The Treasury Department and the Internal Revenue Service (IRS) on Monday released a new Notice of Proposed Rulemaking that would repeal the FIRPTA “look-through” rule for domestically controlled real estate investment trusts (REITs)—a significant policy shift strongly supported by The Real Estate Roundtable (RER).

Proposed Change

• Under the proposed regulation, the domestic corporation look-through rule would be removed, treating all domestic C corporations as non-look-through persons when determining whether a REIT is domestically controlled, and thus exempt from FIRPTA. (National Law Review, Oct. 23)

• Once finalized, taxpayers could elect to apply the new rule retroactively to transactions occurring on or after April 25, 2024, when the prior regulations were finalized. (Thomas Reuters, Oct. 21)

RER Advocacy

• RER was a vocal critic of the look-through rule when it was first proposed in 2022, and urged its removal from the regulations.

• The rule was finalized last year with only modest transition relief. In March, RER submitted a letter to Treasury outlining concerns with the regulation and again calling for its repeal. (Roundtable Weekly, March 21)

• Those issues were also raised and discussed with Treasury at RER’s Tax Policy Advisory Committee (TPAC) meeting this summer.

• The positive development reflects years of coordinated engagement from RER and TPAC members on the issue. Comments submitted by RER in 2023, not long after the regulations were first proposed, also advocated repeal of the look-through rule. RER’s March 2025 submission was its fourth letter to Treasury and Congress on the matter. (Letters, July 2024; Feb. 2023; Mar. 2023) (Roundtable Weekly, July 2024)

• Backed by detailed data on foreign capital flows provided by CBRE, RER’s March submission emphasized the chilling impact that the regulations were having on foreign investment into U.S. real estate. TPAC member David Polster (Skadden) and his colleague Nick Gianou drafted RER’s legal and technical arguments with significant input from the RER’s FIRPTA Working Group.

Treasury Acknowledges Industry Concerns

• In its release, Treasury cited the practical difficulty of tracing upstream ownership without reliable data and acknowledged the legal uncertainty, operational complexity, and potentially negative effect on investment in U.S. real estate generated by the 2024 regulations.

• The preamble also notes that stakeholders argued the look-through rule conflicted with congressional intent, as Section 897(h)(4)(B) does not include explicit corporate look-through provisions.

Roundtable on the Road

• RER SVP and Counsel Ryan McCormick discussed the recent FIRPTA developments and other real estate and pass-through tax policy issues this week at NYU’s Institute on Federal Taxation in New York City.

• His presentation highlighted key provisions of the One Big Beautiful Bill Act,  potential future legislation, implementation priorities, and major tax litigation affecting partnerships and real estate.

RER will continue to engage with Treasury on areas where further guidance or regulatory changes are needed.

The Senate Banking Subcommittee on Housing, Transportation, and Community Development held a hearing this week, “Innovation in U.S. Housing: Solutions and Policies for America’s Future,” which examined the nation’s housing shortage, the impact of rising regulatory costs, and innovative approaches such as modular and off-site construction, accessory dwelling units (ADUs), and pre-disaster mitigation to help address the housing crisis.

Hearing Highlights

• Subcommittee Chair Katie Britt (R-AL) and Ranking Member Tina Smith (D-MN) framed the housing crisis as a bipartisan priority, citing the ROAD to Housing Act's unanimous 24-0 passage through the Senate Banking, Housing, and Urban Affairs Committee as proof of momentum for federal housing reform. (Watch Hearing)

• Among the measures Senators raised were proposals to ease permitting rules, streamline approvals, and modernize FHA and USDA programs to speed construction.

• Members also discussed Opportunity Zones and expanding the Low-Income Housing Tax Credit (LIHTC as levers to spur investment in underserved areas, particularly when paired with state and local zoning reforms.

• Witnesses emphasized regulatory and financing barriers, noting that government requirements add roughly 24 percent to the cost of new single-family homes and 40 percent to multifamily developments. 

• Mary Tingerthal, founder of Construction Revolution, highlighted modular and off-site construction as key innovations to lower costs and timelines, reducing project durations by up to 50 percent and costs by 10-20 percent.

By the Numbers

• A new report published by Goldman Sachs Research estimates the U.S. must add 3-4 million homes—about 2-2.6 percent of current housing stock.

• The firm found that restrictive land-use regulations are the biggest barrier to growth, and that easing them could generate up to 2.5 million additional units over the next decade. (Goldman Sachs, Oct. 21)

• Separately, Goldman Sachs economists reported that U.S. consumers are bearing about 55 percent of the costs from tariffs this year, with businesses and foreign exporters absorbing smaller shares. (ABC News, Oct. 14)

• The firm said U.S. companies are expected to pass on more of those costs to consumers as the tariffs remain in effect.  (The Hill, Oct. 13)

RER Advocacy

• RER previously submitted a comment letter in support of the ROAD to Housing Act, which passed the Senate on Oct. 9 as part of its version of the National Defense Authorization Act (NDAA)—marking the first bipartisan, comprehensive housing package advanced in more than a decade. (Roundtable Weekly, Aug. 1 | Roundtable Weekly, Oct. 17)

• The bill focuses on streamlining regulations, incentivizing construction, modernizing housing finance and disaster recovery programs, and supporting vulnerable populations such as veterans and the homeless.   

Roundtable on the Road – Chicago

• This week, RER Chair Kathleen McCarthy (Blackstone), RER Treasurer Michelle Herrick (JPMorgan Chase), and RER President and CEO Jeffrey D. DeBoer hosted members in Chicago for Roundtable on the Road, featuring discussions on housing policy, market innovation, and federal priorities.

• “Our Chicago stop underscored the value of Roundtable on the Road—real-time dialogue among industry leaders on housing, the economy, and market trends,” said DeBoer. These on-the-ground insights strengthen our advocacy in Washington, helping to shape practical, fact-based solutions that expand housing, fuel growth, and ensure policymakers understand the real-world impact of their decisions.”

Housing, GSE reform, and solutions to improve housing affordability will be key topics of discussion during RER’s Fall Roundtable Meeting next week in Washington, D.C., on Oct. 27-28 (Roundtable-level members only).

The federal government shutdown—now in its fourth week and the second-longest in U.S. history—shows no sign of ending as partisan divisions deepen and the House remains in recess. (Punchbowl News, Oct. 24)

State of Play

• House Republicans have no plans to reconvene before next week, as negotiations remain stalled over renewing enhanced Affordable Care Act (ACA) subsidies, which expire at year’s end. (PoliticoPro, Oct. 23)

• Speaker Mike Johnson (R-LA) has kept the chamber out of session for more than a month, insisting that Democrats must first agree to reopen the government before any negotiations on broader health care or spending issues resume.

• In the Senate, lawmakers have rejected short-term funding bills 12 times since Oct. 1. The latest GOP-led continuing resolution (CR) to fund operations through Nov. 21 failed earlier this week.

• Senate Majority Leader John Thune (R-SD) has suggested separate votes to fund active-duty military members and air traffic controllers in an effort to increase pressure on Democrats, but the measures have also failed. (Politico | Washington Post, Oct. 23)

Economic and Operational Strains

• The most recent consumer price index showed annual inflation at 3% in September, keeping the Federal Reserve on track to cut rates next week. The shutdown has halted new economic data releases, prompting Fed Chair Jerome Powell to warn that the prolonged “data blackout” could complicate monetary policy. (PoliticoPro, Oct. 24 | Axios, Oct.24)

• Lawmakers on both sides warn that the economic fallout will deepen if the impasse continues, threatening programs vital to housing, infrastructure, and financial markets.

• EY-Parthenon Chief Economist Gregory Daco estimates that the shutdown will cost the U.S. economy roughly $7 billion per week. (BisNow, Oct. 12)

• U.S. GDP could decline by 15-20 basis points per week, though the near-term impact on commercial real estate remains limited, according to Marcus & Millichap. (Marcus & Millichap)

• Cybersecurity risks are rising as agencies such as the Cybersecurity and Infrastructure Security Agency (CISA) operate with minimal staff. Businesses report limited federal coordination following the expiration of the Cybersecurity Information Sharing Act of 2015, which had allowed companies to share threat data with the government. (Bloomberg, Oct. 22)

Looking Ahead & What’s at Stake

• Mounting political and economic pressure points are expected to intensify around Nov. 1, when funding shortfalls for Supplemental Nutrition Assistance Program (SNAP) and WIC nutrition benefits are projected, ACA open enrollment begins, and federal workers miss another paycheck—factors that could force both parties back to the negotiating table.

• Federal workforce: Hundreds of thousands of employees will miss a paycheck this week. The Trump administration has reprogrammed limited funds to pay military personnel and some law enforcement officers, yet mass layoffs are underway, and litigation over the firings has already begun.

• Transportation delays: Shortages of air traffic controllers and TSA employees are worsening as paychecks lapse. Speaker Johnson said he will not recall the House to vote on a standalone bill to fund these workers, while Senate leaders may soon force votes on military pay and nutrition benefits ahead of the Nov. 1 cutoff.

• Public assistance: Existing funding for the SNAP program is expected to run out by the end of October. The administration is assessing whether it can reallocate funds to sustain the program, which serves 42 million Americans.

• Health coverage: The start of ACA open enrollment on Nov. 1 is another flashpoint, as Democrats warn that expiring subsidies could drive higher premiums and intensify voter pressure to end the shutdown.

Path Forward

• Lawmakers have floated extending the current stopgap into December or early 2026, but no consensus has emerged. Democrats oppose any measure that provides funding into next year without renewing enhanced ACA subsidies that expire in December.

• The Senate is set to leave Washington until Monday, while the president departs for a 10-day trip to Asia, further dimming hopes for a near-term deal.

RER continues to urge Congress to act responsibly to reopen the government and restore critical housing, insurance, and economic programs essential to real estate investment and growth.