News Type: Roundtable Weekly

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.

Interest Rates Remain Unchanged as Chair Powell Keeps Door Open for Future Cuts

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The Federal Reserve on Wednesday held its benchmark interest rate at 4.25-4.5 percent, signaling a “wait-and-see” posture amid renewed economic uncertainty and lingering inflation. (FOMC Statement, June 18)

The Fed’s Decision

  • At his Wednesday press conference, Fed Chair Jerome Powell said that policymakers are “well positioned to wait” before moving further on rates. He added, “we’re beginning to see some effects” of tariffs on inflation. (CNBC, June 18)
  • When discussing the tariffs, Powell told reporters, “There’s the manufacturer, the exporter, the importer, the retailer, and the consumer, and each one of those is going to be trying not to be the one to pay for the tariff. But together they will all pay for the tariff.” (Yahoo Finance, June 18) 
  • Hours before the decision, President Donald Trump called Powell “stupid” and asked whether he could “appoint myself” to the Fed. “We have a man who just refuses to lower the Fed rate. Just refuses to do it,” said Trump. (Financial Times, June 18; Fox Business, June 18)

Looking Ahead

  • To resume rate cuts that started last year, Fed officials are likely to need to see either labor markets soften or stronger evidence that price increases due to tariffs will be relatively muted. Projections released Wednesday suggest officials were open-minded about whether they would have that evidence after the summer. (WSJ, June 18) 
  • Markets are now pricing in a rate cut as soon as September or October, though officials cautioned that durable inflation or geopolitical risks could delay those cuts. (Seeking Alpha, June 18)
  • The Fed also raised its inflation forecast to around 3 percent this year—well above its 2 percent target—while reducing GDP growth estimates to approximately 1.4 percent, reinforcing its cautious stance. (The Guardian, June 18)

Implications for CRE

  • The decision to keep rates flat means access to—and the cost of—capital will remain a hurdle for investors across the commercial real estate landscape. (BisNow, June 18)
  • The Fed’s decision reinforces findings from RER’s Q2 2025 Sentiment Index , which indicated that the CRE executives expressed a decline in market confidence, as policy uncertainty, rising costs, and investor caution continue to cloud the outlook. (RW, May 23)

What’s Next

  • The Federal Reserve will hold a June 25 board meeting to consider revising the supplementary leverage ratio (SLR) standards.
  • These revisions aim to address potential issues and ensure the SLR remains an effective backstop to risk-based capital requirements, potentially easing constraints on bank activities, particularly in the Treasury market.

These potential revisions could have positive implications for real estate financing and the broader market. RER plans to submit comments on the anticipated notice of proposed rulemaking.

GOP Leaders Signal Reconciliation May Slip Past July 4 Deadline as Negotiations Continue

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As Senate Republicans navigate internal divisions and mounting pressure from the White House, critical policy decisions in the reconciliation package—including tax reforms, energy, and trade provisions are rapidly taking shape with implications for commercial real estate.

State of Play

  • More doubts have emerged among GOP leaders about whether the Senate will be able to meet its self-imposed July 4 deadline for passing its version of the reconciliation package.
  • Though Speaker of the House Mike Johnson (R-LA) believes that the GOP is still on track, he emphasized that meeting the deadline hinges upon how much the Senate’s bill diverges from the House bill passed last month. 
  • “We’ll see what they produce,” Johnson told Politico, adding, “I just need them to come to their final decisions on everything. So we’ll see how it shapes up.” (Politico, June 11) 
  • Though the White House is keeping the pressure on senators, even President Donald Trump has acknowledged that additional time could be needed to finalize the reconciliation measure. (Politico, June 11)   
  • For their part, House Republicans approved several changes to their bill this week that were necessary in order to keep it in compliance with Senate rules. (Politico, June 10)  
  • If the Senate makes major revisions, the bill could go to conference in July in order to hammer out the differences, which could run up against the U.S. hitting its debt limit in August. (Axios, June 11) 
  • Senate Majority Leader John Thune said his team and key Senate committee chairs are coordinating closely with Speaker Johnson, holding weekly meetings and frequent calls to prevent the House from altering a bill that passes the Senate.
  • “There’s just a lot of coordination to hopefully avoid some of the potential snafus that could happen with something that’s this complicated,” Thune said. (Politico, June 11)

Key Issues 

  • Fiscally conservative Sens. Rand Paul (R-KY) and Ron Johnson (R-WI), among others, continue to scrutinize the long-term effect that the “Big Beautiful Bill” would have on the budget deficit.
  • In an interview with the Financial Times on Tuesday, Sen. Johnson conditioned his vote on assurances that the White House would cut more federal spending with a second major bill before next year’s midterm elections. (Financial Times, June 11)
  • The spotlight remains on the Senate Finance Committee, with Chairman Mike Crapo (R-ID) telling GOP senators Wednesday that he plans to scale back the House’s cap on the deductibility of state and local taxes (SALT) for individuals and rework repeals of clean energy tax credits from the Inflation Reduction Act (IRA). (Punchbowl News, June 12) 
  • Senate Republicans are also aiming to make business tax deductions for R&D, equipment purchases, and interest on debt permanent, rather than temporary as proposed in the House bill. (Punchbowl News, June 13)

IRA Energy Tax Credits

  • Senate Majority Leader John Thune (R-SD) is juggling different IRA demands, including at least four senators who want a less aggressive approach to the House’s proposed repeals. (Punchbowl News, June 12)
  • Sixteen clean energy tax incentives could be repealed or modified under the House-passed reconciliation bill, now under review by the Senate. Proposed changes to the IRA’s clean energy credits would eliminate incentives for residential energy-efficient upgrades and clean vehicles, while shortening the window for projects to begin construction and still qualify.  (PoliticoPro Analysis, June 11)
  • Senate Republicans are moving toward a consensus on preserving the transferability of clean energy tax credits from the IRA, as Finance Chair Mike Crapo (R-ID) signaled openness to easing the House-passed restrictions and extending the phaseout timelines during a GOP conference briefing this week. (PoliticoPro, June 12)
  • The House-passed measure included provisions that would restrict credit transferability, which allows companies to sell their tax credits to a buyer in exchange for cash. (PoliticoPro, June 12)
  • “If you are going to have a credit, if it’s not transferable, it’s not of much use,” said Sen. Kevin Cramer (R-ND). (PoliticoPro, June 12)

Trade Talks

  • Tariffs on materials such as lumber, steel, and aluminum have presented several challenges for commercial real estate. Impacts have included increased construction costs, the potential for project delays, and heightened uncertainty among investors. (RW, April 4)
  • The U.S. and Mexico are approaching a deal to reduce or eliminate President Trump’s 50 percent steel tariffs on imports, up to a certain volume. (Reuters, June 10)
  • This week, Commerce Sec. Howard Lutnick and senior economic officials from China agreed “in principle” to a framework of a “trade truce” between the world’s two largest economies, a sign of further progress. (CNN, June 11)
  • Late Wednesday, Trump said the U.S. was “rocking in terms of deals,” as it held trade talks with about 15 countries, including Japan and South Korea—but the president also threatened to unilaterally set tariff levels for many other countries in the coming weeks.   (WSJ, June 12)

Looking Ahead

As the White House urges Senate Republicans to make only modest changes to the reconciliation bill, Senate leaders are moving toward issuing final bill text by June 23, followed by a vote-a-rama. (Politico, June 12)

RE-ISAC and Homeland Security Task Force Address Civil Risks

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Widespread demonstrations against recent Immigration and Customs Enforcement (ICE) raids, including National Guard deployments across the nation, prompted urgent coordination among commercial real estate leaders this week through The Real Estate Roundtable’s (RER) Homeland Security Task Force (HSTF). (Washington Post, June 13)

Why it Matters for CRE

  • In response to protests over recent immigration sweeps across the U.S., RER’s HSTF,  Real Estate Information Sharing and Analysis Center (RE-ISAC), and partnership with the Commercial Facilities Sector Coordinating Council convened several calls this week to assess potential impacts on properties and personnel. (Axios, June 9)
  • The escalating risk environment, including looting, anti-government extremism, and threats against infrastructure—has immediate implications for commercial real estate assets.
  • Protests in L.A. County and across the country triggered curfews and disruptions across business sectors, including retail, restaurants, and hotels.
  • Tesla Supercharger stations and other critical infrastructure were identified as high-risk. Fires and vandalism remain top concerns, especially near historic and civic buildings.
  • Last month at RER’s HSTF Meeting, one of the discussions included a review of the risks to commercial facilities from lithium-ion batteries with John Frank (AXA XL Risk Consulting). The meeting also included a series of briefs from the FBI regarding the threats from terrorist and transnational criminal organizations that are directly threatening U.S. citizens and commercial facilities. (Roundtable Weekly, May 30)

RER’s Homeland Security Task Force and RE-ISAC Response

  • Rising global tensions are also heightening domestic security concerns. The U.S. has repositioned military resources in the Middle East in response to Israeli strikes across Iran—a development that raises the risk of Iranian retaliation and potential threats to homeland security and critical infrastructure. (AP News | Axios, June 13)
  • Through the HSTF, RER works with government officials and private sector partners to detect, protect, and respond to a multiplicity of key threats.
  • 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.

  •  “This moment requires vigilance, clarity, and coordination across sectors,” said HSTF Chair Amanda Mason (Executive Director, Global Intelligence, Related Companies), who led several calls throughout the week.

  • RE-ISAC’s information-sharing network coordinates activities supporting the detection, prevention, and mitigation of a full range of physical, data, and cyber threats to the nation’s critical infrastructure.

RER, through its HSTF, will remain engaged in efforts to address evolving threats affecting the sector. Through regular briefings and coordination with public- and private-sector partners, the HSTF will continue to support preparedness and resilience across the industry.

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.

Fed’s Beige Book Highlights Uncertainty; CRE Leaders Cautious on Outlook

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The Federal Reserve in Washington, DC

As the Federal Reserve’s latest Beige Book reveals, the U.S. economy is continuing to adjust to shifting conditions, with commercial real estate leaders focusing on strategies to navigate ongoing uncertainty and emerging opportunities. (The Fed, June 4)

Beige Book Findings

  • The Beige Book published this week, reported that “all Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions.”
  • The report, based on surveys and interviews conducted through May 23, noted that the overall outlook remains “slightly pessimistic and uncertain,” unchanged from the prior report. (Bloomberg, June 4)
  • Nine of the 12 Federal Reserve districts reported either a contraction in economic activity or no change in growth; only a few districts, including Richmond, Atlanta, and Chicago, experienced modest growth. (Market Watch, June 4)
  • Commercial construction and real estate activity also declined overall, with the office sector continuing to lag. In San Francisco, construction activity remained subdued due to uncertainty over trade policy and rising material costs. (The Fed, June 4)
  • Tariffs were mentioned 122 times in the report, compared to 107 times in April, reflecting rising concerns about inflationary pressures. (CNBC, June 4)
  • In Boston, the Fed noted deals took longer to close, and “foreign investors grew generally skittish about investing in the United States.”

Economic Conditions & CRE

  • This week, during Lument’s webcast, “Turning Point: Multifamily Strategies Amidst Policy and Economic Shifts,” RER’s President & CEO Jeffrey DeBoer discussed how federal policies, including tariffs, liquidity, and the ongoing tax debates in Washington, are reshaping investor strategies.
  • DeBoer also emphasized that uncertainty and volatility are hindering investment decisions, mirroring the Beige Book’s findings of delayed business spending.
  • RER’s Q2 Sentiment Survey reflected similar caution, with the index falling to 54 as executives cited policy uncertainty, rising costs, and muted investor confidence—echoing the Beige Book’s insights on slowing activity and elevated economic risk. (Roundtable Weekly, May 23)
  • On Wednesday, the administration doubled tariffs on steel and aluminum imports from 25% to 50%, adding further pressure on construction costs and heightening unpredictability. (BisNow, June 4)
  • In the May edition of ULI’s Economist Snapshot, RER’s Senior Vice President Clifton E. “Chip” Rodgers Jr. weighed in on how rising tariffs and trade tensions are impacting U.S. commercial real estate—from delayed development timelines to increasing construction costs and reduced foreign investment. (ULI, May 13)

What’s Next

The Fed will consider the Beige Book findings at its June 17–18 meeting as it navigates a delicate balancing act between persistent inflation risks and ongoing trade tensions.

Senate Republicans Grapple with Details of Tax and Spending Bill

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With Congress back in session this week, Senate Republicans got to work on ironing out the details of their version of the budget reconciliation package. Members of the upper chamber are signaling a number of changes to the House’s bill, which could complicate Speaker Mike Johnson’s (R-LA) fragile coalition.

State of Play

  • Majority Leader John Thune (R-SD) met with President Trump at the White House on Monday, initiating a series of calls from Trump to individual GOP senators to discuss their concerns for the House-passed reconciliation package. (Punchbowl News, June 4)
  • The Senate GOP caucus met Wednesday afternoon to speak about the portions of the legislation that had already been or are on the cusp of being released. Among the most contentious issues: Medicaid, the state and local tax (SALT) deduction cap, and Inflation Reduction Act (IRA) energy tax credits. (Politico, June 3)
  • Finance Committee member Sen. Thom Tillis (R-NC) is one of several GOP lawmakers who has voiced interest in adjusting the phaseouts of certain IRA energy tax credits with a more “targeted” approach to protect U.S. businesses—including real estate—that are already invested in existing projects. (NBC News, June 6)
  • Fiscal hawks Rand Paul (R-KY) and Ron Johnson (R-WI) have already expressed opposition to the bill because it doesn’t contain enough spending cuts or do enough to address budget deficits. (WSJ, June 4)

Potential SALT & Business Tax Changes

  • On Wednesday, Senate Finance Committee members met with President Trump to discuss possible changes to the tax section of the bill. During the meeting, Senators briefly touched on their intention to try to revise the House’s proposal to raise the cap on SALT deductions for individuals to $40,000. 
  • Speaking to reporters outside the White House, Majority Leader Thune said he and his colleagues “start from a position that there really isn’t a single Republican senator who cares much about the SALT issue.” Thune went on to concede that he and other GOP senators “understand that it’s about 51 and 218, so we will work with our House counterparts and with the White House.”(Politico, June 4)
  • “We are sensitive to the fact that, you know, the speaker has pretty narrow margins, and there’s only so much that he can do to keep his coalition together. At the same time it wouldn’t surprise people that the Senate would like to improve on their handiwork,” Sen. Todd Young (R-IN) told reporters. (Politico, June 4)
  • The bulk of tax writers’ Wednesday meeting with the president, however, focused on a different issue: Trump is not sold on making several proposed business tax breaks permanent, including 100 percent bonus depreciation for equipment, machinery, and nonresidential property improvements.
  • Trump told Sen. Johnson and other members of the Finance Committee that it could be better for economic growth to make the provisions temporary, providing a more immediate incentive for businesses to take advantage of them. (Politico, June 5)

Section 899

  • Another area of debate that has emerged among Senate tax writers concerns Section 899, which would impose steep retaliatory taxes—up to 50 percent—on foreign taxpayers from countries that discriminate against U.S. businesses through their own tax regimes. (Roundtable Weekly, May 30)
  • If enacted in its current form, in addition to taxing foreign companies, Section 899 could raise tax rates on passive foreign investment in the U.S. (CNBC, June 2; Kirkland and Ellis, June 5)
  • Congress’ Joint Committee on Taxation has asserted that the “retaliatory tax” could in effect lead to a decline in foreign demand for U.S. assets and lower U.S. tax revenue (Bloomberg, May 30) 
  • In the short term, however, the provision is projected to raise significant revenue—$120 billion over the first five years. (Politico, June 4) 
  • Senators are reviewing potential changes and modifications to section 899 to address concerns. “There’s a lot of nervousness about how it could be used,” Sen. James Lankford (R-OK) told reporters, indicating that Republicans “want to make sure there’s not some unintended consequences.” (Semafor, June 4)

Implications for CRE

  • Senate tax writers, thus far, have not signaled significant interest in changes to priority issues like the deductibility of property taxes (business SALT) or carried interest.
  • The Senate is considering potential Roundtable-backed improvements to the House-passed Opportunity Zone provisions, as well as reforms to the low-income housing tax credit, the new markets tax credit, and a longer extension for provisions related to bonus depreciation and business interest deductibility.
  • An RER working group is analyzing Section 899’s impact on real estate and working to ensure policymakers understand its potential unintended consequences, which could include deterring foreign investment in large-scale, capital-intensive real estate and infrastructure projects in the U.S. (Roundtable Weekly, May 30)

Looking Ahead

While a few Senate committees have already released their sections of the bill, the Senate Finance Committee is expected to share their draft of the tax portion next week. RER will continue to update its members on key changes and their impacts on the commercial real estate industry during what will surely be an eventful month in Washington as the Senate works toward passing their reconciliation package by July 4.