what.”

Capital Gains Bill Introduced

  • Reps. French Hill (R-AR) and Greg Steube (R-FL) introduced the Revitalizing Investment, Savings, and Entrepreneurship (RISE) Act to lower the top federal capital gains rate to 15%, aiming to boost investment and long-term economic growth. (Rep. Hill Press Release, June 24)
  • The RISE Act would restore a bipartisan policy that was in place from 2003 to 2012.
  • “To build a stronger, more prosperous future, we need policies that unlock capital, reward risk-taking, and drive real growth for all Americans. That is exactly what the RISE Act delivers,” said Rep. Hill.

As negotiations continue, RER remains focused on advancing tax policies that foster capital formation, protect real estate investment, and support Main Street employers nationwide.

Section 899’s Revenge Tax Removed from GOP Tax Bill

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Lawmakers have removed the Section 899 provision known as the “revenge tax” from the reconciliation package after the Treasury Department secured an international tax agreement with G7 countries. The Real Estate Roundtable (RER) strongly advocated for changes to the measure, warning that the tax would have deterred foreign investment in U.S. commercial real estate and weakened capital formation. (AP News, June 26)

Why It Matters

  • Congressional Republicans agreed Thursday to strike Section 899 from the One Big Beautiful Bill Act at the request of Treasury Secretary Scott Bessent, who announced a “joint understanding” with other G7 nations that he said will protect American companies from foreign tax discrimination. (NYT, June 26)
  • In a post on X, Sec. Bessent said the provision was no longer necessary after the U.S. and its partners in the G7 reached a “joint understanding … that defends American interests.” (The Hill, June 26)
  • Senate Finance Committee Chairman Mike Crapo (R-ID) and House Ways and Means Committee Chairman Jason Smith (R-MO) said they would remove the provision. But, they noted, “Congressional Republicans stand ready to take immediate action if the other parties walk away from this deal or slow walk its implementation.” (AP News, June 26)
  • Section 899 would have raised U.S. taxes on inbound investment from countries with “unfair” tax regimes. RER and other industry groups told lawmakers that the mere proposal of the tax was chilling current foreign capital investment activity and warned that its enactment would substantially deter future investment, increase borrowing costs, and dampen property values.
  • Earlier this week, Chairman Smith and White House economic adviser Kevin Hassett signaled that Section 899 could be removed from the bill if foreign governments—agreed to suspend policies like the Pillar Two global minimum tax and finalize related trade deals. (Reuters, June 25 | Bloomberg, June 25)
  • The Joint Committee on Taxation (JCT) last week released a revised score showing that, under a Senate version of the bill, Section 899 would have raised only $12.5 billion over three years, compared to the $63 billion originally projected in the House version.
  • The JCT estimate used the “current policy baseline” that assumes the extension of expiring tax provisions, lowing the bill’s total cost estimate to $442 billion. (Politico, June 22)

RER Advocacy

  • RER has been at the forefront of the policy debate surrounding Section 899, strongly advocating for its elimination or revision. Following weeks of one-on-one meetings with policymakers, a delegation of RER members and their counsel met last week with leading Congressional tax staff.  
  • The views expressed are summarized in comment letters submitted on June 12 and June 23 to congressional leaders, warning of its harmful impact on investment, job creation, and market stability. (Bisnow, June 25)
  • “We commend congressional leaders and the Trump administration for removing Section 899 from the reconciliation bill,” said Jeffrey DeBoer, RER President and CEO. “This provision would have increased market volatility, discouraged inbound capital, and imposed higher borrowing costs on American real estate owners—ultimately reducing job creation, slowing economic growth, and diminishing U.S. competitiveness. Its removal helps preserve access to foreign capital and supports continued investment in communities across the country.”
  • RER this week joined a coalition of leading trade groups representing private equity, managed funds, and the securities industries in urging the Senate to include a passive investment exemption in Section 899—a provision in both the House and Senate tax bills that would have raised taxes on inbound investment from countries with “discriminatory” tax regimes. (Letter, June 23) (Bisnow, June 25)
  • “The threat of Section 899 is already having a chilling effect on investment decisions,” said Ryan McCormick, RER’s SVP & Counsel. “These investors are highly mobile, so rather than paying the higher tax rate, they will simply invest elsewhere.” (Bisnow, June 25)
  • The coalition letter states, “Applying Section 899 to all forms of inbound passive investment would result in a significant increase in market volatility and a decline in investment in U.S. companies and our capital markets.” (Pensions&Investments, June 24)
  • RER also sent a letter on June 12 to Senate Majority Leader John Thune (R-SD) and Finance Committee Chair Crapo, calling for changes to the Section 899 tax proposal and cautioningthat without changes, the measure could potentially drive up borrowing costs, depress property values, and significantly deter foreign investment in housing, commercial developments, and infrastructure projects nationwide. (Letter, June 12 | RW, June 23)

The removal of Section 899 represents a meaningful policy outcome for commercial real estate, helping to protect investment flows and market stability. RER will continue working with Congress to ensure the final tax package supports capital formation, economic growth, and job creation.

Sen. Wyden Introduces New Tax Bills Targeting Partnerships Tax Rules

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Senate Finance Committee Ranking Member Ron Wyden (D-OR) introduced two bills aimed at overhauling the taxation of partnerships this week, reviving a longstanding effort with major implications for commercial real estate.

Why It Matters

  • Although the legislation faces little chance of advancing this Congress, it signals Democratic priorities for any future tax package, particularly if control of Congress shifts after the 2026 elections.
  • According to Sen. Wyden’s press release, partnerships are “a preferred tax avoidance strategy for wealthy investors and mega-corporations.” He continues, “you can bet we’ll have this on the shelf when it comes time for Democrats to pass an agenda that cleans up the harm Trump is doing to American families.” (Sen. Wyden Press Release, June 17)
  • The PARTNERSHIPS Act is an updated version of Sen. Wyden’s 2021 partnership reform discussion draft. While he has not shared the JCT revenue table, his press release states that the proposals would raise $727 billion over 10 years.

  • The legislation would make fundamental changes to how debt, gains, and deductions are allocated among partners—departing from established practices that reflect real estate economics and contractual obligations.

Bill’s Key Provisions 

  • Partnership debt: The PARTNERSHIPS Act would rewrite Section 752 rules to require all partnership debt be allocated according to profit shares, disregarding real estate partners’ actual economic risk, contractual guarantees, and repayment obligations. This could significantly alter basis allocation and impact deductions, losses, and gains—though a six-year transition period would apply.

  • Allocation of partnership items: One of the major reforms proposed in the prior discussion draft was eliminating the “substantial economic effect (SEE)” safe harbor for allocating partnership items among the partners. The PARTNERSHIPS Act preserves the SEE rules while creating a specific rule for certain related-party partnerships. Under the Act, these partnerships would be required to allocate items consistent with contributed capital.

  • Allocation of built-in gains with respect to contributed property: The bill would eliminate two of the three options available to partnerships for allocating built-in gain among the partners when property is contributed to a partnership.
  • Net investment income tax: Mirroring the Biden budget, the bill would expand the 3.8% net investment income tax to include active pass-through business income not currently covered.

Roundtable Advocacy

  • RER has consistently advocated for fair treatment of partnerships—emphasizing their vital role in driving investment, job creation, and entrepreneurial risk-taking. As nearly half of all U.S. partnerships are in real estate, RER continues to urge Congress to strengthen, not undermine, the long-standing tax rules that support pass-through businesses and economic development.
  • RER, along with 23 national real estate organizations, previously led a comment letter on Sen. Wyden’s proposal in 2021, and will continue to advocate against provisions that mischaracterize partnerships as “tax scams.” (Letter, Sept. 2021 | RW, Sept. 2021)

  • Earlier this year, RER commissioned a comprehensive study by professors at Syracuse University and USC to analyze and address the important role of partnerships in the U.S. economy. 

RER’s Tax Policy Advisory Committee (TPAC) is reviewing how this research can further counter misleading narratives as tax policy discussions evolve.

Senate Finance Chairman Circulates Draft Tax Legislation as Senate Prepares for Reconciliation Debate

Posted on by abigail_grenadier

The Senate Finance Committee released the draft legislative text and a section-by-section summary of its portion of the budget reconciliation bill, encompassing tax cuts, extensions of the 2017 Tax Cuts and Jobs Act (TCJA), and an overhaul of Medicaid. The draft Senate bill has several differences compared to the House-passed One, Big, Beautiful Bill Act.

Why it Matters

  • The 549-page proposal would permanently extend the 20% pass-through business income deduction (Section 199A), 100% bonus depreciation, and the Opportunity Zone tax incentives. (Bisnow, June 16)
  • The Senate bill would also increase the debt ceiling to $5 trillion instead of the $4 trillion that passed the House. (Axios, June 18)
  • The legislation should continue to evolve through upcoming manager’s amendments, as negotiations among Senate Republicans and the White House continue.
  • Senate Finance Committee Chair Mike Crapo (R-ID) confirmed on Tuesday that his panel will not formally take up the sprawling tax package.

CRE Provisions in Senate Bill

Key provisions under Senate consideration include:

  • Section 899 “Revenge Tax” Provisions: Includes retaliatory tax measures on foreign companies and investors similar to the House bill but delaying the effective date until 2027. The draft clarifies that certain lending would be exempt under the portfolio interest exception, but it does not exempt all passive investment in U.S. real estate—an area of continued concern. (Bloomberg, June 17)
  • Opportunity Zones: Permanently extends OZ incentives, establishes recurring 10-year census tract designations, a rolling reset of deferral windows, new Rural OZs, and a phase-in of the 10% basis step-up for reinvested gains. (The Hill, June 16 | BisNow, June 17)

  • Low-Income Housing Tax Credit (LIHTC): Permanently increases state LIHTC allocations by 12% and lowers the private activity bond threshold from 50% to 25%—in line with the House bill.
  • Bonus Depreciation: Permanently extends 100% bonus depreciation for property acquired and placed in service after Jan. 19, 2025.

  • Business Interest Deductibility: Permanently modifies section 163(j) to allow interest deductions based on earnings before depreciation and amortization (EBITDA), effective for tax years after Dec. 31, 2024.
  • Factory Expensing: Provides four years of 100% expensing for factories that begin construction after Jan. 19, 2025, and are placed in service by Dec. 31, 2030.

  • New Markets Tax Credit: Permanently extends the NMTC, which currently expires on Dec. 31, 2025.

  • SALT Cap: Permanently extends the $10K SALT deduction cap for individuals, with negotiations on a larger increase ongoing. The bill retains full deductibility for business property taxes paid by pass-throughs, but limits the amount of state and local income taxes that pass-through owners can deduct through SALT workaround laws enacted in various states.
  • Energy Tax Incentives: Maintains House-passed foreign entity rules and includes a phasedown of the clean electricity investment tax credit. The clean electricity investment tax credit is phased out over three years (100% if construction begins in 2025, 60% if construction begins in 2026, 20% in 2027, and terminated thereafter). Unlike the House bill, the Senate version terminates section 179D for property constructed 12 months after enactment.

Immigration – Gold Card Proposal

  • Last week, President Donald Trump launched TrumpCard.gov for individuals to register for a proposed “gold card” that would grant U.S. permanent residency to eligible applicants for $5 million (Axios, June 11)
  • Announced in February, the plan aims to sell up to 1 million cards, an effort President Trump claims could generate enough revenue to retire the national debt. The website currently only collects basic contact information. (USA Today, June 11)
  • The administration says the program would replace the EB-5 visa, but legal questions remain about whether a new visa program can proceed without congressional approval. (CBS News, June 12)
  • In March, RER sent a letter to Commerce Secretary Howard Lutnick, expressing support for pairing the “Gold card” proposal with the existing EB-5 framework, offering a powerful, dual-track approach that would reform America’s visa system, attract top global talent, and drive foreign investment into strategic, job-creating projects. (Letter, March 11 | RW, March 14)

State of Play

  • Republican leaders are pushing for swift negotiations to revise the Senate tax bill as White House officials hold firm on the July 4 deadline despite mounting GOP skepticism. (Bloomberg, June 17)
  • “We first get 51 senators together and then we’ll see what the House can do,” Sen. John Cornyn (R-TX) said Tuesday, referring to the legislation released this week as “an initial draft.” (PoliticoPro, June 17)
  • Senate Majority Leader John Thune (R-SD) said Wednesday that the chamber is aiming to begin consideration of the GOP’s party-line megabill by mid-next week. (Axios, June 18)

RER remains closely engaged with policymakers on the Hill and the administration on several high-stake policy issues, such as the retaliatory tax measures and the Opportunity Zone provisions.