News Type: Roundtable Weekly

Fed Signals Another Rate Hike as Regulators Advance Capital Reforms

Posted on by Julian Anderson

Minutes from the Federal Reserve’s Sept. 15-16 meeting, released Oct. 7, indicated that most policymakers believe another interest rate increase would likely be appropriate by year-end. The minutes follow recent remarks by Federal Reserve Vice Chair for Supervision Michelle Bowman, who said she expects regulators to finalize the revised Basel III capital framework by year-end, while pointing to early results from recent leverage ratio reforms. (Federal Reserve, Sept. 18 | Federal Reserve, Oct. 1 | American Banker, Oct. 1 | Federal Reserve, Oct. 7)

Fed Outlook

  • Most Federal Open Market Committee (FOMC) participants indicated that another rate increase would likely be appropriate before year-end, following the Fed’s unanimous decision in September to raise its benchmark rate by 25 basis points, bringing the target range to 3.75%-4%. Officials cited persistent inflation, resilient economic activity, and diminished labor market risks in support of additional tightening. (Federal Reserve, Oct. 7 | Wall Street Journal, Oct. 7 | Associated Press, Oct. 7)
  • Credit and Housing. Several participants pointed to easier bank lending standards, while a few noted that elevated mortgage rates continued to weigh on housing activity. Treasury yields rose roughly 35 basis points across the 2- to 10-year range between meetings, while residential mortgage rates increased slightly more than the 10-year Treasury yield. (Federal Reserve, Oct. 7)
  • Regulatory Reform. Bowman said the Fed’s recalibration of the enhanced supplementary leverage ratio (eSLR) has expanded large banks’ balance sheet capacity and improved Treasury market intermediation. Dealers’ Treasury positions increased from approximately $600 billion before the changes to more than $700 billion by the end of April, demonstrating how adjustments to capital requirements can support market liquidity. (Federal Reserve, Oct. 1 | Bloomberg Law, Oct. 1)
  • Capital Reforms. Regulators are expected to finalize revised risk-based capital requirements under Basel III and accompanying changes to the global systemically important bank (G-SIB) surcharge before year-end. The proposals, released in March, would reduce aggregate capital requirements for the largest U.S. banks by an estimated 2.4% and revise the treatment of mortgages and mortgage servicing assets to better align capital requirements with risk. (Roundtable Weekly, March 20 | Bloomberg, March 19 | Federal Reserve, Sept. 18)

Why It Matters

  • Another potential rate increase, combined with elevated Treasury yields, could extend borrowing and refinancing pressures for commercial real estate (CRE) owners. Nearly $983 billion in CRE mortgages are estimated to mature in 2027, increasing the importance of accessible financing as borrowers seek to refinance existing debt. (Federal Reserve, Oct. 7 | RER Policy Priorities, Capital & Credit)
  • At the same time, appropriately calibrated capital requirements could strengthen banks’ capacity and incentives to provide CRE financing. While the eSLR changes primarily address Treasury market intermediation, the revised Basel III framework could ease certain regulatory constraints on lending and support market liquidity as borrowers navigate elevated financing costs. (Roundtable Weekly, March 20 | Federal Reserve, Sept. 18 | Federal Reserve, Oct. 1)

Roundtable Advocacy

  • The Real Estate Roundtable has consistently advocated for appropriately calibrated, risk-based bank capital requirements that maintain financial stability without unnecessarily limiting CRE lending. RER opposed the original 2023 Basel III proposal, warning that higher capital requirements could reduce credit availability, increase financing costs, and constrain investment in commercial and multifamily real estate. (Roundtable Weekly, March 20)
  • In a June 18 coalition letter, RER and other national real estate organizations urged regulators to preserve the revised proposal’s improvements while making targeted changes to avoid unnecessarily constraining CRE financing. Recommendations included more risk-sensitive treatment of CRE and multifamily loans, mortgage servicing, and securitizations, along with changes to prevent disproportionate capital charges on common financing arrangements such as mezzanine loans and preferred equity. (Coalition Letter, June 18)

RER will continue engaging with federal regulators and industry partners as the Basel III reforms move toward finalization, advocating for capital requirements that preserve credit availability, support housing and commercial real estate investment, and maintain a stable and liquid CRE finance market.

New Senate Legislation Takes Aim at Wall Street but Threatens to Disrupt U.S. Real Estate

Posted on by Julian Anderson

Legislation introduced in the House and Senate on Sept. 24 aims to fundamentally reform the private equity industry, but the expansive legislation could cause major disruption to U.S. real estate values and markets.

The newly revised Stop Wall Street Looting Act, introduced by Sen. Elizabeth Warren (D-MA) and seven other Democratic senators, as well as a coalition of progressive House members, would raise the tax rate on REIT investors, end capital gains treatment for carried interest, and greatly restrict the deductibility of interest on real estate borrowing. (Senate Banking Committee, Sept. 24 | Bill Text)

State of Play

  • Sponsors seek to rein in investment by private funds. The bill authors seek to build on their successful effort this summer to expand the government’s role in regulating private investment in single-family rental housing. The legislation would impose restrictions on the activities of private funds, including their acquisitions, distributions, and business operations such as outsourcing jobs or closing facilities. (Section-by-Section Summary, Sept. 24)
  • Legislation’s reach extends beyond Wall Street. The legislation would have far-reaching consequences for REITs, REIT investors, and real estate generally. While the sponsors highlight a specific case involving REIT ownership of health care-related property, the bill would raise the tax rate on all REIT investors by repealing the 20% deduction for qualified REIT dividends (Section 199A). (Section-by-Section Summary, Sept. 24)
  • Carried interest. The bill also incorporates the Carried Interest Fairness Act (S. 445), introduced by Sen. Tammy Baldwin (D-WI). The Carried Interest Fairness Act would recharacterize all carried interest income as ordinary income rather than capital gains. (Section-by-Section Summary, Sept. 24)
  • Interest deductibility. The bill would restrict business interest deductions under Section 163(j) for certain businesses controlled by private investment funds if the business has a rate of leverage (debt-to-equity ratio) greater than 50%. The proposal would calculate leverage using the adjusted basis of a business’s assets rather than market value, potentially overstating the leverage on appreciated real estate. Qualifying businesses that meet the bill’s conditions would also lose access to the existing real estate exception from the Section 163(j) limitation. (Section-by-Section Summary, Sept. 24)
  • Health care real estate and fund fees. Other provisions would prohibit federal health care payments to certain entities that sell or pledge assets to REITs and modify rules governing taxable REIT subsidiaries that operate health care properties. Additionally, it would impose a 100% tax on certain fees, often called “monitoring” or “transaction” fees, paid by fund-controlled companies to private fund managers. (Section-by-Section Summary, Sept. 24)
  • Outlook for the bill. While action on the legislation is unlikely in the near term, the sponsors will likely seek to include some or all of the provisions in tax legislation next year if control of either chamber changes.

Why It Matters

  • Taken together, the proposed changes could affect a broad range of real estate businesses and investors beyond private equity funds. Eliminating the Section 199A deduction for qualified REIT dividends and changing the tax treatment of carried interest would increase tax burdens and discourage investment in real estate partnerships, REITs, and development projects. (RER Carried Interest Fact Sheet, Jan. 2026)
  • Restrictions on interest deductions could create additional financing challenges for real estate owners by increasing after-tax borrowing costs, reducing property values, and complicating the refinancing of maturing debt. Because debt is a fundamental source of financing for commercial real estate investment and development, the changes could also constrain capital availability and discourage new investment. (RER Policy Priorities, Tax)

Roundtable Advocacy

  • The Real Estate Roundtable (RER) has consistently opposed proposals to tax all carried interest as ordinary income, emphasizing that carried interest reflects the entrepreneurial risk and “sweat equity” contributed by general partners to real estate ventures. RER has warned that such changes could affect 2.2 million real estate partnerships and 9.7 million partners nationwide. (RER Carried Interest Fact Sheet, Jan. 2026)
  • Beyond carried interest, RER has advocated for preserving the Section 199A deduction for pass-through businesses and qualified REIT dividends, as well as the real estate exception from Section 163(j). In an October 2025 letter to Treasury and the IRS, RER urged regulators to allow real estate businesses to revisit prior Section 163(j) elections to access bonus depreciation benefits restored under the 2025 tax law. (RER Letter, Oct. 17, 2025)

RER will continue working with policymakers to oppose tax provisions that could undermine real estate investment, financing, and development, while advocating for policies that support capital formation and the stability of U.S. real estate markets.

Data Centers, Permitting Reform Await Action Post-Midterms

Posted on by Julian Anderson

With affordability of energy prices top of mind for voters heading into the midterms, the Senate failed this week to advance legislation addressing data center growth and broader permitting reform. Both measures could see action during the post-election lame-duck session or the next session of Congress that starts in January, while House Democrats have outlined energy priorities they could pursue if they win the majority in November.

Regulations Versus Voluntary Agreements 

  • The Ratepayer Protection Act (H.R. 9340) stalled in the Senate on Sept. 30, even though it passed the House earlier this month by a wide bipartisan margin (417-3). (Roll Call, Sept. 30) The legislation would pressure state utility regulators to consider, but not compel adoption of, federal standards ensuring 100-MW data centers pay the full cost of grid upgrades needed to serve them. (House Energy Committee Press Release, Sept. 16)
  • Senate Majority Leader John Thune (R-SD) called the bill a “common sense” measure to codify portions of President Trump’s voluntary “Ratepayer Protection Pledge” with utilities and hyperscalers operating global data center networks. (Roll Call, Sept. 30)
  • Senate Minority Leader Charles Schumer (D-NY), meanwhile, criticized the bill as “toothless,” lacking “real guardrails on AI and data centers,” and called for legislation “to make it mandatory for data centers to cover their own costs.” (The Hill, Sept. 29)
  • Also this week, the White House issued an executive order and fact sheet (Sept. 29) “Inaugurating the Era of Super Intelligence.” Amid calls for regulations, frontier companies agreed to a voluntary pact to maintain internal controls, report safety and security incidents, and conduct third-party audits as they develop advanced AI models and agentic systems at the cutting edge of technology. (New York Times, Sept. 29)    

Permitting Reform

  • The package would streamline permitting for energy and infrastructure projects, including transmission, while requiring data centers to pay their associated transmission costs. The Senate is not expected to vote until after the midterm elections, leaving the measure for possible lame-duck action. (Bill Summary, Sept. 30 | Senate EPW Committee, Sept. 30)
  • RER supports permitting reform to improve energy affordability and meet growing electricity demand. Its letter backing the bipartisan SPEED Act (H.R. 4776) urged certainty for approved projects and warned that redundant federal reviews delay affordable, reliable power to homes and commercial buildings. (Letter, Dec. 8, 2025 | Roundtable Weekly, Dec. 12, 2025)

House Democrats’ Energy Blueprint

  • On Sept. 15, House Democrats led by Rep. Kathy Castor (D-FL) released the Thriving Economy Project (TEP), a menu of more than 800 recommendations that could shape the energy agenda if Democrats win the House in November. Democratic leadership has not formally endorsed the proposals. (TEP Report, Sept. 15 | Politico via SEEC, Sept. 16)
  • Building-related recommendations include energy benchmarking for commercial and residential buildings and disclosure of energy costs in sales and leases, as well as high-performance building standards tied to federal housing, infrastructure, disaster recovery, and mortgage programs. (TEP Report, Sept. 15)
  • Data center proposals include energy and water disclosure requirements, siting and efficiency standards, responsibility for associated grid infrastructure costs, and new DOE efficiency metrics, such as an ENERGY STAR-equivalent program for AI tools. (TEP Report, Sept. 15)

RER will continue tracking these developments and advocating for policies that support affordable and reliable electricity and timely energy infrastructure investment.

FinCEN Permanently Ends Beneficial Ownership Reporting for U.S. Companies

Posted on by Julian Anderson

The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) issued a final rule on Aug. 11 permanently removing beneficial ownership information (BOI) reporting requirements for U.S. companies and U.S. persons under the Corporate Transparency Act (CTA). The rule finalizes the narrower framework adopted in March 2025 and provides long-term relief for millions of U.S. businesses.

State of Play

  • All entities created in the United States are exempt from BOI reporting, including the limited liability companies and partnerships commonly used to own and operate commercial real estate. The rule took effect Aug. 14, 2026. (Final Rule | Treasury Press Release, Aug. 11)
  • FinCEN will delete information previously reported by U.S. persons who are now exempt from the requirements. (FinCEN, Aug. 11)
  • Foreign entities that qualify as reporting companies remain subject to the CTA, but they are required to report BOI only for foreign individuals. (FinCEN, Aug. 11)

Why It Matters for CRE

  • Treasury originally estimated the CTA would reach roughly 32 million existing entities, plus millions of newly formed entities each year. Under the narrowed framework, only about 11,600 foreign firms are expected to report annually. (Roundtable Weekly, March 28, 2025)
  • The regime posed particular challenges for real estate, where individual assets are frequently held in separate LLCs or partnerships. The final rule eliminates the need to identify individuals with indirect ownership interests or substantial control across these structures and file updates following changes in ownership or management. (Roundtable Weekly, June 7, 2024)

RER Advocacy

  • Most recently, RER and a coalition urged Treasury to delay the CTA’s reporting requirements weeks before the department announced it would suspend enforcement against domestic companies. (Coalition Letter, Jan. 4, 2025)

RER’s Real Estate Capital Policy Advisory Committee (RECPAC) will continue to track developments related to beneficial ownership reporting requirements.

Senate Passes Seven-Year TRIA Reauthorization

Posted on by Julian Anderson

The Senate passed the bipartisan Terrorism Risk Insurance Program Reauthorization Act of 2026 (S. 4395) by unanimous consent, advancing a seven-year extension of the federal terrorism risk insurance program through Dec. 31, 2034.

State of Play

  • Sponsored by Sen. Dave McCormick (R-PA), with Sens. Tina Smith (D-MN), Thom Tillis (R-NC), and Ruben Gallego (D-AZ), S. 4395 provides a clean seven-year reauthorization through 2034, maintaining the program’s existing structure.
  • Both chambers have now approved seven-year extensions, but the Senate bill differs from the House-passed measure, which would increase the minimum loss threshold for an event to qualify as an act of terrorism under the program from $5 million to $10 million beginning in 2029 and establish a 90-day timeframe for Treasury certification determinations. (Roundtable Weekly, July 17) 

What’s Next

  • Because the House and Senate passed different versions of the reauthorization, identical legislation must still clear both chambers before it can be sent to the president for his signature.
  • Options include the House adopting the Senate bill, a conference to resolve differences, or attaching final language to a must-pass package by year’s end.

RER Advocacy

  • RER and coalition partners urged lawmakers to advance S. 4395, warning that policyholders are already negotiating coverage extending beyond TRIA’s 2027 expiration and emphasizing the importance of maintaining certainty for insurers and policyholders. (Roundtable Weekly, Sept. 18)
  • RER and its industry partners will continue urging Congress to send a long-term TRIA reauthorization to the president’s desk before the end of the year, providing certainty ahead of the program’s 2027 expiration.

Opportunity Zone Rules and Maps Take Shape as Congress Weighs Data Center Limits

Posted on by abigail_grenadier

As states finalize the next Opportunity Zone maps, Treasury and the IRS are seeking input on program rules while lawmakers weigh whether data centers should qualify for OZ tax benefits.

Treasury Seeks Input on OZ Rules

  • In a Sept. 22 notice, Treasury and the IRS requested comments on how to implement the permanent OZ program, specifically regarding housing investment, working capital rules, operating businesses and the tax treatment of long-held investments. Comments are due Nov. 23. (Tax Notes, Sept. 22 | Bloomberg Law, Sept. 23)
  • The request follows proposed regulations issued Sept. 11 on reporting requirements for Qualified Opportunity Funds (QOFs) and OZ businesses, as well as fund certification and decertification. Comments on that separate proposal are due Oct. 16. (PoliticoPro, Sept. 10)

RER Advocacy

  • RER’s Opportunity Zone Working Group has urged Treasury and the IRS to adopt clear, workable rules that allow existing projects to continue through the transition to the permanent program.  The Group also recently met with Treasury and IRS staff in August to discuss guidance for projects spanning the original and permanent OZ programs.
  • The new maps and forthcoming rules will shape where and how OZ capital can support housing, redevelopment and other projects in low-income communities.

New Opportunity Zones Maps

  • Governors are finalizing nominations for the next generation of OZs ahead of a Sept. 28 deadline, with a 30-day extension available upon request. Treasury will certify the new designations, which take effect Jan. 1, 2027 and remain in place for 10 years.
  • The tighter eligibility rules are expected to significantly reduce the number of designated OZs. Roughly, 6,500 zones could be selected nationwide, nearly 26% fewer than the 8,764 designated under the original program. (Bisnow, Sept. 15)
  • The designation process will help determine where new OZ-supported investment can occur beginning in 2027. While the original program attracted significant multifamily investment, developers are now pursuing designations for a broader range of real estate projects, including mall redevelopments and data centers. (Bisnow, Sept. 15)

Data Center OZ Legislation

RER will continue working with Congress, Treasury, and the IRS to secure and improve  OZ rules to ensure the incentives support economic development and job growth, new sources of local tax revenue,  and expanded housing supply.

RER Urges Bridge Financing Status Quo in EB-5 Program

Posted on by abigail_grenadier

The Real Estate Roundtable (RER) submitted comments on Aug. 19 to the U.S. Citizenship and Immigration Services (USCIS) recommending changes to proposed regulations implementing the EB-5 Reform and Integrity Act of 2022 (RIA). RER urged revisions to three provisions in USCIS’s proposal that could limit EB-5’s effectiveness as a source of capital for job-creating real estate and economic development projects.  (Letter, Aug. 19)

The Proposal

  • Published July 2, Ensuring the Integrity of the EB-5 Program (Docket No. USCIS-2026-0100) is USCIS’s first proposed rule implementing the 2022 law. (Federal Register) 

  • The proposed rule would change the program’s treatment of bridge financing, expand “source of funds” reviews to non-EB-5 capital, and establish a new $1.4 million investment tier for projects in “high employment areas.” (Letter, Aug. 19)

RER Recommendations

RER urged USCIS to:

  • Maintain the longstanding treatment of bridge financing. Bridge financing addresses the timing mismatch between when a project requires immediate capital and when longer-term capital becomes available. RER urged USCIS not to cap, eliminate or time-limit the amount of repaid bridge financing that can support qualifying EB-5 job creation. (Letter, Aug. 19)
  • Apply “source of funds” requirements only to EB-5 capital. The RIA does not support applying these requirements to every component of a project’s financing. It would be impractical for an EB-5 investor to document the ultimate source of funds supporting institutional bank loans, pension fund investments and other capital the investor neither owns nor controls. (Letter, Aug. 19)
  • Congress delegated responsibilities to other agencies— not USCIS—to monitor avenues of illicit overseas finance regarding non-EB-5 capital.
  • Reject the proposed $1.4 million investment tier for “high employment areas.” RER warned that the new category would place urban and suburban projects at a competitive disadvantage and could impede affordable and low-income housing development, working against the goals Congress set in the 21st Century ROAD to Housing Act enacted in July. (Letter, Aug. 19)

Why It Matters

  • Real estate and infrastructure projects typically depend on multiple, interrelated sources of capital with different risk profiles, financing terms, and deployment timelines.
  • Denying job-creation credit solely because temporary bridge financing preceded an EB-5 investment would elevate form over substance.
  • EB-5 policy should focus on whether the capital supports a qualifying project that creates U.S. jobs, not the sequence in which each component of the project’s capital stack was deployed.

What’s Next

USCIS will review public comments before issuing a final rule. RER will continue advocating for an EB-5 framework that maintains program integrity while supporting capital formation, housing production, economic development and U.S. job creation.

Industry Urges Congress to Include Retail Crime Bill in Final NDAA

Posted on by abigail_grenadier

The Real Estate Roundtable (RER) and a coalition of national real estate organizations urged congressional leaders to include the bipartisan Combating Organized Retail Crime Act (CORCA) in the final Fiscal Year 2027 National Defense Authorization Act (NDAA). (Letter, Sept. 17)

State of Play

  • CORCA (H.R. 2853/S. 1404) would strengthen coordination among federal, state, and local law enforcement and provide additional tools to investigate and prosecute organized criminal networks operating across jurisdictions.
  • The House passed H.R. 2853 on May 12 by a bipartisan vote of 348–60. Senate supporters later filed CORCA as part of a bipartisan amendment package to the FY 2027 NDAA, but the chamber has not advanced the broader defense bill. (Legis1, May 14)
  • RER joined the Commercial Real Estate Development Association, ICSC, Nareit, and the National Association of REALTORS® in sending the letter to House and Senate leaders.

Why It Matters

  • Organized retail crime affects more than retailers. These criminal networks threaten employees and customers, disrupt shopping centers and supply chains, contribute to store closures and higher prices, and discourage investment in communities. (Letter, Sept. 17)
  • Retailers are projected to lose $49.8 billion to retail theft in 2026, with losses potentially exceeding $59 billion by 2029 without federal intervention.
  • A nationwide FTI Consulting survey found that 81% of Americans believe organized retail crime contributes to higher consumer prices, while 74% support federal legislation to address it.

What’s Next

  • With the House not expected to return until after the midterm elections, lawmakers will face a compressed year-end window to complete the NDAA.

RER and its coalition partners are urging congressional leaders to preserve CORCA in the final package and enact the bipartisan measure before the end of the 119th Congress.

Fed Raises Rates for the First Time Since 2023

Posted on by abigail_grenadier

The Federal Reserve raised its benchmark interest rate by a quarter point on Wednesday to a target range of 3.75-4 percent, its first increase since 2023. The Federal Open Market Committee (FOMC) voted unanimously, a sharp turn from July when three officials dissented in favor of a hike. (Cushman & Wakefield, Sept. 17)

Fed’s Decision

  • The FOMC voted 12-0 to raise the target range by 25 basis points, citing economic activity expanding at a solid pace, resilient domestic spending, strong productivity growth, robust capital investment, and job gains keeping pace with the workforce. (Federal Reserve | Implementation Note, Sept. 16)
  • Chair Warsh said this summer’s readings do not show underlying inflation trends meaningfully improving, putting 12-month total PCE inflation at roughly 3.6 percent in August, with too many categories still running above 3 percent. (Opening Statement, Sept. 16)
  • Repeating a point from Jackson Hole, Warsh said he would be “hard-pressed to describe broad financial conditions as restrictive,” a view he said the Committee widely shared. (Opening Statement, Sept. 16)
  • The Summary of Economic Projections put median real GDP growth at 2.3 percent this year, total PCE inflation at 3.7 percent falling to 2.3 percent next year, and unemployment steady near 4.1 percent. (Projections | Opening Statement, Sept. 16)

Housing and CRE Outlook

  • The 10-year Treasury breached 5 percent on Sept. 15, and the 30-year topped 5.4 percent, both the highest since 2007. Most permanent commercial mortgages price off Treasury benchmarks rather than the federal funds rate. (Scotsman Guide, Sept. 16)
  • Lenders report that higher debt service costs are reducing loan proceeds and widening the gap between buyers and sellers, requiring sponsors to contribute more equity. Deal structures are adapting, with more cash-in refinancings, recapitalizations, and loan sales as lenders grow less willing to extend. (Commercial Observer, Sept. 16)

What to Watch

  • The FOMC next meets Oct. 27-28, followed by Dec. 8-9. With the median projection pointing to one more increase this year, attention will remain on both meetings for signs of when the Fed could make its next move. (Federal Reserve Calendar)
  • Nearly $983 billion of U.S. commercial real estate mortgages are estimated to mature in 2027. Sustained higher long-term yields would increase refinancing costs as those loans come due. (RER Policy Priorities, Capital & Credit)

RER will continue to advocate for policies that strengthen capital markets, preserve access to credit, and support the capital formation needed to drive long-term economic growth.

Tax Policy Roundup: Foreign Investment, Demolition Expenses, Data Centers, and Partnership Taxes

Posted on by abigail_grenadier
FIRPTA

The Real Estate Roundtable (RER) submitted recommendations this week aimed at removing barriers to foreign investment in US real estate and reforming the tax treatment of demolition costs, as lawmakers introduced data center tax legislation and a federal appeals court ruled on the self-employment tax treatment of limited partners.

FIRPTA: RER Requests Repeal of IRS Notice

  • This week, RER submitted a letter to Treasury Secretary Scott Bessent requesting revocation of IRS Notice 2007-55, citing its negative impact on foreign investment in U.S. commercial real estate. (Letter, Sept. 15)
  • The IRS Notice took the position that REIT distributions are not exempt from tax under the tax exemption for foreign governments (section 892). It also treats REIT liquidating distributions as sales of real property subject to tax under the Foreign Investment in Real Property Tax Act (FIRPTA).
  • The letter notes that nearly 20 years have passed without regulations implementing the Notice. Since that time, statutory changes to FIRPTA have eliminated much of its original rationale, and foreign capital’s importance to U.S. real estate investment and jobs has only increased. (Letter, Sept. 15)
  • RER contends that the Notice creates unnecessary transaction costs, limits investment flexibility, and discourages otherwise productive transactions. (Letter, Sept. 15)
  • “[S]ound legal reasoning, good governance, and favorable economic policy strongly support an administrative action to revoke Notice 2007-55,” wrote RER President and CEO Jeffrey DeBoer. “Repeal of the Notice would align squarely with the Administration’s stated priority of ‘unleashing prosperity through deregulation.’”

Property Redevelopment and Demolition Costs: Coalition Seeks Tax Reforms

  • On Wednesday, RER and 13 other national real estate organizations sent Congress a letter encouraging changes to the tax treatment of demolished buildings and demolition expenses.  (Letter, Sept. 15)
  • Current treatment: Section 280B generally requires both demolition expenses and a demolished building’s remaining tax basis to be added to the basis of nondepreciable land. Owners typically cannot recover those amounts for tax purposes until the land is sold, potentially years or decades later.
  • “This treatment can delay or deter redevelopment projects that would otherwise support increased housing supply and commercial activity, particularly in high-cost areas and downtown corridors facing elevated vacancy rates,” the 14 organizations wrote. (Letter, Sept. 15)
  • Proposed changes: The coalition recommends allowing taxpayers to deduct as a loss any remaining tax basis of a demolished building and allowing taxpayers to deduct the actual demolition expenses. The reforms should be paired with reasonable guardrails to protect historic buildings and ensure timely redevelopment of the property.

  • The issue was recently highlighted in an op-ed written by RER Tax Policy Advisory Committee Chairman Joshua Parker and published in The Hill. (The Hill, Aug. 30 | Roundtable Weekly, Sept. 11)
  • Future legislation in this area could also restore the deductibility of environmental remediation expenses.
  • The recently enacted, bipartisan ROAD to Housing Act removed many barriers to creating new housing. The organizations’ proposal would continue building on these efforts by promoting productive real estate investment.

Data Centers: House Democrats Propose Tax Restrictions

  • Reps. Kristen McDonald Rivet (D-MI) and Don Davis (D-NC) introduced the Reverse Big Ugly Tax Breaks for Data Centers Act on Sept. 16, seeking to exclude covered data centers from investment incentives expanded in the 2025 tax law. (Politico |  Rep. Rivet Press Release, Sept. 16)
  • The bill would deny 100% bonus depreciation and Opportunity Zone eligibility to covered data-center property. Its definition covers facilities exceeding 50 megawatts of maximum rated power capacity or total peak power load, including property dedicated to their operation. (Bill text)
  • The legislation follows an August white paper from Senate Finance Committee Ranking Member Ron Wyden (D-OR) addressing bonus depreciation, Opportunity Zones and REIT treatment for data centers, along with a proposed excise tax on operators. (Senate Finance proposal, Aug. 6 | Roundtable Weekly, Aug. 7)

Partnership Taxes: Second Circuit Rules in Soroban

  • The U.S. Court of Appeals for the Second Circuit on Sept. 17 affirmed the Tax Court’s decision in Soroban Capital Partners LP v. Commissioner, holding that three principals did not qualify for the limited partner exception from self-employment tax because they exercised managerial control over the firm. (Opinion, Sept. 17)
  • The court focused on the partners’ actual responsibilities, including managing investments, serving on governing committees, and directing personnel decisions. It clarified that partners may provide some services and still qualify for the exception if those activities do not involve controlling, managing or running the business. (Bloomberg Law, Sept. 17)
  • The opinion appears to align, at least in significant part, with the Fifth Circuit’s revised approach in K Alain, formerly Sirius Solutions. (Court Opinion | JD Supra, Aug. 12)
  • RER filed an amicus brief supporting the taxpayer in Soroban as part of its broader challenge to the IRS’s restrictive interpretation of the limited partner exception from self-employment tax. RER also filed briefs supporting taxpayers in Sirius Solutions in the Fifth Circuit and Denham Capital in the First Circuit. (Roundtable Weekly, Jan. 30 | Feb. 13 | Sept. 11)

RER will continue working with Congress, Treasury and the IRS to advance tax policies that expand access to capital, encourage redevelopment and support long-term economic growth.