Section 899

• In a Sept. 9 meeting, Treasury Assistant Secretary for Tax Policy Ken Kies told House Republicans that the department would support reviving Section 899 if Europe fails to exempt U.S. companies from the global minimum tax. (Bloomberg Law, Sept. 10)

• The measure was originally dropped from the reconciliation bill after the G7 pledged to exempt the U.S. from the Organization for Economic Co-operation and Development (OECD) Pillar Two taxes. (Reuters, June 30)

• Section 899 would impose escalating penalties on companies and individuals from jurisdictions applying “unfair” foreign taxes. 

• Senate Finance Chair Mike Crapo (R-ID) and House Ways and Means Chair Jason Smith (R-MO) said they are prepared to reconsider the proposal if needed. (PoliticoPro, Sept. 9)

• “We will absolutely pass that bill” if European finance ministers don’t honor the U.S.’s international tax structure, Chairman Smith said Tuesday. He added that such legislation could be included in a second budget reconciliation bill. (Bloomberg Law, Sept. 10)

• The Real Estate Roundtable (RER) supports modifications to the proposed Section 899 measure that would exempt passive, noncontrolling, minority investment in U.S. real estate in order to protect an important source of financing and capital.

• If revived without changes that exempt passive investment in US businesses and assets, Section 899 could negatively impact U.S. commercial real estate by applying to sovereign wealth funds, foreign insurers, and other noncontrolling, minority investors — key sources of equity for large-scale projects (Roundtable Weekly, June 27)

• During negotiations for the OB3 Act, RER and other industry groups warned that the tax would deter foreign investment, weaken capital formation, increase borrowing costs, and dampen property values. (Roundtable Weekly, June 6)

• A tentative G7 understanding must still gain acceptance among 140 OECD participants, many of whom are reluctant to grant the U.S. special treatment. Meanwhile, the White House and House Republicans are targeting OECD funding through rescissions and appropriations. (PoliticoPro, Sept. 10)

Energy Tax Incentives

• Kies also briefed lawmakers on Treasury’s plans to implement provisions of the OB3 Act and fielded questions about recent guidance narrowing eligibility for certain wind and solar projects. (PoliticoPro, Sept. 9)

• To address ongoing questions about the OB3 Act’s impact, RER developed a fact sheet, “Clean Energy Tax Incentives and the One Big Beautiful (OB3) Act – What CRE Should Know”, detailing how the law treats energy investments relevant to real estate. (RER Fact Sheet, Aug. 27 | Roundtable Weekly, Sept. 5)

Government Funding

• The government runs out of money on Sept. 30, and Republican leaders are split on how long to extend current funding. (The Hill, Sept. 9)

• GOP fiscal hawks and the White House want a stopgap bill through January or beyond to press spending rescissions and partisan reconciliation measures. (Punchbowl News, Sept. 10)

• Top appropriators in the House and Senate are nearing a deal on a package of three funding bills paired with a stopgap measure to avert a shutdown, extending government funding until Nov. 20. The House could take it up as soon as next week. (Punchbowl News, Sept. 12)

Speaker Mike Johnson (R-LA) faces pressure from President Trump and OMB Director Russ Vought to back a longer-term plan, while Senate Republicans such as Majority Leader John Thune (R-SD) are urging a cleaner, narrower resolution to avoid a shutdown fight.

The Real Estate Roundtable (RER) filed an amicus brief last month with the First Circuit Court of Appeals in Denham Capital Management LP v. Commissioner, a case that challenges the IRS’s restrictive interpretation of the “limited partner exception” from self-employment (SECA) taxes under section 1402(a)(13) of the tax code. (Amicus Brief, Aug. 15)

Why It Matters

• Income-producing real estate—rental housing, neighborhood shopping centers, office buildings, etc.—is predominantly owned and operated in partnership form. In 2022, there were over 2.2 million real estate partnerships in the United States, with nearly 9.6 million partners.

• The Self-Employment Contributions Act imposes Social Security and Medicare taxes on net earnings from self-employment. The SECA tax rate on earnings above $250,000 is 3.8%. While the tax applies to a broad range of trade or business income, Congress expressly exempted limited partners from SECA in the Social Security Amendments of 1977.

• Legislative proposals (including the House version of the Build Back Better Act) and proposed regulations have attempted unsuccessfully to extend the 3.8% SECA tax or the 3.8% net investment income tax to limited partners.

• More recently, the IRS has undertaken an aggressive effort to redefine what it means to be a limited partner by challenging taxpayers and litigating the issue in several cases before the Tax Court.

Roundtable View

• Real estate partnerships have relied for decades on longstanding tax law as it relates to limited partners and the SECA exception.

• In Denham and related cases, the Tax Court “imposed a judge-made test and concluded contrary to decades of established state law that a limited partner must be a ‘passive investor,’” notes the Roundtable amicus brief.

• On the contrary, “state law in the run-up to the 1977 Amendments tells an entirely different story—one that remains true today: limited partners have routinely provided key business services to their partnerships without losing their limited liability status.” (Amicus Brief, Aug. 15)

• The Tax Court’s 2023 Soroban ruling wrongly introduced a federal “passivity” requirement that is unmoored from statute, legislative history, and Treasury’s own prior interpretations. (TaxNotes, Sept. 10)

• “A shift in the federal tax definition of a limited partner could alter underlying partnership economics, increase tax burdens, and create significant uncertainty for real estate and other pass-through businesses,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Such changes need to go through Congress and withstand legislative scrutiny.”

Background

• The Roundtable amicus brief was prepared by President’s Council Member Isaac Wheeler and his colleagues at Sullivan & Cromwell LLP, in consultation with RER’s Tax Policy Advisory Committee (TPAC).

• The Denham appeal follows similar disputes in other circuits, including Sirius Solutions in the Fifth Circuit, where RER filed a parallel amicus brief in 2024. (Roundtable Weekly, Sept. 2024)

Next Steps

The First Circuit’s decision in Denham could have nationwide implications for how partnerships are treated under SECA. A ruling against the Tax Court’s passive investor test would reinforce state law’s central role in defining “limited partner” status.

At Connect Apartments 2025 in Los Angeles this week, Real Estate Roundtable (RER) President and CEO Jeffrey DeBoer delivered the keynote Q&A session, outlining top legislative and regulatory priorities in the coming months.

Remarks

• His remarks covered implementation of new tax rules on bonus depreciation and expensing, expansion of the Low-Income Housing Tax Credit, policies to encourage new housing supply, efforts to enhance energy grid access, and preparation for the scheduled 2027 expiration of the Terrorism Risk Insurance Act (TRIA).

• Recognizing that his remarks came on Sept. 11, DeBoer emphasized the broader role of industry leaders in fostering collective action.

• “For the past 24 years, our industry and its leaders have supported individual, business, and policy actions to respond to and prevent terrorism. Today we face a new reality that also requires a collective response,” he said.

• He continued, “Our personal, social, and political discourse clearly has spiraled in a very dangerous direction. Many are now calling on political leaders to tone down their divisive rhetoric. We agree. But we also strongly believe that political leaders should not act alone. The Real Estate Roundtable, and our leaders, now urge that the millions of people in our industry work to find boundaries to insightful rhetoric by rejecting actions and language that vilify and denigrate those whose views differ from our own.”

Next Wednesday, the House Financial Services Housing and Insurance Subcommittee will hold a hearing on "The Reauthorization of the Terrorism Risk Insurance Act of 2002." RER will continue to engage on TRIA renewal and related policy issues.

Housing affordability remained a central issue in Washington this week, with congressional hearings, a special Housing Showcase event, fireside chats, and the introduction of new housing legislation all contributing to the increasing momentum for reform.

HUD Innovative Housing Showcase Highlights Market Solutions

• This week also marked the return of the Department of Housing and Urban Development’s (HUD) Innovative Housing Showcase on the National Mall in Washington, D.C., which ran from Sept. 6-10.
  
  
• The event featured model homes, manufactured and 3D-printed structures, and new building technologies aimed at reducing construction costs, expanding supply, boosting efficiency, and spotlighting public-private partnerships. (HousingWire, Sept. 5)
  
  
• Coinciding with the event, Rep. Mike Flood (R-NE), chairman of the House Financial Services Subcommittee on Housing and Insurance, and Rep. Emanuel Cleaver (D-MO) introduced the Streamlining Manufactured Housing Standards Act. (HousingWire, Sept. 10)
  
  
• The bipartisan bill seeks to remove regulatory uncertainty, preserve affordability, and promote manufactured housing as a scalable solution to the nation’s housing shortage.

Fireside Chat with Chairman Scott and Secretary Turner

• On Sept. 9, as part of the Housing Showcase, Senate Banking Committee Chairman Tim Scott (R-SC) joined HUD Secretary Scott Turner for a fireside chat to discuss housing priorities and the Renewing Opportunity in the American Dream (ROAD) to Housing Act. (Press release)
  
  
• Sec. Turner underscored the importance of working in coordination with the private sector. “Public-private partnerships are key to overcoming the housing issue we have in our country,” said Sec. Turner. “We want to do the best job we can from a HUD standpoint to work with our private-sector partners to bring about solutions for the American people.” (Watch Discussion)
  
  
• Meanwhile, Sen. Scott highlighted the ROAD to Housing Act as proof that Republicans and Democrats can come together on housing policy. “It started off as my bill, but it became our bill… We got every member on the left and every member on the right to have a piece of the pie.”
  
  
• The ROAD to Housing Act was unanimously approved by the Senate Banking Committee in July, and now awaits a vote in the Senate.

Industry Urges Cost-Effective Energy Policies at Hearing on Housing

• On Wednesday, the House Energy and Commerce Subcommittee on Energy held a hearing titled “Building the American Dream: Examining Affordability, Choice, and Security in Appliance and Buildings Policies,” to assess the impact of federal energy regulations on housing costs. (Watch hearing)
  
  
• National Association of Home Builders (NAHB) Chairman Buddy Hughes testified that restrictions on energy choice, appliance standards, and mandates on energy codes are making new homes less affordable for most buyers.

• “Our members are on the front lines of an affordability crisis. Seventy-five percent of households can't afford a median-priced new home, and half the renters in this country spend over 30 percent of their income on housing costs. New Washington mandates will only make this crisis worse,” said Hughes. (NAHB Testimony)

Looking Ahead

• The Federal Reserve will decide next week whether to reduce interest rates, which could bring much-awaited relief from elevated home borrowing costs. (Realtor.com, Sept. 11)

• Meanwhile, reports suggest that President Trump may declare a national housing emergency this fall. Treasury Secretary Scott Bessent confirmed that “everything is on the table.” (Fox News, Sept. 10 | Realtor.com, Sept. 10)

RER will continue to engage with policymakers and industry leaders to promote bipartisan legislation and regulatory reforms that expand the housing supply and improve affordability.

The Real Estate Roundtable (RER) is pleased to share our 2025 Annual Report, A New Era for America’s Buildings: Policy to meet increased energy demands, new technology, and evolving living and working environments.

Roundtable Leadership

• This year’s report highlights how RER’s engagement drove policy wins in tax, capital and credit, housing, energy, and homeland security, amid one of the most intense legislative years in recent memory.

• It also underscores commercial real estate’s vital role in powering jobs, growth, and communities nationwide, while ensuring our industry’s trusted voice is heard at the highest levels in Washington.

• “The pace and complexity of policy this past year has been unprecedented, requiring rapid and well-coordinated responses,” said Jeffrey DeBoer, RER President and CEO. “Thanks to the engagement and expertise of our members, policy committees and national real estate partners, we have met each legislative challenge with substance, speed and credibility. I believe the past 12 months have been among the most challenging and most successful in our history.”

• “In the year ahead, we will continue to evolve how we communicate our mission, align our membership with the future of the industry and focus on the most urgent issues,” said Kathleen McCarthy, RER Chair and Global Co-Head of Blackstone Real Estate. “Real estate anchors our communities and touches every part of American life—from where people live and work to how businesses grow. As the nation faces a housing crisis and urgent energy challenges, public policy must support a strong, resilient real estate sector that drives solutions, fuels economic growth and improves quality of life and opportunity for all.”

Explore the 2025 Report

• RER’s FY2025 Annual Report details the organization's mission and recent activities, and offers potential policy solutions to today's pressing and far-reaching industry challenges, including:

• Tax Policy

• Capital & Credit

• Energy

• Infrastructure, Housing & Cities

• Homeland Security

• The publication also includes:

Printed copies of the Annual Report are currently being mailed to members. If you would like additional copies, please email agrenadier@rer.org