Category: Tax Policy

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)

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.”

# # #

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

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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.

Coalition Urges Senate to Revise Section 899 to Protect Access to Foreign Capital for U.S. Real Estate Investment

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The Real Estate Roundtable (RER) and a coalition of real estate organizations sent a letter to Senate Majority Leader John Thune (R-SD) and Finance Committee Chair Mike Crapo (R-ID) this week, calling for changes to the House-passed Section 899 tax proposal to prevent harm to U.S. real estate investment, property values, and economic growth. (Letter, June 12)

Why it Matters

  • The retaliatory tax provision is part of the broader House reconciliation package and would impose steep tax increases on investors from countries that enact “unfair” taxes on U.S. businesses.  (Bloomberg, June 12)
  • The coalition letter cautions that, without changes, the retaliatory tax measure could potentially drive up borrowing costs, depress property values, and significantly deter foreign investment in housing, commercial developments, and infrastructure projects nationwide. (PoliticoPro, June 13)
  • As drafted, the policy would apply broadly to both equity and debt investments in U.S. real estate, including capital gains, REIT dividends, and interest income—regardless of whether the investor has any controlling stake in the U.S. property.
  • The coalition urges the Senate to revise Section 899 to exempt non-controlling real estate investments—passive holdings that do not involve day-to-day management.
  • The coalition is also seeking to ensure the exemption applies to both new and existing transactions made under current law and tax treaties, and prevent an unintended retroactive tax increase that could disrupt capital markets and undermine confidence in U.S. investment stability. (Letter, June 12)
  • On Institutional Real Estate, Inc.’s podcast this week, RER President & CEO Jeffrey DeBoer emphasized the importance of maintaining stable, predictable tax policy to attract investment and fuel economic growth—echoing the coalition’s call for Senate revisions to Section 899 that avoid discouraging capital formation in U.S. real estate. (IREI Podcast, June)
  • Speaking at the NYU Federal Real Estate and Partnerships Tax Conference today, RER Senior Vice President and Counsel Ryan McCormick warned that Section 899 “would impose higher tax rates on foreign capital that is critical to U.S. real estate, impacting interest income, REIT dividends, and direct property investments. Without an exemption for passive investors, it would have a chilling impact on investment, raise borrowing costs, and slow economic growth.”

By the Numbers

  • Over the past five years, foreign sources have invested more than $213 billion in U.S. commercial real estate, including $57 billion in multifamily housing. This cross-border capital supports construction, jobs, housing affordability, and local tax revenue. (Letter, June 12)
  • The Joint Committee on Taxation has projected that Section 899 would lead to a “decline in foreign demand for U.S. investment” and ultimately reduce Treasury revenues. (AP News, June 10)
  • The Global Business Alliance, which represents foreign multinationals with U.S. operations, released a new study on Tuesday that found Section 899 would result in $100 billion a year in lost gross domestic product. ( PoliticoPro, June 11)

View from Capitol Hill

  • Republican senators have said they’re taking a deeper look at that provision and could make changes when the Senate Finance Committee’s version of the tax bill is released. (PoliticoPro, June 13)
  • During a House Ways and Means Committee hearing on Wednesday, Treasury Secretary Scott Bessent defended the so-called revenge tax in the GOP megabill, in the face of concerns that it could deter foreign investment. (Watch Hearing | PoliticoPro, June 11)
  • Secretary Bessent also testified at the Senate Finance Committee hearing on the president’s fiscal 2026 budget request for the Treasury and tax reform on Thursday.
  • Sen. Thom Tillis (R-N.C.), who’s questioned the proposal, told reporters Tuesday that he at least expects a delay in the proposal. (Bloomberg, June 10)
  • House Ways and Means Chair Jason Smith (R-MO) indicated the preferred outcome would be for the revenge tax never to take effect, urging foreign governments to eliminate discriminatory measures, such as digital services taxes. (PoliticoPro, June 11)

What’s Next

Senate Finance Republicans are expected to release revised legislative text of the One Big Beautiful Bill Act in the coming weeks. “We’re working as aggressively as we can to move as fast as we can,” Senate Finance Chair Mike Crapo (R-ID) said. (Politico, June 9)

RER continues to advocate for smart tax policy that avoids unintended consequences while maintaining the U.S. real estate market’s global competitiveness.

House-Passed Reconciliation Bill includes Potential New Taxes on Foreign Investors

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The One Big Beautiful Bill Act approved by the House of Representatives last week would raise tax rates on foreign governments, firms, partnerships and individuals from any foreign country that imposes “unfair foreign taxes.”

Proposed Section 899

  • The so-called section 899 “retaliatory tax measures” legislation was a significant topic at this week’s Real Estate Roundtable Tax Policy Advisory Committee (TPAC) meeting. A discussion of the legislation was led by Baker McKenzie partner Alexandra Minkovich. (Proposed Section 899 Presentation)
  • Unfair foreign taxes are broadly defined in the legislation to include digital services taxes, diverted profits taxes, and certain tax rules adopted by countries pursuant to OECD model rules for taxing multinational businesses (“Pillar 2”), as well as taxes that the Treasury Secretary determines are extraterritorial, discriminatory, or intended to be born disproportionately by US persons.
  • The legislation would raise the applicable treaty or non-treaty tax rate by 5%/year, up to the maximum statutory tax rate plus 20%.   (WSJ, May 30)
  • Countries or regions widely considered targets of the legislation because of their adoption of either digital services taxes or Pillar 2 undertaxed profits rules include the U.K., Canada, the E.U., Australia, and Japan. 

Implications for CRE

  • If enacted, the legislation could have implications for U.S. real estate because of its application to sovereign wealth funds, foreign insurance companies, and passive investors that provide an important source of equity investment for large-scale, capital-intensive U.S. real estate and infrastructure projects. It could have a chilling effect on inbound investment decisions.
  • According to CBRE, foreign investment in U.S. real estate increased by 40 percent between the second half of 2023 and the second half of 2024. (CBRE, March 2025)
  • Chye-Ching Huang with the NYU Tax Law Center recently told the New York Times that the legislation would “create a new front in the U.S. tariff war with its closest economic partners, extending that to taxes and investment.” (New York Times, May 21)
  • The provisions in the House bill draw heavily from legislation introduced by House Ways and Means Chairman Jason Smith (R-MO). They are estimated to raise $116 billion over 10 years. It is unclear whether they have the full support of key Senators. Also, because they implicate foreign relations and treaty commitments, they could face parliamentary challenges under Senate rules.

At the TPAC meeting this week, Committee Chair Josh Parker (Chairman & CEO, Ancora Group Capital), announced the formation of a working group to analyze the legislation’s impact on real estate and ensure policymakers fully understand the potential unintended consequences of the bill.  

House Ways and Means Advances GOP Tax Bill

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The House Ways and Means Committee this week passed a comprehensive tax package that preserves critical features of current law while extending and improving real estate provisions supported by The Real Estate Roundtable. However, the legislation encountered a substantial setback Friday morning, when the House Budget Committee rejected the “One Big Beautiful Bill,” which combined the work of the Ways and Means and other House committees. (Axios, May 16)

“Taken as a whole, the tax proposals in the Chairman’s amendment 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,” said Roundtable President and CEO Jeffrey DeBoer.  (Read DeBoer’s full statement here)

State of Play

  • The House Budget Committee rejected the bill in a 16-21 vote after GOP leadership failed to secure sufficient support from several Republican holdouts. (Axios, May 16)
  • President Trump on Friday urged Republicans to fall in line and support the massive reconciliation package amid sparring among members on the Hill over various provisions. “Republicans MUST UNITE behind, ‘THE ONE, BIG BEAUTIFUL BILL!’” Trump posted on Truth Social.
  • House GOP leaders plan to continue private talks with the reluctant Republicans and the White House over the weekend in hopes of resurrecting the package next week. (Politico, May 16)

What’s In and Out for CRE

  • As currently drafted, the House legislation maintains the full deductibility of state and local business-related property taxes.
  • Carried interest, capital gains, like-kind exchanges, and general cost recovery periods for commercial real estate would remain unchanged.
  • Section 199A Deduction Boost: The legislation permanently increases the pass-through business income deduction from 20% to 23%, preserving eligibility for REIT dividends and effectively lowering the maximum tax rate on qualifying income to 28.49%.
  • 100% Bonus Depreciation: The Ways and Means Committee is proposing to reinstate 100% bonus depreciation for five years (2025–2030), incentivizing investments and upgrades in nonresidential properties.
  • Opportunity Zones: The legislation extends the Opportunity Zone tax incentives through 2033 and would set aside 33% of new OZ designations for rural areas.
  • Low-Income Housing Tax Credit: The legislation increases the allocation of low-income housing credits by 12.5% for four years and permanently reduces the threshold of private activity bond financing necessary for projects to otherwise qualify for credits.
  • Energy Tax Incentives: The Ways and Means legislation repeals or phases out tax incentives such as the section 48 tax credit for solar panel and other clean energy investments, the 45L tax credit for new home construction, and the section 30C tax credit for EV recharging stations.  (See more in Energy story below) 
  • Factory Expensing: Other tax changes would temporarily allow newly constructed manufacturing, agricultural and refining properties to qualify for 100% expensing.

Roundtable Advocacy

  • RER President and CEO Jeffrey DeBoer provided insights on these developments during a fireside chat at the ULI Spring Meeting in Denver this week. DeBoer discussed the current political climate, policy implications for commercial real estate, and outlined both emerging risks and opportunities shaping the industry’s future.

Housing News

  • The Ways and Means Committee’s provisions to expand the Low-Income Housing Tax Credit (LIHTC) align with components of the Affordable Housing Credit Improvement Act (AHCIA).  (Affordable Housing Finance, May 16) (RW, May 2)
  • The House Financial Services Subcommittee on Housing and Insurance held a hearing this week titled, “Expanding Choice and Increasing Supply: Housing Innovation in America,” focused on how modern construction technologies could increase moderate-income housing supply while identifying regulatory and financing barriers that limit broader adoption.
  • Lawmakers and witnesses explored alternative housing solutions such as manufactured housing, modular construction, and 3-D printed homes as ways to help close the housing supply gap.  (Watch Hearing, May 14)

Looking Ahead

  • House Ways and Means Chair Jason Smith (R-MO) expressed interest in passing a separate bipartisan tax package by the end of the year, at an appearance at the Economic Club of Washington, D.C. earlier this week. This package would include expiring tax provisions and healthcare-related items.
  • “I would love to work with Sen. Wyden, Chairman Crapo, ranking member Neal in trying to craft a bipartisan bill before the end of the year, because there’s a lot of tax provisions that I really care about that are expiring, or have expired, that are truly, truly bipartisan,” said Smith. (PoliticoPro, May 15)
  • Senate Finance Committee Chair Mike Crapo (R-ID) and fellow panel member Sen. Steve Daines (R-MT) are pushing to extend business tax cuts beyond the expiration set by Ways and Means, the latest change the Senate wants to make to the bill. (Reuters, May 16)

With the Budget Committee setback, the immediate future of the tax package is uncertain. But the provisions are certain to change further as the debate shifts to the Senate.

Roundtable Statement on the House Ways and Means Committee Reconciliation Mark-Up

Posted on by abigail_grenadier

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

(WASHINGTON, D.C.) — “The Real Estate Roundtable supports Chairman Smith’s budget reconciliation substitute amendment. Taken as a whole, the tax proposals in the Chairman’s amendment 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.

Importantly, the amendment preserves the deductibility of business-related state and local property tax payments. It ensures that the long-term capital gains rate continues to reward entrepreneurial risk-taking by recognizing the value of sweat equity, business acumen, and other non-cash risks that taxpayers assume in order to build businesses and create jobs, and the amendment expands tax incentives for badly needed new housing construction. The amendment also recognizes the vital role that non-corporate businesses play in the nation’s economy.

When combined with spending reductions expected in the overall reconciliation bill, the pro-growth tax measures in the amendment can be expected to lessen the immediate impact on our nation’s budget deficit and begin to address our country’s long term structural, fiscal challenges.”

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