Tag: Revitalizing Downtowns and Main Streets Act

Tax Policy Roundup: Community Revitalization, Opportunity Zones, Foreign Investment, and Judicial Developments

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As Congress returns to Washington, The Real Estate Roundtable (RER) is working to advance several tax policy initiatives aimed at expanding housing supply, revitalizing communities, and removing barriers to capital formation for real estate investment.

Tax Policies to Support Community Revitalization

  • On August 30, RER’s Tax Policy Advisory Committee (TPAC) Chairman Joshua Parker published an op-ed in The Hill newspaper setting forth a three-part framework for how lawmakers should think about potential tax policies to support community revitalization. (The Hill, Aug. 30)
  • “Preserve buildings that can serve again,” wrote Parker. “Convert those that can meet a new need. Clear those that cannot and require the land to be rebuilt.”
  • Parker’s op-ed outlines three actionable tax changes advocated by RER to advance this framework: (1) reforming the tax treatment of demolition costs, including the lost tax basis when a building is torn down; (2) strengthening the historic tax credit, and (3) incentivizing commercial-to-residential conversions through the bipartisan Revitalizing Downtowns and Main Streets Act (H.R. 2410).

Opportunity Zones

  • RER is continuing to encourage Treasury and the IRS to move forward with transitional tax guidance that will provide much-needed clarity to Opportunity Zone (OZ) investors pursuing new housing and other real estate projects that straddle the pre- and post-2025 OZ statutory regimes.
  • IRS Notice 2026-40, released in June, embraced several RER recommendations and clarified certain key issues for taxpayers with OZ projects in expiring census tracts. (Roundtable Weekly, June 26)
  • RER followed up the Notice with additional suggestions, and met virtually with Treasury and IRS staff, along with other stakeholders, on Aug. 27. Formal proposed regulations from Treasury are expected before the end of the year. (Letter, July 29 | Roundtable Weekly, July 31)
  • This week, Treasury and the IRS issued proposed regulations implementing new reporting requirements for Qualified Opportunity Funds and Qualified Opportunity Zone Businesses. (PoliticoPro, Sept. 10)

FIRPTA and Tax Barriers to Foreign Investment in US Real Estate

FIRPTA
  • RER is finalizing a request to Treasury to revoke outdated administrative guidance (IRS Notice 2007-55) that creates unnecessary hurdles and tax burdens for foreign investors seeking to deploy capital in US real estate.
  • Notice 2007-55 treats REIT liquidating distributions as a sale of real property rather than the sale of stock, thus subjecting the transactions to tax under FIRPTA. The Notice also treats REIT distributions as ineligible for the section 892 foreign government tax exemption.
  • RER believes the Notice’s conclusions were incorrect at the time, and more recent events strongly favor its repeal.
  • These include changes in the FIRPTA statute since the Notice was issued, growth in the importance of foreign capital to U.S. real estate jobs and investment, and the corrosive effect of 20 year-old sub-regulatory guidance that has never been subject to the formal rulemaking process.

SECA Limited Partner Exception

  • On Aug. 12, the Fifth Circuit withdrew its January opinion in Sirius Solutions and issued a substitute opinion holding that the self-employment tax exception applies to a limited partner who plays “no significant role in managing or running a business.” (JD Supra, Sept. 9)
  • The new standard is a step back from the court’s earlier ruling, which based eligibility on limited liability and state-law limited partner status. However, the court again rejected the Tax Court’s stricter “passive investor” test and remanded the case for further consideration. (Grant Thornton, Aug. 17)
  • RER has filed amicus briefs supporting taxpayers in Sirius and two related appeals—Denham Capital in the First Circuit and Soroban Capital Partners in the Second Circuit. (Roundtable Weekly, Jan. 30 | Feb. 13)

RER will continue engaging with Congress, Treasury, and the IRS to advocate for clear, effective tax rules that expand access to capital, encourage investment and redevelopment, and support long-term economic growth.

Roundtable CEO Discusses Measures to Boost Housing Supply at Capitol Hill Summit

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Congress returned from recess this week with housing affordability at the forefront, as lawmakers, industry leaders, and advocates launched new legislation, coalition efforts, and regulatory proposals aimed at expanding supply and lowering barriers to residential development.

Summit on Housing Affordability

  • The National Summit on the Housing Affordability Crisis convened Sept. 3 on Capitol Hill and featured House Democratic Leader Hakeem Jeffries (D-NY), Sen. Ruben Gallego (D-AZ), and other lawmakers calling for bold action to expand and improve the affordability of housing nationwide. Rep. Jimmy Gomez (D-CA) hosted the summit. (Watch Panel)
  • RER President & CEO Jeffrey DeBoer joined Rep. Gomez, Emily Cadik (Affordable Housing Tax Credit Coalition), and Will Fischer (Center on Budget and Policy Priorities) on the summit’s opening panel “Making the Housing Puzzle Work.” (Watch DeBoer’s Remarks, Sept. 3)
  • DeBoer commented, “Housing affordability is at its core a supply problem—and supply is constrained by costs, labor, and capital. We need policies that continue to expand the Low-Income Housing Tax Credit, advance the bipartisan Revitalizing Downtowns and Main Streets Act to encourage the conversion of obsolete buildings, and ensure we have the skilled workforce to build. That’s why it’s so important to bring together lawmakers and stakeholders from every sector, because housing is an essential facet of American life, and solving this crisis requires public and private partners working together to expand supply, modernize rules, and deliver homes—both owned and rental single-family and multifamily—that meet the needs of Americans.”
  • Rep. Gomez highlighted the RER-backed Revitalizing Downtowns and Main Streets Act, which would create a federal tax credit to convert underutilized and obsolete commercial properties into affordable housing.
  • Rep. Gomez framed the affordability crisis as a test of confidence in U.S. institutions, saying America “needs a housing boom” prioritizing fairness and accessibility. (Rep. Gomez Press Release, Sept. 4)

Bipartisan Housing Legislation

  • On Sept. 2, RER joined more than 20 real estate and housing groups in a Housing Affordability Coalition letter to Congress urging action on several bipartisan bills, including the HOME Investment Partnerships Reauthorization and Improvement Act, the Workforce Housing Tax Credit Act, and more. (Letter, Sept. 2)
  • The letter emphasized that housing affordability requires public–private partnerships and the removal of regulatory barriers.
  • Rep. Mike Flood (R-NE), chair of the Housing and Insurance Subcommittee, said he aims for an October markup of a bipartisan HOME program reauthorization with Ranking Member Emanuel Cleaver (D-MO). (PoliticoPro, Sept. 3)
  • Their plan would expand uses of HOME funds, reduce regulatory burdens associated with Davis-Bacon, NEPA, and Buy America compliance, and speed affordable housing development.
  • The House agenda complements the Senate’s ROAD to Housing Act, advanced in July, and includes veteran housing and land-use reform bills. (Roundtable Weekly, Aug. 1)
  • Earlier this week, Treasury Secretary Scott Bessent said the Trump administration is weighing whether to declare a national housing emergency this fall, citing zoning and building codes as barriers to new supply. (Bloomberg, Sept. 1)

Coalition Seeks Flexibility on Davis-Bacon

  • On Sept. 3, RER and a group of multifamily trade associations sent a comment letter to HUD Secretary Scott Turner urging the use of Project Labor Agreements (PLAs) to determine prevailing wages on HUD projects. (Letter, Sept. 3)
  • The letter states that PLAs would provide more accurate, local, and timely wage determinations than the Department of Labor’s (DOL) survey method, which often delays projects and raises costs.  
  • The coalition said voluntary PLAs could reduce administrative burdens, speed delivery of HUD-backed housing, and serve as a test case for future Davis-Bacon reforms.

What’s Next

With Congress back in session, housing advocates are pressing for quick action on bipartisan bills and regulatory reforms. RER will continue to push for policies that expand supply, modernize outdated rules, and foster partnerships to address the nation’s affordability crisis.