September 2021 - Real Estate Tax Issues and Budget Reconciliation Legislation
August 2021 - Tax and Fiscal Reconciliation Fact Sheet
August 2021 - Budget Reconciliation: Tax Priorities and Talking Points
The tax system should treat real estate consistently with other types of assets and avoid excessive incentives or disincentives that distort markets. In limited and narrow circumstances (e.g., low-income housing), tax incentives are needed to address market failures and encourage capital to flow to socially desirable activities. The Tax Cuts and Jobs Act of 2017 retained or enhanced key elements of the tax code that promote productive real estate investment and job growth. The Real Estate Roundtable works with policymakers to ensure that our tax laws and regulations reflect the economics of real estate assets and contribute to strong property values and well-served, livable communities.
See more details below on each policy issue:
Foreign Investment In Real Property Tax Act (FIRPTA) Issue Position Background
FIRPTA applies a discriminatory capital gains tax on foreign investors in U.S. real estate that does not apply to any other asset class. In so doing, the FIRPTA regime discourages capital formation and investment that could be used to create jobs and improve U.S. real estate and infrastructure.
Carried Interest Issue Position Background
The Roundtable has spearheaded a coalition of 14 national real estate organizations to urge members of the House of Representatives not to move forward with the Carried Interest Fairness Act. The bill would limit capital gain treatment only to taxpayers who have cash to invest, making it more expensive to build or improve real estate and infrastructure, including workforce housing, assisted living communities, and industrial properties, to name just a few.
Opportunity Zones Issue Position Background
An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the U.S. Treasury.
Interest Deductibility Issue Position Background
The ability to borrow without a tax penalty is critical to the health and stability of real estate markets. The Roundtable’s advocacy helped put the potential harm of changes to the deductibility of business interest front-and-center for lawmakers during the consideration of the tax overhaul.
Affordable Housing Issue Position Background
The low-income housing tax credit (LIHTC) is an effective, market-based tool to help address the shortage of affordable housing in the United States. The 40 percent reduction in the corporate tax rate indirectly reduced the value of the LIHTC and demand for the credit.
The Roundtable's policy agenda encourages government programs designed to increase the nation's stock of affordable, low-income and market-rate housing, as opposed to rent control and other measures that constrict residential supplies.
Tax Reform Technical Corrections Issue Position BackgroundTax Reform Technical Corrections - Nonresidential, Improvements, Multifamily HousingIn the rush to pass tax reform, one unintentional drafting mistake has resulted in a longer cost recovery period for qualified interior improvements (a category that previously covered leasehold improvements, retail improvements, and new restaurant construction).
Internet Sales Tax
In June, in South Dakota v. Wayfair, the Supreme Court overturned its prior case law and upheld a South Dakota law that imposes sales tax collection requirements even if the seller lacks a physical presence in the State. The decisions marks a monumental step forward in the effort to create a level economic playing field between internet retailers and Main Street stores.
Condominium Tax Accounting Issue Position Background
In the last Congress, the Fair Accounting for Condominium Construction Act (H.R. 3659) would have corrected the tax accounting treatment of new condominium development. The Real Estate Roundtable will work with Members of Congress to advance this issue in 2019.
Capital Gains Issue Position Background
Traditionally, the United States has taxed long-term capital gains at a lower rate than ordinary income (wages, rent, and other compensation). The only exception was a brief three-year period after the Tax Reform Act of 1986 when Congress lowered the top ordinary tax rate from 50% to 28% and created temporary tax parity between ordinary and capital income. Long-term capital gain is currently taxed at a top rate of 20%. However, the rate will increase to 23.8% if the income is subject to a 3.8% tax on net investment income. The net tax investment income applies to real estate gains earned by passive investors and not the income earned from the active conduct of professionals in real estate.
Congress should continue to encourage investment and job creation with a meaningful capital gains incentive.
Maintaining a reduced rate on capital gains decreases the cost of capital, drives long-term investment, encourages productive entrepreneurial activity, draws investment from around the world, and increases U.S. workforce productivity and competitiveness.
We should be taking steps to encourage and reward risk-taking and investment in communities where it is needed, not punishing it.
June 11, 2019
Treasury Releases Proposed Regulations on FIRPTA Foreign Pension Fund Exemption
May 24, 2019
Senate Finance Committee Ranking Member Introduces Bill to Tax Carried Interest at Ordinary Income Rates
May 23, 2019
GOP Leaders Considering Legislation to Make Recent Tax Cuts Permanent; House Speaker Paul Ryan Announces Retirement, Endorses Majority Leader Kevin McCarthy
December 21, 2021
Real Estate Roundtable and Other Stakeholders Urge Congress to Extend Expiring Opportunity Zone Tax Incentive Deadlines
July 28, 2021
Coalition Opposes Eviction Moratorium Extension
March 15, 2021
Broad Business Coalition Highlight the Economic, Social, and Environmental Benefits of Like-Kind Exchanges
The Roundtable's Tax Policy Advisory Committee (TPAC) is led by Frank G. Creamer, Jr. (FGC Advisors, LLC) as chairman, and Kathy Weiden (LeFrak) as vice chairman. TPAC members are leading experts on tax issues affecting commercial and multifamily real estate, and include representatives from the major national real estate trade associations.
Senior Vice President & Counsel