Tag: Inflation Reduction Act

Policymakers and Industry Advocates Focus on ENERGY STAR Support, Clean Energy Tax Credits

Posted on by abigail_grenadier

As Republican lawmakers released a sweeping tax package this week and considered federal spending for the next fiscal year, The Real Estate Roundtable (RER) and industry allies continued to advocate for the ENERGY STAR program amid efforts to cut Inflation Reduction Act (IRA) clean energy credits.

Roundtable Advocacy

  • This week, RER along with eleven industry partners submitted a letter to U.S. Department of Energy (DOE) Secretary Wright reiterating the message of support for ENERGY STAR, and the benefits of the program driving down utility costs, bolstering grid reliability, and supporting U.S. economic competitiveness by helping building owners and managers benchmark performance and cut waste (Letter, May 14) (RW, May 9)
  • In April, RER and 17 industry organizations sent a letter to EPA Administrator Lee Zeldin expressing strong support for the program. (Roundtable Weekly, April 4)
  • In a Washington Post op-ed this week, former EPA Administrator William K. Reilly (1989-1993) described the program as “government at its best,” noting it was never intended as a climate policy tool but rather a cost-saving initiative embraced by businesses, developers, and consumers alike. (Washington Post, May 14)

Hearings This Week

  • EPA Administrator Lee Zeldin testified at Appropriation Committee House and Senate hearings this week regarding the president’s budget, but offered no clarity on ENERGY STAR’s future.
  • Lawmakers on both committees voiced concern over the scope of proposed EPA spending cuts.
  • The chair of the House’s Interior-EPA spending subcommittee Mike Simpson (R-ID) told Zeldin during the hearing, the administration’s proposed 55% EPA budget cut was unlikely to be accepted. (PoliticoPro, May 15)
  • In the Senate, Appropriations Subcommittee on Interior, Environment, and Related Agencies Chair Lisa Murkowski (R-AK) called the FY2026 EPA budget proposal “unserious” and “problematic.” (Sen. Murkowski Remarks, May 15)

IRA Clean Energy Tax Credits

  • The House Ways and Means Committee advanced its reconciliation bill that proposes sweeping changes to the IRA.

  • The bill terminates or phases out most of the clean energy tax credits that were expanded or created in the IRA.
  • Over past few weeks, several Senate and House Republicans have written to leadership expressing their support for maintaining energy incentives that benefit both traditional and renewable energy sectors, and urging a more selective approach to scaling back the IRA’s tax provisions. (RW, April 25)
  • Ways and Means vice chair Rep. Vern Buchanan (R-FL), a defender of IRA clean energy credits, said in an interview Wednesday he hopes Senate Republicans will make changes to the committee’s rollback of incentives. (Politico, May 14)

The Roundtable continues to engage lawmakers to ensure balanced, effective energy policies that support industry and economic growth.

GOP Races to Shape Reconciliation Bill

Posted on by abigail_grenadier

The House returned this week from recess to begin critical markups, racing against Speaker Mike Johnson’s Memorial Day goal. With just over three weeks until the Memorial Day target for President Donald Trump’s ambitious reconciliation bill, GOP lawmakers are navigating contentious policy debates on tax, Medicaid, energy incentives, and spending cuts.  (Politico, May 1)

State of Play

  • On Monday, Treasury Secretary Scott Bessent held another “Big Six” meeting with Speaker Mike Johnson (R-LA), Senate Majority Leader John Thune (R-SD), Senate Finance Chair Mike Crapo (R-ID), House Ways and Means Chair Jason Smith (R-MO), and National Economic Council Director Kevin Hassett to discuss the GOP’s tax provisions in the bill.
  • Although Speaker Johnson is adamant about his Memorial Day goal, Secretary Bessent indicated July 4 might be the more practical timeline.
  • After a White House meeting between President Trump, Speaker Johnson, House Majority Leader Steve Scalise (R-LA) and key committee chairs, the GOP leadership decided to delay markups next week in the House Energy and Commerce, Ways and Means and Agriculture committees. (Punchbowl News, May 2)
  • The House Financial Services Committee voted along party lines Wednesday to approve its portion of the reconciliation package, with Chair French Hill (R-AR) expecting savings to surpass the $1 billion in cuts mandated by the congressional budget resolution.

Tax Policy

  • Business SALT: The Roundtable (RER) is still focusing heavily on preserving the full deductibility of business-related property taxes, as lawmakers look for ways to pay for new tax provisions.
  • Through meetings, outreach, and aggressive advocacy efforts, RER and the real estate industry continue to urge lawmakers to reject a revenue proposal to limit the deductibility of state and local business-related property taxes as part of the tax bill.  The proposal could have a devastating impact on property values, rents, the health of the financial system, local communities, and consumer prices.
  • A cap on the deductibility of property taxes paid by U.S. businesses could have devastating consequences for commercial real estate owners, developers, and investors nationwide, reversing the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and raising effective tax rates on real estate to 1970s-era levels near 50%.  (RW, April 11) 
  • SALT: House Republicans left a high-stakes meeting with Speaker Mike Johnson on Wednesday without resolving their long-running internal dispute over the $10,000 SALT deduction cap.
  • Bonus Depreciation: President Trump said on Wednesday that Republicans are going to restore bonus deprecation for only four years. “Our big, beautiful bill, we may name it that actually, will include 100 percent expensing retroactive to January 20,” And we’re gonna make that expensing for a four-year-period at a full 100 percent.” (PoliticoPro, April 30)
  • The TCJA allowed businesses to fully deduct the costs of equipment and machinery, but bonus depreciation began phasing out in 2023, decreasing 20 percent annually and fully expiring at the end of 2025.

Carried Interest

  • The House Ways and Means Committee has privately indicated it’s not inclined to close the so-called carried interest loophole in the GOP’s sweeping tax package, though conversations are still ongoing. (PoliticoPro, April 29)
  • When asked about the proposal at a press conference, Speaker Johnson said that he didn’t want to get out front of the Ways and Means Committee but that “we’ve heard from interest groups around the country, and we want to do right by them.” (PoliticoPro, April 29)
  • Rep. Hill told Politico’s Morning Money last week that the policy “is a major source of economic growth, jobs, that impacts every community in the country — it’s not a loophole.” (Politico, May 1)
  • Since carried interest and its tax treatment first emerged as a controversial political issue in 2007, RER has consistently opposed legislative proposals to tax all carried interest at ordinary income rates.
  • RER’s Ryan McCormick told Bloomberg this week that taxing real estate investors’ “sweat equity” at higher income rates would hit projects in low-income and high-risk areas hardest. He added that, small real estate entrepreneurs take on significant risk when developing low-income areas, and these investors face similar risks as long-term equity holders and should be taxed at the 20 percent capital gains rate—a point he said has resonated with lawmakers. (Bloomberg, April 29)

IRA Energy Tax Credits

  • As the House Ways and Means Committee, prepares to markup its portion of the reconciliation bill in the coming weeks, House Ways and Means Chair Jason Smith (R-MO) has said the fate of the Inflation Reduction Act (IRA) is one of a few sticking points that the committee still has to figure out. (PoliticoPro, May 1)
  • Internal party divisions persist, highlighted by recent opposing letters from GOP lawmakers. Yesterday, Chair Smith received two letters from opposing House Republicans arguing their cases for full repeal of all energy tax credits under the IRA and preservation of the law.
  • The coalition of 26 House Republicans is urging GOP leaders to preserve electricity tax credits and protect the IRA’s transferability provision, which allows developers to finance clean energy projects by selling their tax credits. (PoliticoPro, May 2)
  • “Nothing is decided on the IRA,” said Rep. Vern Buchanan (R-FL), the number two Republican on Ways and Means. “The chips are on the table and a lot of that is going to happen next week.” (PoliticoPro, May 2)
  • In recent weeks, several Senate and House Republicans have written to leadership expressing their support for maintaining energy incentives that benefit both traditional and renewable energy sectors, and urging a more selective approach to scaling back the IRA’s tax provisions. (RW, April 25)

Challenges Ahead

  • The Energy and Commerce Committee faces internal GOP friction over Medicaid reductions, balancing fiscal hawks demanding significant cuts against moderates worried about political fallout. (Politico, May 1)
  • Majority Leader Thune (R-SD) highlighted the looming debt ceiling as a “hard deadline,” adding pressure to lawmakers juggling complex fiscal decisions.
  • Upcoming Treasury forecasts on the debt ceiling “X-date” could further adjust legislative schedules, as lawmakers await crucial financial projections.
  • Both House and Senate Republicans want to raise the debt limit in a budget reconciliation measure, something that President Trump has called for as well. (PoliticoPro, April 29)

White House Releases Budget

  • The White House on Friday released President Trump’s fiscal year 2026 budget request, outlining $163 billion in proposed reductions to federal spending that would start on October 1. (WSJ, May 2)
  • While presidential budgets outline an administration’s policy priorities, the figures rarely reflect the final appropriations determined by Congress. (Axios, May 2)
  • The FY2026 budget is expected to build on cuts already implemented by President Trump and adviser Elon Musk’s Department of Government Efficiency—most notably, reductions in the federal workforce. (AP News, May 2) The Trump proposal is already running into early resistance on Capitol Hill, including from Republicans. (Politico, May 2)
  • As reconciliation efforts progress, balancing the administration’s budgetary goals with legislative feasibility will be a challenge.

RER will continue to monitor developments closely as Congress advances a package that could have far-reaching implications for commercial real estate, business taxation, and economic growth.

What’s Ahead: Reconciliation Talks on Capitol Hill

Posted on by abigail_grenadier

Congress will return to Washington next week with an ambitious agenda—kicking off markups for a sweeping reconciliation package that would enact the President’s legislative agenda and could shape the fiscal and tax landscape for years to come. (CBS, April 24)

Markup Schedule

  • The Judiciary, Homeland Security, and Armed Services Committees are expected to lead the process starting the week of April 28. These panels have jurisdiction over spending on border security and defense and are tasked with allocating $110 billion, $90 billion, and $100 billion respectively under the House budget resolution. (Politico, April 17)
  • The Energy and Commerce Committee is targeting May 7 for its markup. The committee is required to find $880 billion in savings, which may involve changes to Medicaid, electric vehicle mandates, and other policy areas. (Punchbowl News, April 23)
  • The Financial Services Committee is set to vote on April 30 on its share of the reconciliation package, which must include a minimum of $1 billion in cuts over 10 years. (PoliticoPro, April 23)
  • Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) have expressed a shared goal of advancing the reconciliation package by Memorial Day.
  • “We are pushing it very aggressively on schedule, as you said, to get it done by Memorial Day,” Johnson said this week, citing the need to tame stock market instability.
  • Johnson also said he and House Majority Leader Steve Scalise (R-LA) had a conference call with the 11 House GOP committee chairs on Wednesday to discuss the next steps for Trump’s “big beautiful bill.” (PoliticoPro, April 23)

Tax Policy

  • Tax legislation will be a cornerstone of the reconciliation package as lawmakers prepare to extend the major tax provisions from the Tax Cuts and Jobs Act (TCJA) that are scheduled to expire at the end of 2025. (PoliticoPro, April 14)
  • The House Ways and Means Committee is eyeing a potential two-day markup session on May 12 and 13. (PoliticoPro, April 24)
  • House GOP leaders, including Ways and Means Committee Chair Jason Smith (R-MO), are scheduled to meet Wednesday with blue-state Republicans to discuss the personal SALT deduction cap.
  • The meeting marks a key moment in resolving one of the most politically sensitive issues in the tax bill. While most Republicans support maintaining the current $10,000 cap, several GOP lawmakers from high-tax states have threatened to oppose the package unless the cap is raised to at least $25,000. (Punchbowl News, April 25)
  • As policymakers prepare the first major tax bill since 2017, The Roundtable (RER) and the real estate industry are focusing heavily on preserving the full deductibility of business-related property taxes. The deductibility of business-related state and local income and property taxes has emerged as a central issue as lawmakers look for ways to pay for new tax provisions.
  • A cap on the deductibility of property taxes paid by U.S. businesses could have devastating consequences for commercial real estate owners, developers, and investors nationwide, reversing the benefits of the 2017 tax bill and raising effective tax rates on real estate to 1970s-era levels near 50%.  (RW, April 11) 
  • State and local property taxes represent 40% of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance, and insurance costs combined.  RER urges its members to weigh in with Members of Congress against restrictions on deducting state and local property taxes.
  • Other important issues for real estate in the current tax discussions include: tax parity for pass-through businesses, potential tax increases on carried interest, preservation of the opportunity zone tax incentives, and a possible expansion of the low-income housing tax credit.  (Bloomberg, April 21)

Potential Challenges Ahead

  • The reconciliation effort faces serious political hurdles, particularly regarding spending cuts and revenue-raising provisions.
  • House Republicans have a narrow majority, and leadership must secure support from nearly every member of their caucus. Proposed cuts to Medicaid and SNAP could generate pushback from moderate Republicans, while debates over “payfors” continue to divide lawmakers.
  • The House and Senate are also operating under different reconciliation instructions, which could further complicate aligning final legislation.

IRA & Energy Tax Credits

  • Since budget negotiations began, Republican leadership has suggested repealing some or all of the Inflation Reduction Act’s (IRA) clean energy tax credits as a way to reduce federal spending. However, several GOP lawmakers have advocated preserving specific provisions that benefit their constituents. (Reuters, April 21)
  • In a recent letter to Leader Thune, four Senate Republicans urged a more selective approach to scaling back the IRA’s tax provisions. Additionally, 21 House Republicans expressed their support for maintaining energy incentives that benefit both traditional and renewable energy sectors in a March letter to House Ways and Means Chair Jason Smith (R-MO). (Newsweek, April 21)

RER at the Forefront

  • This week, RER President and CEO Jeffrey DeBoer appeared on the special webcast  “Real Recession Risk or Temporary Distraction?” hosted by Marcus & Millichap President and CEO Hessam Nadji. DeBoer joined Moody’s Analytics Chief Economist Mark Zandi to discuss recession risks, inflation, and the broader impact of trade and tax policy in Washington. (Watch)
  • DeBoer was also a keynote speaker at the University of Wisconsin-Madison’s James A. Graaskamp Center Spring Board Conference earlier this month, where he shared his insights on how the Trump administration’s economic agenda, regulatory changes, tariffs, and tax policy are impacting commercial real estate.

RER will continue to monitor developments closely as Congress advances a package that could have far-reaching implications for commercial real estate, business taxation, and economic growth.

Congressional Republicans Pass Budget Resolution, Move One Step Closer to a Final Tax Bill 

Posted on by abigail_grenadier

This week, House Republicans approved a major budget framework that moves President Trump’s tax and spending agenda closer to the finish line and set the stage for Congressional Committees to “mark up” the key details in May—including tax cuts, revenue raising provisions, and spending reductions.  

State of Play

  • Despite tight margins, on Thursday House Speaker Mike Johnson (R-LA) was able to corral his caucus into passing a new budget resolution that was approved by the Senate over the prior weekend, bringing the president’s goal of “one big beautiful bill” closer to fruition. (WSJ, April 10)
  • Senate Republicans adopted a budget resolution on Saturday morning after an all-night voting marathon. Senate Republicans unveiled their 70-page budget blueprint last Wednesday.  It lays out a fiscal framework for implementing Trump’s border security, defense, energy and tax priorities. (CBS News, April 9)
  • The budget outline punts many of the hard decisions for lawmakers to hammer out later in the tax-cut negotiations. That could lead to a standoff between the House and Senate at the end of the process, where several Senators are resistant to large cuts in safety-net programs while House conservatives are seeking significant deficit reduction. (Bloomberg, April 10)

Next Steps and Implications for CRE

  • Lawmakers in the House and Senate now turn their attention to “marking up” their respective Committee instructions, as provided in the budget resolution.  The House and Senate instructions do not align, so their differences will have to be resolved later in the process.
  • The budget resolution allows the House Ways and Means Committee to pass a tax cut of up to $4.5 trillion, using a current law budget baseline.   The resolution allows the Senate Finance Committee to pass a $1.5 trillion tax cut, but assumes a current policy baseline in the Senate.  The practical effect of the current policy baseline is to increase the size of the Senate tax cut to $5.3 trillion.

  • On the spending side, the budget resolution directs the House Committees to identify at least $1.5 trillion in spending cuts.  The spending reductions for the Senate Committees are de minimis ($4 billion spread across four committees).
  • Besides tax cuts and spending reductions, the resolution calls for increased spending on the military ($150 billion), along with another $175 billion for border security and immigration enforcement work. (Politico, April 10)
  • The debt limit fight will also shape the legislative timeline. House and Senate Republicans have different reconciliation instructions for increasing the nation’s borrowing authority. (Punchbowl News, April 11)
  • Through meetings, outreach, and aggressive advocacy efforts, The Roundtable and the real estate industry continue to urge lawmakers to reject a revenue proposal to limit the deductibility of state and local business-related property taxes as part of the tax bill.  The proposal could have a devastating impact on property values, rents, the health of the financial system, local communities, and consumer prices.
  • In addition, members in both chambers continue to raise concerns about repealing clean energy tax credits from the Inflation Reduction Act (IRA) as part of the upcoming budget reconciliation bill. This week, four senators sent a letter to Senate Republican Leader John Thune warning that a full repeal would undermine investment, hurt businesses, and threaten jobs. (Punchbowl News, April 11) (RW, March 14)
  • At our Spring Roundtable Meeting, House Ways and Means Chairman Jason Smith (R-MO) engaged with RER members, acknowledging their concerns about proposals to change the treatment of business SALT and carried interest. He emphasized the importance of using data to inform policy discussions and commended RER for its impactful work educating policymakers on the issues.

As the budget process enters its next phase, RER will continue to advocate for key real estate priorities and inform members on policy updates from Capitol Hill and their impact on the industry. 

Biden Administration Announces $240 Million of IRA Grants for Building Efficiency Upgrades

Posted on by Trey Jackson
Department of Energy building in Washington, DC

On August 27, the U.S. Department of Energy announced plans to allocate $240 million from the Inflation Reduction Act (IRA) to 19 state and local governments to help communities adopt energy-efficient building codes and retrofit structures to meet updated standards. (Politico, Aug. 27)

Key Details

  • The initiative is expected to reduce utility costs for multifamily residents and commercial building operators, enhance grid resilience, and lower emissions.
  • “DOE is helping jurisdictions move further and faster in implementing stronger codes that will provide Americans safer, healthier, and more comfortable places to live, work, and play,” said U.S. Secretary of Energy Jennifer Granholm. (US-DOE Press Release, Aug. 27)
  • The 19 selected projects will receive direct technical assistance to support the adoption and implementation of traditional energy codes, zero energy codes, and building performance standards.
  • The grants also align with the Justice40 Initiative, designed to direct 40% of federal investments to disadvantaged communities overburdened by pollution.
  • This latest announcement follows an initial $90 million awarded to 27 projects last year from the 2021 Infrastructure Investment and Jobs Act, commonly known as the bipartisan infrastructure law, to implement updated building codes. (Politico, Aug. 27)
  • Chosen jurisdictions must go through a “negotiation process” with US-DOE before the agency ultimately awards Round 1 grants. Applications for the second round of IRA funding will close on Sept. 13. (US-DOE Press Release, Aug. 27)

What’s Next

The Roundtable is developing a “primer” for real estate stakeholders, highlighting key issues in the state and local BPS trend, with a release planned for this fall.

IRS Regulations Clarify Rules for Transferring Energy Tax Credits

Posted on by Trey Jackson
IRS building in Washington, DC

On Thursday, the IRS issued a package of final regulations on the transferability of tax credits for rooftop solar and other clean energy investments under the Inflation Reduction Act (IRA). (Final regulations and IRS news release, April 25)

Transferability

  • The final rules relate to the transferability of qualifying credits to third-party credit purchasers in the context of partnerships and pass-throughs, as well as potential credit recapture events and penalties for excessive credit transfers. (PoliticoPro, April 25 and Tax Notes, April 26)
  • The ability to transfer clean energy credits allows REITs to participate in the new IRA tax incentive regime. The final regulations address several concerns raised by The Roundtable in its July 2023 comment letter, particularly in the context of REIT investments. For example, the regulations clarify that as-yet-untransferred credits are disregarded for purposes of the REIT 75% asset test.
  • Unfortunately, the final regulations did not reverse the Biden administration’s prior guidance that generally limits the ability of mixed real estate partnerships (taxable and tax-exempt partners) to maximize their credit benefits through a combination of credit transfers and direct payments.  Mixed partnerships can still claim the new tax credits, but may lose some of the financial value due to the specific tax attributes of the individual partners. 
  • Treasury indicated additional guidance is likely to help taxpayers meet the cumbersome credit registration requirements and ensure taxpayers can qualify for the underlying incentives. The IRS also updated its FAQs on tax credit transfers on April 25.  

The Roundtable’s Energy Credit Transferability/Direct Pay Working Group is analyzing the regulations and assessing their impact on CRE.

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Roundup: Lawmakers Seek Action on Affordable Housing Incentives, Senators Push Treasury for EV Recharging Station Guidance, and Joint Tax Committee Releases Long-Awaited “Bluebook”

Posted on by Trey Jackson

House Ways and Means Committee members sent a bipartisan letter to House Leadership last Friday urging consideration of the Affordable Housing Credit Improvement Act (H.R. 3238) in any potential tax legislation brought to the floor in 2024. (Letter, Dec. 15)

AHCIA Provisions

  • Since the introduction of H.R. 3238 in May, the bill has garnered strong bipartisan support with 200 cosponsors—100 Republicans and 100 Democrats. (summary of AHCIA)
  • Representatives Darin LaHood (R-IL), Suzan DelBene (D-WA) and others wrote to House leadership urging inclusion of two key changes to the low-income housing tax credit (LIHTC) in any tax legislation that emerges (Tax Notes, Dec. 15):
  • Restoring the 12.5% increase in state allocation of housing credits that expired at the end of 2021, and
  • Lowering the threshold of private activity bond financing (currently 50%) that a project must meet in order to qualify for the maximum amount of 4% housing credits. 
  • The competitive and over-subscribed LIHTC program is a critical federal tool for addressing the widespread lack of affordable rental housing. The arbitrary 50% bond financing requirement creates a barrier to affordable housing production, especially for the growing number of states that fully utilize their private activity bond cap. (Roundtable Weekly, May 19)

Senators Push Treasury to Finalize Rules for EV Recharging Infrastructure Incentives

  • The Roundtable previously submitted detailed comments seeking guidance requesting greater clarity for real estate owners and others contemplating new investments in EV recharging stations.
  • The Inflation Reduction Act generally limits the credit to facilities installed in rural or low-income census tracts. The letter encourages Treasury to adopt an inclusive definition that effectively covers any tract if 10 percent or more of the “census blocks” inside the tract are rural. 
  • The Senators’ letter includes other requests that align with the Roundtable’s comments and aims to help the administration realize its goal of deploying 500,000 chargers by 2030. For example, the Senators urge that the rules treat each port at a refueling property as a “single item” that effectively qualifies for its own credit.

Joint Tax Committee Releases “Bluebook” Describing Recent Tax Laws

Joint Committee on Taxation logo
  • On Friday, Congress’s nonpartisan Joint Committee on Taxation released its long-awaited explanation of recently enacted tax laws.
  • The so-called “JCT Bluebook” is often relied upon by Treasury officials and federal courts when implementing and interpreting tax statutes. 

Congress reconvenes in Washington the week of January 8, where they will face a fast-approaching deadline for fiscal year 2024 spending bills and additional priorities, including a tax package.

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White House Holds Property Conversions Briefing for Roundtable Members

Posted on by Trey Jackson

Last week, the White House hosted a virtual briefing for Roundtable members to discuss federal loan and guarantee programs at the federal departments of Energy, Housing, Transportation and the General Services Administration that may assist with financing commercial-to-residential conversion projects.

Property Conversions Briefing

  • In October, the administration announced a suite of federal resources—including low-interest loans—across various agencies to assist conversion projects aimed at increasing the housing supply, revitalizing urban downtowns, and cutting climate pollution. (Roundtable Weekly, Oct. 27; White House Commercial to Residential Conversions Guidebook)
  • The briefing last week provided members with a high-level overview of the administration’s conversion work and focused on the Transportation Department’s Transportation Infrastructure Finance and Innovation (TIFIA) and Railroad Rehabilitation and Improvement (RRIF) financing programs. (See FAQs)
  • White House staff also announced upcoming workshops with the Department of Transportation’s Build America Bureau to learn more about how TIFIA and RRIF financing can be used for transit-oriented development (“TOD”) that takes the form of adaptive reuse.

Upcoming Workshops – Federal Resources to Support Commercial-to-Residential Conversions

IRA Tax Incentives – 179D

  • White House staff on the property conversions briefing mentioned that green tax incentives enacted by the Inflation Reduction Act (IRA) may be layered with other federal loan, guarantee, and grant programs to support a project.  (See RER fact sheet, “Clean Energy Tax Incentives Relevant to U.S Real Estate)
  • Roundtable Senior Vice President & Counsel Duane Desiderio was quoted this week in Tax Notes on the deduction in section 179D for energy-efficient commercial buildings.
  • “The IRA’s changes to section 179D are good policy, but more changes need to be made for the deduction to reach its full potential,” said Desiderio.” (Tax Notes, Nov. 28). He explained that Congress should make 179D “transferable” by REITs and other private sector owners.

The Roundtable’s Property Conversions Working Group will continue to serve as a conduit between our members and the administration to help design impactful policies that can assist with office-to-residential conversions. Please contact Roundtable SVPs Duane Desiderio (ddesiderio@rer.org) or Ryan McCormick (rmccormick@rer.org) for more information.

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Lawmakers Extend Government Funding Into Early 2024; Outlook Uncertain for Tax Policy and Other Priorities

Posted on by Trey Jackson
Capitol Hill at dusk

The latest threat of a government shutdown eased this week after President Biden signed two continuing resolutions, funding some agencies until Jan. 19 and others until Feb. 2, giving Congress a chance to pass full-year appropriations bills in early 2024, and leaving the Biden administration’s $106 billion supplemental foreign aid request unresolved. (AP, Nov. 17 |Wall Street Journal | Washington Post | NBC News, Nov. 15)

Window Narrowing for Other Policy Priorities

  • Congress’ focus on the funding measures leave policymakers looking for a potential legislative vehicle that could support a separate, expensive tax package. Conversations among tax policy writers are ongoing, according to Ways and Means Ranking Member Richard Neal (D-MA). (BGov, Nov. 16)
  • Senate Finance Committee Chair Ron Wyden (D-OR) and House Ways and Means Committee Chairman Jason Smith (R-MO) are discussing a package in the $90-100 billion range that would include measures on business interest deductibility and bonus depreciation, as well as an increase in the child tax credit for low-income families. (Roundtable Weekly, June 16)

IRA Tax Incentives

Tax Notes publication
  • On the regulatory front, Roundtable Senior Vice President Ryan McCormick was quoted this week in Tax Notes on the Inflation Reduction Act’s (IRA) rules affecting clean energy credits—and the need to ensure incentives extend equitably to “mixed partnerships” that include both taxable and tax-exempt investors.
  • “Tax-exempt investors in mixed real estate partnerships include pension funds, educational endowments, private foundations, and public charities,” said McCormick, noting that these entities have invested over $900 billion in commercial real estate.
  • The Tax Notes article also addressed problems posed by IRA prevailing wage and apprenticeship rules that were the focus of an Oct. 30 Roundtable comment letter. The letter quantified the large compliance costs and recommended allowing contractors to self-certify their compliance with the wage and apprenticeship requirements. (Roundtable Weekly, Nov. 3)

The Roundtable’s Tax and Sustainability Policy Advisory Committees will remain engaged with policymakers as the IRA rules affecting CRE are finalized and implemented. These issues will be discussed during The Roundtable’s State of the Industry Meeting on January 23-24, 2024 in Washington.

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Roundtable Recommends Solutions to Ease Compliance with Labor Rules for IRA Tax Incentives

Posted on by Trey Jackson
Workers on sustainable energy project on rooftop of building

The Real Estate Roundtable submitted comments this week encouraging the Treasury Department to provide a compliance “safe harbor” to streamline labor-related requirements necessary to seek “bonus” tax incentives for clean energy building projects under the Inflation Reduction Act (IRA). (Roundtable comment letter, Oct. 30)

Prevailing Wage and Apprenticeship Compliance Burdens

  • The Roundtable letter notes that the IRA’s objective to support retrofits and slash carbon emissions in the built environment will be undermined if the costs of labor compliance far exceed the incentives offered by Congress.
  • The comments explain that wage and apprenticeship compliance burdens would dis-incentivize businesses and taxpayers’ to pursue the IRA’s clean energy bonuses, thereby rendering the bonus credits program illusory in many cases.
  • The letter also emphasizes that a regulatory solution to ease the IRA’s paperwork burdens would spur more clean energy projects in buildings—and encourages Treasury/IRS to conduct its own thorough cost-benefit accounting of Prevailing Wage/Registered Apprenticeship (PW/RA) Requirements before issuing a final rule.

 Contractor Compliance Certifications Sought

rooftop heat pumps with solar panels in the foreground.
  • The “safe harbor” recommendation by The Roundtable would allow building owners/developers to rely on written certifications provided by their General Contractors (GCs), or any other subcontractors (subs), would confirm and fulfill all PW/RA labor requirements.
  • This streamlined approach would reduce the compliance burden and retain the fervor that IRA tax incentives could generate under the IRA. Real estate owners and developers are not the direct employers of electricians, plumbers, HVAC technicians, solar technicians, EV charging installers, or any others that construct or retrofit buildings. GCs and subs directly employ manual laborers.
  • The Roundtable also recommends regulators develop “Recordkeeping Requirements” for PW/RA compliance that reflect the reality of how laborers, mechanics, and apprentices are employed on real estate projects, who is hired by whom, and how hours worked are tracked.

Other targeted tax reforms that will help scale real estate’s transformation toward zero emissions are recommended in The Roundtable letter. These include expanding Section 48 of the Code to building electrification technologies; allowing private owner transfers to unrelated third parties under Sections 45L and 179D; and repealing a Section 179D rule that reduces a property’s basis by the amount of the claimed deduction. (Roundtable comment letter, Oct. 30)

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