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.

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

• The PARTNERSHIPS Act and the Basis Shifting is a Rip Off Act mark a renewed attempt by Democrats to clamp down on what Sen. Wyden calls “a preferred tax avoidance strategy for wealthy investors and mega-corporations.” (Sen. Wyden Draft Proposal and Summary)

• 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.

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)

• The Federal Open Market Committee (FOMC) still expects to make two rate reductions later this year. (Axios, 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.