Tag: Tax Policy

Outlook for 2025 Budget, Reconciliation, and Tax Legislation

Posted on by Abigail Grenadier

Senate Republicans are mapping out an ambitious two-step reconciliation strategy for 2025, planning to first address defense, energy, and border security before tackling a tax package later in the year. The initial focus is to secure an early win that could help build momentum for the more complex task of extending the expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). (Tax Notes, Dec. 4)

Why It Matters

  • This approach marks a notable shift from House Republicans’ earlier plan to address tax issues within the first 100 days of President-elect Trump’s term. (Washington Post, Dec. 4)
  • Instead, Senate Republicans want to divide the legislative work to make each package more manageable, leveraging early victories to build momentum for harder battles. (PoliticoPro, Dec. 4)

Reconciliation Plan

  • GOP senators, including Thom Tillis (R-NC) and Shelley Moore Capito (R-WV), emphasized the importance of consensus and coordination within the party, acknowledging that a slim House majority could complicate passage. (Tax Notes, Dec. 4)
  • Sen. Capito noted that a smaller, earlier reconciliation package—focused on defense, energy, and border security—could help set the stage for tackling the more politically challenging tax bill.
  • The initial bill could include measures that all Republican factions can support, such as limited deficit reduction and targeted energy policy reforms.
  • Failure to act on tax reform by the end of 2025 will lead to the expiration of many provisions from the 2017 tax law, resulting in tax increases for most individuals and some businesses. (Bloomberg, Dec. 3)
  • Rep. Jason Smith (R-MO), chairman of the House’s Ways and Means committee, voiced his opposition to delaying tax reform under Sen. Thune’s plan, noting the difficulty of advancing two budget reconciliation packages, which are immune to filibusters in the Senate. (The Hill. Dec. 5 | CNBC, Dec. 4)
  • “The important thing is getting all the policies done as quickly as possible, and what we ultimately all agree on [is] we’re all going to have to be in unison on that, but no final decision has been made,” said House Majority Leader Steve Scalise (R-LA) regarding the reconciliation timeline. (PoliticoPro, Dec. 4)

View from Senate

  • Sen. Chuck Grassley (R-IA) pointed to the complexity of the tax package as the reason for its placement as the second bill.
  • “We want to help lower energy costs, we want to help the military. We want to hit the ground running,” said Sen. Lindsey Graham (R-SC). (The Hill, Dec. 4)
  • Sen. Rand Paul (R-KY) cautioned against using reconciliation to increase spending, emphasizing the need to reduce overall expenditures.

What’s Next

  • Senate Republicans, led by incoming Senate Majority Leader John Thune (R-SD), will work closely with House Speaker Mike Johnson (R-LA) and the White House to finalize the contents and timing of both reconciliation bills.
  • Passage of a budget resolution, which is the first key step in the reconciliation process, will be crucial to move forward—a challenge in itself given the slim GOP majority in the House.

The two-bill reconciliation strategy reflects Senate Republicans’ cautious approach to the legislative calendar. By securing an earlier, more straightforward win, the GOP hopes to gain the momentum needed to navigate a complex tax debate later in 2025.

CRE Leaders Gather to Discuss Elections, Economy, Housing and More

Posted on by Abigail Grenadier
Roundtable Chair Kathleen McCarthy (Global Co-Head of Blackstone Real Estate, Blackstone)

This week’s Fall Roundtable meeting came at a pivotal time for commercial real estate, as key policy issues take center stage in Washington. Discussions focused on national policies impacting the industry, including the implications of the recent elections, challenges in capital and credit markets, expiration of the 2017 tax bill, and the federal government’s role in supporting housing supply and regulating energy usage. (Bisnow, Nov. 11)

The meeting also covered topics such as return-to-office trends, office-to-residential conversions, and liquidity concerns. (The Roundtable’s  Fall 2024 Policy Priorities and Executive Summary)

Speakers & Policy Issues

Roundtable members engaged in policy issue discussions with the following guests:

  • Reince Priebus, former White House Chief of Staff (President Trump) and the longest-serving chairman of the Republican National Committee in modern history, gave his perspective on the recent elections, dynamics on Capitol Hill, and potential focus of the new administration in 2025.
(L-R) Roundtable President & CEO Jeffrey DeBoer & Reince Preibus
  • Sen. Tim Scott (R-SC) is the current ranking member and presumed next chair of the influential Senate Banking, Housing, and Urban Affairs Committee and a senior member of the Senate Finance Committee. Sen. Scott advocated for expanding business and homeownership, enhancing financial literacy, and improving affordable housing by reducing regulations and advancing zoning reforms to foster economic growth and equity in communities.
Sen. Tim Scott (R-SC)
  • The Honorable Tom Barkin (President & Chief Executive Officer, Federal Reserve Bank of Richmond), provided a candid assessment of economic recovery and the challenges ahead. He also questioned the fundamental demand for office space as companies reassess their needs in a post-pandemic environment. (Reuters, Nov. 14)
(L-R) RER Board Secretary Jodie McLean (CEO, EDENS) and Tom Barkin
  • Rep. Richard Neal (D-MA) (Ranking Member, House Committee on Ways and Means), addressed the significance and major takeaways of the recent election and the outlook for tax and trade policy going forward. He discussed affordable housing incentives, such as the Low Income Housing Tax Credit (LIHTC) and the bipartisan Revitalizing Downtowns and Main Streets Act (H.R.9002), and extending tax provisions like Section 199A, capital gains. (RER’s Tax Policy Priorities)
Rep. Richard Neal (D-MA)

Next on The Roundtable’s meeting calendar is the all-member State of the Industry (SOI) Meeting, which will include policy advisory committee meetings, on January 22-23, 2025 in Washington, DC. 

The Roundtable Congratulates President-Elect Trump and Looks Forward to Jointly Addressing Key Policy Priorities    

Posted on by Abigail Grenadier

The 2024 election cycle concluded this week, with Donald J. Trump elected as President of the United States. The Roundtable congratulated the President-elect and the newly elected members of Congress. As the nation transitions to new leadership, The Roundtable is looking forward to collaborating with the new administration and Congress on policies critical to the economy, jobs, housing, and the health of real estate markets.

Election Results

  • At the time the election was called, President-elect Trump had received 295 electoral votes compared to Vice President Harris’ 226. Trump also took the lead in the popular vote, with 72,773,748 votes compared to Harris’ 68,123,125. (The New York Times, Nov. 7)
  • On the Congressional front, the Republican party took control of the Senate with 53 seats. Neither party has reached the necessary 218 seats to secure a majority in the House, but Republicans are in the lead with 211 seats. (AP News, Nov. 7)

Focused Hard Work Ahead Regarding Tax Legislation, Deregulation, and Housing Policy Shifts

  • Donald Trump’s victory in the presidential election, Republicans’ victory in the Senate, and the likely Republican House majority dramatically reshuffle the dynamics for policy debates on key issues related to real estate. The Roundtable’s initial thoughts on how the election results impact our priorities, strategy and outlook include:
  • Tax Policy Extensions and New Proposals: The incoming administration is expected to extend 2017 tax cuts, restore bonus depreciation, and support Opportunity Zone incentives. New pro-growth tax measures could also gain traction.
  • Deregulation in Energy and Financial Services: Deregulatory shifts may impact climate and financial services regulations, prioritizing oil and gas development, easing bank regulatory and SEC, HUD, and FHFA oversight. Federal rollbacks could increase regulatory challenges across states as they implement varying climate standards. Ensuring grid reliability could become an even more prominent issue in the energy policy arena.
  • Focus on Credit Markets and Housing: Anticipated policy objectives include reducing mortgage rates, revisiting Fannie Mae and Freddie Mac conservatorship, and reducing housing costs by cutting regulatory barriers. Potential Treasury appointments reflect a push toward expanded credit access and reduced regulatory burden.

Roundtable Statement

Earlier this week, Roundtable President and CEO Jeffrey D. DeBoer issued a statement congratulating President-elect Trump and pledging to work with the new administration and Congress on pressing commercial real estate issues.

“We look forward to working with the President-elect and his team to advance policies that will expand the nation’s economy, boost job creation, increase the supply and affordability of housing, and address the many important national policy issues related to constructing, financing and maintaining modern real estate, work, living, and recreational buildings.

Strong real estate markets provide millions of American jobs, support strong local budgets, and help millions of people plan for retirement through their pension and retirement savings investments in real estate.

The strength of real estate and the benefits the industry provides to all Americans, depends on fair, consistent, and forward-looking policies at all levels of government.

Real estate public policies are nonpartisan. The Real Estate Roundtable supports policies based on objective economic principles that are responsive to changing economic cycles and sensitive to societal demands.

Tax and financial regulatory reform, housing investment, immigration issues, energy policy, and physical and cyber security each present opportunities to advance the economy and stability of U.S. real estate markets.

We are excited to offer our support, expertise and assistance to President-elect Trump and the new Congress. We are honored to contribute meaningfully to the strength and prosperity of our nation,” said DeBoer.

CRE Industry Advocates for Tax Relief to Support Recovery and Stability

Posted on by Abigail Grenadier

As the U.S. commercial real estate sector enters a critical recovery period, industry leaders are urging policymakers to retain key tax policies from the Tax Cuts and Jobs Act of 2017 (TCJA), many of which expire at the end of 2025. (Reuters, Oct. 28)

Tax Landscape

  • The outcome of the November presidential election will play a critical role in shaping year-end tax bill discussions.
  • If either candidate secures the presidency and achieves unified control of Congress, they may urge their congressional allies to delay any tax negotiations until 2025.
  • The Roundtable is preparing for potential tax legislation in the lame-duck session, though action may be delayed until next year’s debate when major provisions in the TCJA expire. (Roundtable Weekly, Oct. 25)
  • In early October, RER submitted comments to Capitol Hill on the pending expiration of the TCJA and ways in which tax policy can support long-term investment, economic stability, and the creation of affordable housing. (Roundtable Weekly, Oct. 4)

Industry Advocacy

  • Speaking to Reuters, Real Estate Roundtable President and CEO Jeffrey DeBoer noted the difficult economic backdrop for real estate as the tax debate has gathered steam, “Over the last 18 months … operating costs have … risen dramatically at the same time the availability of capital and credit have diminished…. All of that creates stress and challenges in the CRE marketplace.” (Reuters, Oct. 28)
  • With the tax reform debate heating up in Washington, maintaining sound tax rules that both reflect the economics of real estate transactions and encourage capital formation is a priority for the CRE industry.
  • “Depreciation deductions and interest expense deductions. They’re not tax breaks. They’re the cost of doing business,” said Ryan McCormick (SVP & Counsel, RER) while discussing housing policy in Politico’s Morning Tax.  (Politico, Oct. 28)
  • RER Member Hessam Nadji (President & CEO, Marcus & Millichap) appeared on CNBC International Squawk Box this week and spoke on the upcoming elections, international investor re-engagement with U.S. CRE, zoning and private-public partnerships, and the impact of government policies, particularly regarding housing.

RER Tax Priorities

Roundtable tax priorities heading into 2025 include:

  • Capital formation and capital gains: Preserving key elements of the tax code (e.g., capital gains preference, like-kind exchanges, step-up in basis at death) that encourage productive real estate investment, risk-taking, and growth.
  • Strong partnership, pass–through, and entity choice rules: Extending tax provisions like section 199A that allow pass-through businesses to compete on a level playing field with public corporations.  
  • Affordable housing and community development incentives: Advocating for tax incentives tied to affordable housing, energy efficiency, Opportunity Zones, and commercial-to-residential conversions.
  • Removing barriers to job-creating foreign investment:  The tax system should avoid discriminatory policies that discourage job-creating foreign investment in US real estate and infrastructure.  

Tax Bill Negotiators to Watch

  • Sen. Mike Crapo (R-ID): If Republicans take control of the Senate, Crapo is poised to lead the Senate Finance Committee in 2025. Given his influence over Senate Republicans, many of whom followed his opposition to this year’s bipartisan tax bill, Crapo’s stance on a year-end tax deal will be pivotal.
  • Sen. Ron Wyden (D-OR): Wyden has shown a willingness to strike deals, as evidenced by his work with Rep. Smith on this year’s agreement. He might be eager to pass as much of that legislation as possible during the lame-duck session.
  • Rep. Jason Smith (R-MO): As chair of the House Ways and Means Committee, Smith’s perspective will be highly influential in the lame-duck session, with Republicans still holding the House majority.

The Roundtable is committed to working with lawmakers to ensure the U.S. maintains a competitive tax code that encourages capital formation, rewards entrepreneurial risk-taking, and supports critical policy objectives, including accessible and affordable housing and safe and healthy communities.

Zoom Town Hall Recap: Election Insights and CRE Policy Priorities

Posted on by Abigail Grenadier

Last week, The Roundtable hosted a Zoom Town Hall to discuss the upcoming election, along with policy priorities for the lame-duck session and the upcoming year. (Watch Town Hall)

Town Hall

  • The Roundtable’s Chair Kathleen McCarthy (Global Co-Head of Blackstone Real Estate, Blackstone) kicked off the meeting thanking and recognizing Roundtable Immediate Past Chair John Fish (Chairman and CEO, Suffolk) and board members for their stewardship and support.
  • The Town Hall featured Jonathan Martin, Politics Bureau Chief and Senior Political Columnist for POLITICO. He shared his expert insights on the political landscape, highlighting the most significant races and trends leading up to the election.

Election Forecast

  • Senate flip likely: Martin emphasized the high likelihood of a Senate flip.
  • Split government impact: If Vice President Kamala Harris wins the presidential election, the Senate and House could be controlled by opposing parties. Conversely, a Trump victory might ensure Republican control of both chambers.
  • The policy angle: Regardless of the election outcome, key commercial real estate issues will remain central to legislative discussions.
  • “We are preparing for potential action during the lame-duck session, but definitely positioning ourselves for what may come next year,” said Roundtable President & CEO Jeffrey DeBoer. “No matter the election outcome, core issues for the real estate industry—tax policy, energy, housing affordability and liquidity—will be front and center.”

Roundtable Policy Priorities: What’s Next?

  • Tax policy: The Roundtable is preparing for potential tax legislation in the lame-duck session, although it likely will be delayed until next year’s debate regarding the expiration of the 2017 tax cuts. Priorities include:
    • Capital formation and capital gains: Preserving key elements of the tax code (e.g., capital gains preference, like-kind exchanges) that encourage productive real estate investment, risk-taking, and growth.
    • Strong partnership, pass–through, and entity choice rules. Extending tax provisions like section 199A that allow pass-through businesses to compete on a level playing field with public corporations.  
    • Foreign investment and competitiveness: Ensuring the U.S. remains competitive by maintaining tax rules and regulations that attract foreign capital to infrastructure and real estate.
    • Affordable housing incentives: RER advocacy will continue for tax incentives tied to affordable housing, energy efficiency, Opportunity Zones, and commercial-to-residential conversions.

  • Energy & climate: Expect policy movement regardless of election outcomes. Key focus areas include:
    • Mandates on buildings: state and local governments are increasingly adopting Building Performance Standard (BPS) laws that impose mandates on buildings to limit emissions and energy use, setting new requirements for energy and climate performance in real estate.
      • RER recently published a BPS policy guidebook reflecting our ongoing commitment to addressing climate change while ensuring the economic sustainability of real estate investments and the communities they support. (Roundtable Weekly, Oct. 11)
    • Disclosure requirements: Future climate risk disclosures for public companies remain on the radar, along with possible passage of the Energy Permitting Reform Act of 2024 (S. 4753), legislation aimed at streamlining and modernizing the permitting process for energy infrastructure projects.

  • Capital & credit: RER continues to monitor the looming wave of maturing commercial real estate loans, Basel III Endgame proposals, and SEC rules affecting capital formation.
    • Insurance rate spike: The real estate industry is dealing with a historic spike in insurance rates, exacerbated by recent hurricanes. RER continues to work constructively with policymakers and stakeholders to address commercial insurance gaps and rising costs.
    • Basel III Endgame: With regulators at an apparent impasse on revisions to the original Basel III Endgame proposal, we do not expect any further action on the revised proposal before the elections.

RER’s Real Estate Capital Policy Advisory Committee (RECPAC) will be meeting in person on November 19, 2024 in New York to discuss the outcome of the election on the political landscape, the economic outlook, capital and debt markets and much more.

Senate Finance Committee Tackles 2025 Tax Policy Debate

Posted on by Abigail Grenadier

The Senate Finance Committee held a hearing on the 2025 tax policy debate, highlighting sharp divides between Republicans and Democrats over the future of the key provisions of the Tax Cuts and Jobs Act of 2017 (TCJA) that are set to expire in 2025. (Watch Hearing | Bloomberg, Sept. 12)

2025 Tax Policy Debate

  • Chair Sen. Ron Wyden (D-OR) pushed for reforms targeting tax avoidance by the ultra-wealthy. Wyden pointed out tactics like “buy, borrow, die,” which he argues allow billionaires to accumulate wealth without paying appropriate taxes, and criticized corporate tax loopholes​. (Sen. Wyden Statement)
  • Ranking Member Sen. Mike Crapo (R-ID) defended the TCJA, emphasizing its positive impact on economic growth, job creation, and tax relief for middle-class Americans. Sen. Crapo warned that allowing the TCJA to expire would result in significant tax increases for individuals and businesses, harming the economy. (Sen. Crapo Statement)
  • Jeff Brabant, VP of Federal Government Relations at the National Federation of Independent Business, testified on the importance of making the 20% pass-through business income deduction (Section 199A) permanent and shared new data detailing the critical impact the deduction’s looming expiration will have on the small business economy if Congress fails to act. (Brabant Testimony)
  • Republicans also pushed back on potential changes to estate taxes, including lowering exemptions or eliminating stepped-up basis, which they argue would hurt family-owned businesses. (Bloomberg, Sept. 12)
  • Speaking on the consequences of eliminating stepped-up basis on small businesses, Brabant said, “If you get rid of stepped-up basis and you have an increase in the death tax, you’re looking at a double death tax. Our members who are nearing retirement, this is a critical issue for them. The concern for the small business sector is, often these small businesses are selling these businesses—because they can’t afford to pay these taxes—to larger businesses that don’t have the same footprint in these same small rural communities.”

199A Coalition

  • The Roundtable is a founding member of the newly formed PROTECT Coalition, an alliance of small, medium and large pass-through businesses and industries that oppose the expiration of Section 199A. (Politico, Sept. 5)
  • The coalition’s mission is to defend vital tax incentives that support the growth and sustainability of successful entrepreneurial businesses across the nation.
  • The Real Estate Roundtable’s SVP & Counsel Ryan McCormick said, “Over four million businesses, including two million in real estate, are organized as partnerships. Section 199A was enacted to ensure that these entrepreneurial businesses could compete on a level playing field with large corporations. Permanently extending Section 199A will allow partnerships and other pass-through businesses to continue advancing careers, investing in communities, and expanding economic opportunity for all.”

What’s Next

  • The TCJA expiration looms large, with both parties framing the debate around small businesses, working families, and economic growth. Republicans argue that letting it expire would stifle economic activity, while Democrats are focused on shifting more of the tax burden on higher-income earners.
  • Next week, on September 18 at 2:00 PM EDT, the Senate Banking, Housing and Urban Affairs Subcommittee on Economic Policy, chaired by Senator Elizabeth Warren (D-MA) will hold a hearing on the macroeconomic impacts of potential tax reform in 2025.

The Roundtable’s Tax Policy Advisory Committee (TPAC) will continue to closely track ongoing tax debates in Congress.

The Roundtable Files Amicus Brief in Sirius Solutions v. Commissioner

Posted on by Abigail Grenadier

On August 19, The Roundtable submitted an amicus brief to the Fifth Circuit Court of Appeals in Sirius Solutions v. Commissioner, a pivotal case that could redefine the tax obligations of limited partners under the self-employment tax in the Self-Employed Contributions Act (SECA). (Amicus Brief)

Why It Matters

  • There are more than 441,000 limited partnerships in the U.S., with over 10 million partners. Nearly half of these limited partnerships are real estate partnerships.
  • If the IRS position prevails, it could result in widespread tax increases on real estate limited partners who provide some services to the business and effectively raise the tax burden on real estate investments.
  • The IRS’s position would requires limited partners to be “passive investors” to qualify for the exemption from the 3.8% SECA tax under Section 1402(a)(13).

Roundtable Amicus Brief

  • The Roundtable’s amicus brief argues that the IRS’s interpretation is flawed, pointing to decades of state law that allows limited partners to provide services and still retain their status.
  • The brief emphasizes that pre-1977 state court decisions and the IRS’s own 1994 proposed regulations contradict the government’s position that limited partners must be passive to avoid SECA taxes.
  • The Tax Court’s imposition of the passive investor test is found nowhere in the statute and rests on a fundamental misunderstanding of state laws that Roundtable members and others have relied on for decades.  
  • Ignoring an established body of partnership law, the IRS is relying on a recent Tax Court decision, Soroban, that imposes a judge-made test requiring a limited partner to be a “passive investor.” The Roundtable believes this fundamental error should be reversed. 

What’s Next

  • The Fifth Circuit’s ruling in Sirius will set a precedent for future SECA tax cases, with significant consequences for real estate and other industries that use limited partnerships for business purposes.
  • A successful outcome in the Sirius case could reduce the likelihood that the government moves forward with formal tax guidance that expands the reach of SECA taxes.    

The Roundtable remains committed to protecting entrepreneurs’ ability to flexibly organize in partnerships and other pass-through entities that promote capital formation, risk-taking, and economic growth, and it will remain engaged as the SECA dispute moves forward.   

Bipartisan Tax Bill Stalls in Senate

Posted on by Abigail Grenadier

Yesterday, the Senate failed to pass a bipartisan $79 billion tax package, the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024). The House-passed legislation seeks to extend various expiring tax provisions from the 2017 and pandemic-related tax bills. (WSJ, Aug. 1 | The Hill, Aug. 1)

Key Points

  • Bipartisan Effort: Senate Finance Committee Chair Ron Wyden (D-OR) and House Ways and Means Committee Chair Jason Smith (R-MO) crafted the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024). The bill passed the House on Jan. 31 by an overwhelming 357-70 vote.
  • Senate Opposition: Despite bipartisan support, the bill faced significant opposition in the Senate, where critics argued it failed to adequately address long-term fiscal concerns and prioritized short-term fixes.
  • Roundtable Support: The bill included Roundtable-supported measures on business interest deductibility, bonus depreciation, and the low-income housing tax credit (LIHTC).
  • Other provisions in the agreement: Reforms to the child tax credit, the expensing of R&D costs, disaster tax relief, a double-taxation tax agreement with Taiwan, and a large pay-for that creates significant new penalties for abuse of the employee retention tax credit (ERTC) rules and accelerates the expiration of the ERTC. (RW, Jan. 19)

Roundtable Advocacy

  • In February, The Roundtable and a large coalition of housing and other real estate groups sent letters to Congress in support of the tax bill. (RW, Feb. 16)
  • The Roundtable and the Housing Affordability Coalition’s letter emphasized the importance of advancing provisions in the bill that strengthen the low-income housing tax credit (LIHTC)—along with various real estate investment measures that would benefit families, workers, and the national economy.
  • The coalition noted how the bill would increase the housing supply as a positive response to the nation’s housing affordability crisis. It would also suspend certain tax increases on business investment that took effect in 2022 and 2023. 

Congress will return to Washington on September 9, with several critical legislative priorities on the agenda, including decisions on key housing policies and potential new regulations impacting the commercial real estate industry.

Roundtable Requests Additional Guidance for FIRPTA REIT Regulations

Posted on by Abigail Grenadier

Today, The Roundtable wrote to U.S. Treasury Secretary Janet Yellen requesting that the Treasury Department provide additional clarifying guidance regarding transition relief in the Foreign Investment in Real Property Tax Act’s (FIRPTA) regulations for domestically controlled REITs.  (Letter)

Key Concerns

  • In April, Treasury issued final regulations that redefined what constitutes a domestically controlled REIT exempt from tax under FIRPTA. The regulations created a new look-through rule that extended the reach of the discriminatory FIRPTA regime to common investment structures. (Roundtable Weekly, April 26)
  • Clarifying guidance is necessary and urgent to enable a qualified investment entity (QIE) to make a timely determination concerning its direct or indirect ownership of “U.S. real property interests” (“USRPI(s)”) under the conditions of the Transition Rule.
  • Impact on foreign investment: Foreign investment can attract significant capital, helping to support market stability and create jobs. The final regulations, designed to define a domestically controlled QIE, are feared to be deterring foreign investment in U.S. real estate.
  • Outstanding questions: Specifically, the letter seeks additional guidance on: what constitutes “direct or indirect” ownership of real estate when it is held by a REIT through multiple subsidiaries, how to treat acquisition costs and capitalization expenditures, and situations where ongoing construction or substantial renovations are occurring. 

Roundtable Advocacy

FIRPTA
  • The Roundtable has consistently advocated for the withdrawal of regulations and policies that hinder foreign investment in U.S. real estate. (Roundtable Weekly, April 26)
  • David Friedline, a tax partner at Deloitte and Vice Chair of RER’s Tax Policy Advisory Committee (TPAC) said, “The official guidance would provide needed clarification for our members, who have been adversely affected by the final regulations’ new look-through rule, on how to comply with the conditions of the transition relief.”  Friedline was a principal drafter of the Roundtable letter. 
  • Building new affordable housing and office-to-residential conversion projects requires encouraging more investment, not less. Erecting new barriers to passive foreign investment in U.S. real estate runs counter to important bipartisan policy priorities.

The Roundtable remains committed to collaborating with the Treasury to ensure that the final regulations can provide much-needed clarity and stability, supporting the industry’s efforts to attract foreign capital and drive economic growth.

Property Conversions Legislation Introduced

Posted on by Abigail Grenadier

On Thursday, House Ways and Means Committee Members Mike Carey (R-OH) and Jimmy Gomez (D-CA) introduced the bipartisan Revitalizing Downtowns and Main Streets Act (H.R.9002), which would create a market-based tax incentive for converting older commercial buildings to residential use.

Revitalizing Downtowns and Main Streets Act

  • The bill is a positive step forward in the effort to modernize U.S. real estate, create new and affordable housing, and strengthen cities and neighborhoods that continue to suffer from the aftereffects of the pandemic and changing business needs. 
  • “Between high housing costs and the rise of remote work, formerly prosperous neighborhoods across the country are struggling,” said Rep. Carey (R-OH). “The solution is right in front of us. But even though vacant commercial and office space is sitting unused, converting these properties into housing is so expensive it is often uneconomical. This bill will allow communities to meet their residents’ need for affordable, abundant housing and allow American downtowns and main streets to thrive.” (Rep. Carey Press Release)
  • The bill would create a new and temporary 20% tax credit for qualified property conversion expenditures, modeled after the historic rehabilitation credit. (RER’S One-Page Summary)
  • The total credit authority would be limited to $15 billion, allocated by state housing finance agencies based on feasibility and impact.
  • Larger credits would be available for projects in rural areas, low-income census tracts, and economically distressed areas.
  • The credit could be stacked with other federal tax benefits, including LIHTC, the rehabilitation credit, and Opportunity Zone benefits. 

Roundtable Advocacy

  • The Real Estate Roundtable has supported similar versions of conversion legislation, such as the Revitalizing Downtowns Act (S. 2511, H.R. 4759), introduced by Sen. Debbie Stabenow (D-MI) and Rep. Jimmy Gomez (D-CA). The Roundtable has also worked closely with the White House on administrative actions designed to provide low-cost financing for conversion projects. (Roundtable Weekly, April 19)
  • “The Revitalizing Downtowns and Main Streets Act is a proactive, market-based policy measure that aims to breathe new life into underutilized commercial properties, create jobs, generate local property tax revenue, and help reinvigorate our nation’s cities and suburbs,” said Jeffrey D. DeBoer, President and CEO of The Real Estate Roundtable. “We commend the leadership of the bill sponsors for their vision and urge support for this critical bipartisan legislation.”
  • The bill addresses and incorporates most of the recommendations a Roundtable-led coalition had collectively made to the Revitalizing Downtowns Act in comment letters submitted in October 2022 and June 2024.  
  • Since then, many states and localities have taken bold action to support property conversion efforts.
  • Both letters are the product of a property conversions working group created by The Roundtable’s Tax Policy Advisory Committee (TPAC). The working group has reviewed and considered the challenges and impediments confronting potential property conversion activities. (Roundtable Weekly, June 28)

The Roundtable’s Tax Policy Advisory Committee will continue working with policymakers to advance tax policies that encourage and facilitate property conversion efforts.