Tag: Tax Policy

Real Estate Industry Urges Congress to Preserve Carried Interest

Posted on by Trey Jackson

As tax negotiations continue this week on Capitol Hill, a coalition of 17 national real estate organizations submitted a unified message to congressional leadership urging preservation of current law on carried interest. (Letter)

Why It Matters

  • The coalition letter, led by the National Multifamily Housing Council and joined by The Real Estate Roundtable (RER) and others, highlighted that taxing all carried interest as ordinary income would raise taxes on 2.2 million real estate partnerships and nearly 9.7 million partners, potentially stalling new housing, infrastructure, and redevelopment projects.
  • 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. (Axios, March 24 | NYT, March 8)
  • Research cited in the letter demonstrates that carried interest legislation would lower wages, reduce property values, and undermine economic growth. (Letter)

What’s At Stake

  • “Taxing carried interest at ordinary income rates would discourage the risk taking that drives job creation and economic growth. It would reduce economic mobility by increasing the tax burden on cash-poor entrepreneurs who want to retain an ownership interest in their business. It would have profound unintended consequences for housing affordability and main streets all across our country,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable. Roundtable Weekly, Feb. 21)
  • The coalition emphasized that changing the tax treatment would particularly impact small and mid-sized real estate entrepreneurs who contribute sweat equity rather than large capital contributions to their projects.
  • The letter notes that the tax code ”has never, and should never, limit the reward for risk-taking to taxpayers who have cash to invest.”
  • Retroactive application of new tax policies on longstanding partnership agreements could harm small businesses, stifle entrepreneurs and sweat equity, and threaten future improvements and infrastructure in neglected areas.
  • Under the headline “Carried Interest Fight Gets Real,” media outlet Politico wrote that the real estate industry was “laying down a marker as lawmakers begin working to pass a deficit-conscious extension of the 2017 tax cuts.” (Politico, March 27)
  • The signatories of the letter included: National Multifamily Housing Council; American Hotel and Lodging Association; American Resort Development Association; American Seniors Housing Association; CCIM Institute; Council for Affordable and Rural Housing; ICSC Institute of Real Estate Management; Latino Hotel Association; Manufactured Housing Institute; Mortgage Bankers Association; NAIOP, the Commercial Real Estate Development Association; National Apartment Association; National Association of Black Hotel Owners, Operators, and Developers; National Association of Home Builders; NATIONAL ASSOCIATION OF REALTORS®

RER urges lawmakers to retain current law and avoid policies that would disincentivize investment, threaten housing affordability, and penalize job-creating entrepreneurs.

With Shutdown Averted, GOP Sharpens Focus on Tax Priorities

Posted on by Trey Jackson


Tax and fiscal policy are now at the top of the GOP’s agenda after a stopgap spending bill passed last Friday, preventing a potential government shutdown. House and Senate GOP members have just a few weeks of session before the long Easter and Passover recess to make significant progress on a budget resolution.

Government Shutdown Averted

  • Congress avoided a shutdown last Friday after ten Senate Democrats, including Minority Leader Chuck Schumer (D-NY), voted to advance the GOP’s stopgap spending bill. The six-month continuing resolution funds the federal government through September. (NBC News, March 14)

  • Schumer rallied enough Democrats in the Senate to approve the measure in a key procedural vote. Responding to outspoken disagreement within his party about voting for the GOP’s spending bill, Schumer said, “I knew it was a difficult choice, and I knew I’d get a lot of criticism for my choice, but I felt as a leader I had to do it.” (ABC News, March 18)

Tax Policy Update

  • With the risk of a shutdown now in the rearview mirror, House and Senate GOP leaders are focusing their attention on a reconciliation package that would advance their tax priorities, including extending key provisions of the 2017 Tax Cuts and Jobs Act (TCJA). (NYT, March 21)

  • The House passed its version of the budget resolution last month, but the bill has seen little movement in the Senate due to divisions within the GOP over budget constraints and offsets.
  • Congressional Republicans want to make the TCJA tax cuts permanent, which will be challenging under the House budget resolution’s current $4.5 trillion tax cut ceiling.

  • President Trump, Senate GOP leadership and House Speaker Mike Johnson (R-LA) support using a “current policy baseline” approach, a budget scoring method that would allow Congress to extend the TCJA tax cuts without adding to the deficit on paper and give them more room to include the administration’s other tax priorities. (Politico, March 13)

  • Senate Budget Committee Republicans are planning to hold meetings with the Senate parliamentarian’s office to determine if this approach complies with reconciliation rules. GOP lawmakers need guidance by early April to move forward with large parts of the budget resolution. (Punchbowl News, March 18)

  • The challenge of balancing tax relief with deficit concerns has fueled high-level discussions between Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD). Thune acknowledged the difficulty of the process, saying, “Both of us understand we’ve got to get this done. And we’re trying to figure out the best way to do that.” (Punchbowl News, March 19)

Key Tax Provisions At Stake

  • While GOP leaders seek guidance on the “current policy baseline” approach, House Ways and Means Committee and Senate Finance Republicans are continuing to debate key tax provisions of the bill.

  • Senate Finance Chair Mike Crapo (R-ID) mentioned during an appearance at the U.S. Chamber of Commerce that there are over 200 proposals under consideration—including reducing the estate tax, expanding the Opportunity Zone program and enhancing the Low-Income Housing Tax Credit (LIHTC). (PoliticoPro, March 12)

  • Expanding Opportunity Zones and the LIHTC would help expand the supply of affordable housing and address the U.S. housing crisis. (Roundtable Weekly, March 17)
  • To offset the cost of the large number of tax proposals under consideration, Republicans are considering the repeal of Inflation Reduction Act (IRA) energy tax credits. IRA programs have come under increasing scrutiny by the Trump administration as it looks to roll back Biden-era energy policies.

  • However, a new report warns that eliminating these credits could result in nearly 790,000 job losses and increase consumer energy costs by $6 billion annually by 2030. In light of these concerns, 21 House Republicans have advocated for preserving the energy tax credits—pointing out that they are critical to help the U.S. meet Trump’s goal of becoming “energy dominant.” (PoliticoPro, March 20; Politico, March 10)

  • Other lawmakers have raised potential restrictions on the deductibility of state and local business property taxes, also known as “business SALT,” as a revenue offset for the tax bill. This tax change would have devastating consequences on the commercial real estate industry and the broader economy. (Letter, March 7 | Roundtable Weekly, March 17 | (BisNow, March 14)

  • RER has urged members to contact their representatives to oppose restrictions on business SALT that would discourage new investment and undermine housing affordability nationwide.

GSA’s Plans for Federal Leases

  • In other news this week, the General Services Administration (GSA)—under directions from the Elon Musk-led Department of Government Efficiency (DOGE)—will begin to vacate nearly 800 offices across the country this summer. (AP, March 14)

  • The news has generated great uncertainty for federal agencies using these offices and building owners who lease to the government. The Associated Press released a full list of office locations it found would be affected by the planned lease terminations. (AP, March 14)

Looking Ahead

  • With Congress racing to cut through key process hurdles before the April 13 recess, GOP leaders are hoping the concurrent budget resolution will start to finally take shape—though tough decisions remain ahead.

RER will continue to engage policymakers on important tax priorities for the real estate industry and analyze the implications of the GSA’s federal lease plans on commercial real estate across the country.

Real Estate Industry Fights to Preserve Business Property Tax Deductions Amid GOP Tax Negotiations

Posted on by Trey Jackson

As House and Senate Republicans work to develop the details of their tax legislation, the real estate industry is mounting a unified defense against possible limitations on the deductibility of state and local business property taxes. (BisNow, March 14)

Why It Matters

  • Last week, The Real Estate Roundtable (RER) and sixteen other national real estate organizations wrote to members of the House Ways and Means and Senate Finance Committees urging them to oppose any proposal that would cap or eliminate the deductibility of state and local business property taxes.  (Roundtable Weekly, March 7)
  • The House Ways and Means Committee is exploring reductions to business-related state and local tax deductions—including property taxes—as part of its effort to offset the costs of a broader GOP tax package. (PoliticoPro, March 11)
  • At a White House meeting on Thursday between President Trump and Senate Finance Committee Republicans, Sen. Ron Johnson (R-WI) said Senators raised corporate SALT as a potential offset.  Several Senators reportedly “pitched Trump on repealing the corporate state and local tax deduction.”  (CQ, March 13; Politico, March 13)
  • 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.
  • 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.
  • The potential tax change could reverse the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and Section 199A, potentially raising effective tax rates on real estate to 1970s-era levels near 50%.
  • With elevated interest rates, rising insurance premiums, and increased operational expenses pressuring property owners across asset classes, industry advocates argue that eliminating the deduction would only deepen existing challenges, resulting in “job losses, pressure on rents, stress on the banking system, and reduced housing construction.” (BisNow, March 14)

Tax Talks

  • Both chambers had a busy week meeting with committee members and Trump administration officials to discuss the overall framework for their respective tax agendas.
  • House Ways and Means Committee Republicans met with Treasury Secretary Scott Bessent on Monday to review tax options, while Senate Finance Committee members separately convened to discuss their approach, revealing significant differences in timeline and strategy. (PoliticoPro, March 10)
  • Ways and Means Committee Chairman Jason Smith (R-MO) has already said that the instructions laid out in the House-approved budget resolution won’t allow for a permanent extension of Trump’s tax cuts, but would allow for an eight- to nine-year extension. (Politico, March 10)
  • GOP lawmakers from high-tax states, including New York, New Jersey, and California, continue to demand that any final tax legislation include lifting or fully repealing the $10,000 SALT cap for individual taxpayers. President Trump has expressed support for repealing the SALT limitation.
  • House and Senate Republicans have yet to reach an agreement on a budget plan that would set the framework for Trump’s legislative agenda.
  • During the White House meeting with Senate Finance Republicans, Trump raised his Gold Visa card concept as a way to pay for the package, along with tariffs and other options.  (PoliticoPro, March 13)

Looking Ahead

  • House Republicans aim to pass legislation extending Trump-era tax cuts by Memorial Day, while Senate Republicans suggest an August timeframe might be more realistic, with Sen. John Cornyn (R-Texas) noting “there’s no consensus” in the Senate. (Politico, March 10)

RER will remain actively engaged with lawmakers, reinforcing the message that preserving full deductibility of business property taxes is essential to protecting jobs, promoting investment, housing affordability, and ensuring continued economic stability nationwide.

Major Tax and Fiscal Package Gains Momentum as House Passes Budget Resolution

Posted on by Trey Jackson

House Republicans’ effort to pass a massive tax and fiscal package received a jolt of momentum this week after a cliffhanger vote on the House floor Tuesday night. Passed by a narrow vote of 217-215, the House resolution would authorize $4.5 trillion in tax cuts, provided congressional committees can identify $2 trillion in spending reductions. 

House Budget Proposal

  • Under the deal negotiated with fiscal conservatives in the House, if congressional committees cannot agree on $2 trillion in savings, the size of the authorized tax cut will automatically adjust downwards.  If they can agree on more than $2 trillion in savings, the size of the authorized tax cuts would adjust higher. (House Committee Report, Feb. 18)
  • The House resolution also includes a controversial $4 trillion increase in the national borrowing limit, along with allocations of up to $200 billion for border security and $100 billion for defense funding. (Roll Call, Feb. 25; AP, Feb. 25))
  • Shortly before the vote, The Roundtable joined a broad business coalition urging Congress to pass the House budget resolution to prevent a looming tax hike on pass-through businesses.  (Letter, Feb. 24)

Next Steps

  • Both the House and Senate chambers must now align on a budget resolution before moving forward with a reconciliation bill detailing the spending cuts, tax reductions, and other measures.
  • Senate Republicans have expressed reservations about the House’s approach, particularly concerning the scale of spending cuts and the structure of tax extensions.
  • Senate leaders have already signaled they will push for changes to ensure the 2017 tax cuts become permanent, as the House plan may lack the fiscal room to do so while also accommodating President Trump’s proposed new tax breaks.
  • Senate Majority Leader John Thune emphasized the complexity of the task, stating, “It’s complicated. It’s hard. Nothing about this is going to be easy.” (The Hill, Feb. 27)

View from The White House

  • For weeks, the president has endorsed the House plan as the best way to achieve his top legislative priorities in one move, yet he has also signaled openness to the Senate’s alternative or a compromise blending both approaches.
  • “So the House has a bill and the Senate has a bill, and I’m looking at them both, and I’ll make decisions,” President Trump said at the White House on Tuesday. “I know the Senate’s doing very well, and the House is doing very well, but each one of them has things that I like, so we’ll see if we can come together.”

Revenue Offsets and Business SALT

  • Some lawmakers have raised “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. 
  • Eliminating the business deduction for property taxes would be the equivalent of raising property tax bills on commercial real estate by roughly 40 percent. 
  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” observed Real Estate Roundtable President and CEO Jeffrey DeBoer last week.  (Roundtable Weekly, Feb. 21)
  • “Employers would owe federal tax on money that they do not have.  It would lead to insolvencies and foreclosures. It would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures.  It is a recipe for a recession,” said DeBoer.
  • It remains an open question whether the House and Senate will use a “current policy” budget baseline that would not count the extension of the 2017 tax cuts as a revenue loss.  A current policy baseline could significantly reduce the pressure to identify spending reductions and revenue offsets. (PoliticoPro, Feb. 28)

Averting Government Shutdown

  • In addition to the tax and fiscal package, congressional leaders are under pressure to reach an agreement on current-year federal spending before a government shutdown on March 14.  A short-term stopgap bill will likely be necessary. (Axios, Feb. 27, CBS, Feb. 27)

Looking Ahead

The House budget resolution directs House committees to report their spending reductions and tax changes to the House Budget Committee no later than March 27, 2025.

Real Estate Challenges: Business SALT, Carried Interest Emerge as Focal Points of Tax and Budget Discussions

Posted on by Trey Jackson

As congressional Republicans weigh their budget options and consider competing plans from both the House and Senate, their search for revenue offsets has included proposals to restrict the deduction for state and local taxes (SALT) on businesses and raise the tax rate on carried interest. 

Business SALT

  • Prior to the markup of its budget resolution, the House Budget Committee floated a menu of potential revenue offsets for reconciliation legislation, including a proposal to “eliminate the business SALT deduction.” (New York Times, Jan. 28)

  • Depending on how broadly the business SALT limitation is designed, it could include repealing the deductibility of state and local property taxes paid by commercial real estate owners.  Hill discussions on business SALT have intensified in recent weeks.  (Bloomberg, Feb. 18)
     
  • “Eliminating the business deduction for property taxes would be the equivalent of raising business owners’ property tax bills by roughly 40 percent.  Employers would owe federal tax on money that they do not have.  It would lead to insolvencies and foreclosures. It would cause self-inflicted injury to the U.S. economy, including unnecessary job losses, higher rents for families and individuals, and other inflationary pressures.  It is a recipe for a recession,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable.

  • The idea of limiting business SALT has support from several outside organizations and, according to Politico, was initially floated by members of the House Freedom Caucus.  (Politico, Jan. 15)

  • “Business taxes are fundamentally different from state and local individual income taxes.  State and local business taxes are an unavoidable expense, an inescapable cost of doing business,” noted DeBoer. “Property taxes alone are, on average, 40% of operating costs for real estate businesses.  In many cases, capping the deductibility of property taxes would require businesses to pay income tax when their actual income and cash flow is negative.”

  • The Roundtable is working, alongside its real estate trade association partners, to raise awareness among policymakers of the risk and harm that a cap on business SALT poses for the industry and the broader economy.  

Carried Interest

  • President Trump’s recent call on Congress to close the “carried interest tax deduction loophole” has put a national spotlight back on the issue of carried interest and its proper tax treatment.  (Financial Times, Feb. 6)  

  • Trump’s expression of support for raising taxes on carried interest led Senators Tammy Baldwin (D-WI), Elizabeth Warren (D-MA), Bernie Sanders (I-VT) and others to reintroduce legislation, the Carried Interest Fairness Act. The bill would recharacterize all carried interest as ordinary income. (Politico, Feb. 18)

  • Sen. Baldwin filed a nonbinding amendment on carried interest during the Senate budget resolution debate this week but did not offer it for a formal vote.  

  • Carried interest emerged as a political issue in 2007, but remains largely misunderstood to this day. In real estate, carried interest is not compensation for services. General partners receive fees, taxed at ordinary rates, for routine services like leasing and property management. Carried interest is granted for the value the general partner adds, such as business acumen, experience, and relationships. It is also recognition for the risks the general partner takes.   

  • In response to the new legislation, the Americans for Tax Reform—alongside a broad coalition of other taxpayer advocacy groups—penned a comment letter urging lawmakers to consider the negative ramifications of this policy.

  • In the letter, the organizations argue that the proposal would discourage investment and reduce growth, urging Congress to oppose the bill. “The current tax treatment of carried interest is an intentional, pro-growth feature of the tax code for more than 100 years that incentivizes risk-taking and entrepreneurship, benefiting investors, public pension funds and retirees.” (Americans for Tax Reform, Feb. 19)

  • The Tax Cuts and Jobs Act of 2017 extended the holding period required for carried interest income to qualify for long-term capital gains treatment from one year to three years.

  • The false narrative surrounding the carried interest issue is that it targets only a handful of hedge fund billionaires and Wall Street executives. The carried interest legislation is far broader and would apply to real estate partnerships of all sizes.

  • “Taxing carried interest at ordinary income rates would discourage the risk taking that drives job creation and economic growth. It would reduce economic mobility by increasing the tax burden on cash-poor entrepreneurs who want to retain an ownership interest in their business. It would have profound unintended consequences for housing affordability and main streets all across our country,” said DeBoer.

Looking Ahead

As tax negotiations develop, RER will continue to engage with congressional leaders on both sides of the aisle to inform policymakers about the real-world consequences of proposed changes to the deductibility of business SALT and tax treatment of carried interest.  

While the budget debate will move forward, it will likely be several weeks, if not months, before the tax-writing committees mark-up and vote on the actual details of their tax and revenue legislation.

House GOP Unveils Fiscal Blueprint Calling for Trillions in Cuts to Taxes and Spending

Posted on by Trey Jackson

After weeks of discussions, the House GOP and Speaker Mike Johnson unveiled their long-term budget blueprint, which would allow congressional committees to move forward with trillions into tax cuts and spending reductions. However, negotiations to fund the government ahead of the March 14 deadline have stalled.

Committee Advances Budget Plan

  • The House Budget Committee voted late Thursday night 21-16 to advance their budget resolution, which authorizes up to $4.5 trillion in tax cuts and $2 trillion in spending cuts over the next decade. The fiscal blueprint also calls for $300 billion in new border and defense spending and a two-year extension of the debt ceiling. (Politico, Feb. 12)
  • While Speaker Mike Johnson hopes to bring the resolution to the floor later this month, there are a number of details to hammer out that could hinder its passage. Overcoming the GOP’s extremely narrow majority in the House (218-215) will be a challenge.
  • House Budget Republicans secured passage of their resolution along party lines after striking a deal with the Freedom Caucus to win over fiscal hardliners Reps. Ralph Norman (R-SC) and Chip Roy (R-TX). (Roll Call, Feb. 13)

  • An amendment from Vice Chair Lloyd Smucker (R-PA) cemented the agreement by linking the size of a future tax-cut package to spending reductions. Under the modified resolution, the amount of the tax cuts would be reduced if the legislation does not include the full $2 trillion in spending reductions.

Tax Negotiations

  • House Ways and Means Chair Jason Smith (R-MO) also faces a difficult road to extend key provisions in the 2017 Tax Cuts and Jobs Act (TCJA). The $4.5 trillion figure for tax cuts is not enough to permanently extend the TCJA and include President Trump’s other tax priorities. (Politico, Feb. 12)

  • How to come up with the spending cuts to fund a permanent TCJA extension and other priorities remains a fundamental question. The budget package is expected to include significant reductions in Medicaid, which provides health benefits to low-income families and individuals.  President Trump has expressed concern with those health care cuts. (Politico, Feb. 13)
  • Some estimates place the cost of the President’s additional tax priorities as high as $2 trillion. These include exempting tips, overtime pay, and Social Security benefits from tax. Tax-writers must also find a way to pay for any adjustments to the SALT limitation, which are widely understood as needed to secure Blue State Republican votes in the House. 
  • Tax-writers are expected to look for other tax offsets, raising concerns that they could target issues such as the deductibility of state and local property taxes paid by businesses.
  • Limits on the deductibility of property taxes would upend the federal income tax by denying a deduction for a basic cost of doing business. It would severely hurt property values, real estate markets, and the millions of Americans employed directly and indirectly by the real estate industry.
  • “Capping or eliminating the federal deduction for business property taxes would be a major policy misstep,” said Roundtable President and CEO Jeffrey DeBoer. “Property taxes are not optional—they are a fundamental cost of doing business.”
  • “This change would force businesses to pay federal tax on money they never actually receive, placing a heavy burden on real estate investment and development. The impact would be severe for property owners repositioning assets—such as converting office buildings into housing—where property taxes remain due even when rental income is disrupted. Losing this deduction would drive up operating costs, which would ultimately be passed to consumers through higher rents, and hindering economic growth at a time when we should be encouraging investment and revitalization,” said DeBoer.
  • House Republicans are also considering shorter extensions of the expiring tax cuts in a bid to fit them into the budget plan’s constraints.
  • However, in a letter released Thursday, Senate Republican leaders, including Majority Leader John Thune (R-SD), Finance Chair Mike Crapo (R-ID) and seven others, said they would not support a tax package that only provides temporary relief from tax hikes. They said that any extension of the provisions due to lapse at the end of this year “must” be permanent. (Politico, Feb. 13)
  • Meanwhile, congressional Democrats have attacked Republican’s tax and spending cuts as a “betrayal of the middle class,” though they have minimal power to stop the GOP’s budget plan if Republicans are able to align on a strategy. (Politico, Feb. 13)

Reconciliation

  • To avoid the Senate filibuster, the tax and spending cuts will require the House and Senate to pass identical budget resolutions as part of the reconciliation process—and the Senate is pursuing its own budget proposal. (Politico, Feb. 12)

  • On Wednesday, the Senate Budget Committee approved its own budget blueprint, which includes up to $345 billion in funding for border security, immigration enforcement and defense. However, the resolution punts on any sweeping tax and spending cuts. (Washington Times, Feb. 12)

  • Preferring a two-step strategy over the House Republican’s plan, Senate Budget Chair Lindsey Graham (R-SC) said, “To my colleagues in the House, I hope you can pass one, big beautiful bill.” “But we’ve got to move on this issue.” (Politico, Feb. 12)

  • The March 14 deadline to fund the government is fast approaching. House Appropriations Chair Tom Cole (R-OK) indicated that negotiations are ongoing, but with much activity and attention focused on budget resolutions, little progress has been made.
  • If congressional leaders are unable to extend government funding before the deadline, key programs like the National Flood Insurance Program (NFIP) could lapse. (Politico, Feb. 12)

Looking Ahead

While the Senate will be in session next week after President’s Day, the House is out of session until February 24. The Roundtable will continue to follow developments on tax and budget negotiations closely.

Tax Policy This Week in Washington: Carried Interest and Budget Talks

Posted on by Trey Jackson

As budget negotiations continued this week in the House and Senate, President Donald Trump met with Republican lawmakers on Thursday to discuss his tax priorities.

Tax Talks

  • White House Press Secretary Karoline Leavitt told reporters that during a Thursday meeting with Republican lawmakers, President Trump outlined his tax priorities, including closing the “carried interest tax deduction loophole,” along with other provisions he wants included in a sweeping tax bill this year. (Bloomberg, Feb. 6 | Axios, Feb.7)
  • President Trump also reiterated ideas he promoted on the campaign trail, including ending taxes on tips, overtime and Social Security payouts, as well as adjusting deductions for state and local taxes.
  • Appearing on Fox Business this week, Treasury Secretary Scott Bessent rejected the idea of a short-term extension of President Trump’s tax cuts, emphasizing they should be made permanent. (Fox Business, Feb. 5)

The Roundtable’s Position

  • Since carried interest and its tax treatment first emerged as a controversial political issue in 2007, The Roundtable has consistently opposed legislative proposals to tax all carried interest at ordinary income rates.
  • “The proposals would penalize entrepreneurs, slow housing production, and reduce economic mobility,” said Roundtable President and CEO Jeffrey DeBoer.  â€śThe tax code has never, and should never, limit the reward for risk-taking only to deep-pocketed investors who have cash to deploy.” 
  • “Real estate partnerships of all sizes across the country, small and large, use carried interest.  It is not compensation for services, and it is not comparable to wages. Carried interest is granted for the value a general partner adds beyond routine services, and it is a recognition of the risks a general partner takes, such as funding predevelopment costs, guaranteeing construction budgets and financing, and exposure to potential litigation,” said DeBoer. 
  • Reversing well-established tax law and ending carried interest would raise little revenue. It would, however, reduce construction activity, especially higher-risk and much-needed projects like affordable housing, commercial developments in long-neglected neighborhoods, and the cleanup of contaminated land. 
  • “Today, construction costs are higher than ever and financing remains challenging.  Now is not the time to raise taxes on U.S. real estate,” said DeBoer. 

Senate Proposal

  • Senate Budget Chair Lindsey Graham (R-SC) announced today that his committee will convene Wednesday and Thursday to debate and vote on his budget resolution, setting the stage for a future vote on a bill focused solely on border security, defense, and energy. (Politico, Feb. 7)
  • Their decision comes ahead of a meeting with President Trump at Mar-a-Lago today, where they also plan to discuss budget reconciliation. (Politico, Feb. 5)
  • “This budget resolution jumpstarts a process that will give President Trump’s team the money they need to secure the border and deport criminals, and make America strong and more energy independent,” Graham said in a statement.
  • With a 53-seat majority, Senate Republicans have a bit more flexibility than the House, but still need to unite their party, as some members demand significant spending cuts.
  • Senate GOP leaders plan to revisit the extension of the TCJA 2017 tax cuts later this year through a second reconciliation package.

House Proposal

  • Several House Republicans met with President Trump on Thursday to resolve intraparty spending disputes. House Majority Leader Steve Scalise (R-LA) said the meeting was designed so House Republicans could “get in a place” where they could advance their stalled budget blueprint “next week.” (Politico, Feb. 7)
  • Speaker Mike Johnson had aimed to release a framework today but now says Republicans will be working all weekend to finalize it.

GOP leaders have warned members that full details won’t be available until Monday, and a topline spending agreement remains elusive.

Industry Leaders Convene for 2025 State of the Industry Meeting

Posted on by Trey Jackson

This week, The Real Estate Roundtable’s (RER) State of the Industry meeting brought together policymakers, industry leaders, and experts to discuss key policy issues shaping debates in Washington and impacting the economy and commercial real estate industry.

2025 State of the Industry Meeting

  • Roundtable Chair Kathleen McCarthy (Global Co-Head, Blackstone Real Estate) opened the meeting by welcoming attendees, setting the stage for discussions on industry priorities and advocacy opportunities, and highlighting key member priorities for the year ahead.
  • RER President & CEO Jeffrey DeBoer highlighted the organization’s unique strengths in policy advocacy, which is known for its trusted, fact-based, and data-driven approach. He also acknowledged members for participating in the annual policy issues survey, which revealed widespread concern about tariffs and strong support for priorities like tax reform, housing incentives, reducing regulatory barriers, energy infrastructure, insurance, and cybersecurity resiliency.

Meeting Speakers

  • Geopolitical expert John Sitilides (Principal, Trilogy Advisors LLC; National Security Senior Fellow, Foreign Policy Research Institute) gave a presentation on “Washington & the World: The New Geopolitics of Great Power Competition” and discussed the current geopolitical dynamics and vulnerabilities affecting global commerce and energy.
  • Rep. Darin LaHood (R-IL) (Member, House Committees on Ways and Means; and  Permanent Select Committee on Intelligence) discussed the U.S.-China economic relationship, extending the Tax Cuts and Jobs Act (TCJA) tax cuts, housing incentives such as the Low-Income Housing Tax Credit (LIHTC), opportunity zones, and property conversions.
  • Rep. Tom Suozzi (D-NY) (Member,House Committee on Ways and Means) stressed the need for bipartisanship to address housing shortages, restore state and local tax (SALT) deductions, advance immigration reform, and revitalize cities.
  • Robert Costa (Chief Election & Campaign Correspondent, CBS News) shared his insight on the current political environment and his experiences with the past and current administrations.
  • Rep. French Hill (R-AR) (Chair of the House Financial Services Committee) spoke to RER’s Joint Real Estate Capital Policy Advisory Committee (RECPAC) and Research Committee on his policy priorities for the 119th Congress.

Committee Meetings

Joint Real Estate Capital Policy Advisory Committee (RECPAC) and Research Committee

  • During a joint meeting, Research Co-Chair Spencer Levy (Global Chief Client Officer & Senior Economic Advisor, CBRE) and Darin Mellot (CBRE) discussed the current real estate conditions and the outlook for real estate credit and capital markets. Working Group Chair Michael Lascher (Global Head of Real Estate Debt Capital Markets, Blackstone) led a discussion on office financing with David Bouton (Citibank), Michael Maturo (RXR Realty), and James Million (CBRE). Will Skinner (Blackstone Credit and Insurance) presented on the growing adoption of private credit by insurance companies and the interplay with alternative asset managers. (Agenda & Speakers)

Tax Policy Advisory Committee (TPAC)

  • TPAC Chair Joshua M. Parker (Chairman & Chief Executive Officer, Ancora L&G) and TPAC Vice Chair David Friedline (Partner, Deloitte Tax LLP) led panels on the status of tax legislation in Congress and the pending expiration of the TCJA, property conversions, partnerships, pass-throughs, partnership basis-shifting rules, and SECA-limited partners tax dispute. (Agenda & Speakers)

Sustainability Policy Advisory Committee (SPAC)

  • SPAC Vice Chairs Ben Myers (Vice President, Sustainability, BXP) and Katie Rothenberg (Vice President, ESG, Avalon Bay Communities, Inc.) led discussions on public-private partnership opportunities with US-DOE, utilities, refrigerant emissions, and building performance standards. (Agenda & Speakers)

Homeland Security Task Force (HSTF)

  • Co-Chair Amanda S. Mason (Executive Director, Global Intelligence, Related Companies) highlighted the overall mission of the HSTF, and led a series of discussions on areas of concerns for the commercial facilities sector. Bruce Hoffman (Senior Fellow for Counterterrorism and Homeland Security, Council on Foreign Relations) provided an overview of implications of recent terrorist incidents here and abroad, and the evolving terrorism landscape. Trent Frazier (CISA) and Tobi Rosenzweig, (U.S. Department of State) discussed the current geopolitical tensions in Europe and both short-term and long-term risks. Ken Kurz (COPT Defense Properties)and Marcelle Lee (Equinix) led a panel on the evolving landscape of cyber and physical threats. Cathy Lanier (National Football League), Hon. Lucian Niemeyer (Building Cyber Security), and Thomas Warrick (The Future of DHS Project) hosted a roundtable discussion on recent terrorism incidents, and natural catastrophes.(Agenda & Speakers)

Next on RER’s FY 2025 meeting calendar is the Spring Meeting on April 7-8. The Spring Meeting is restricted to Roundtable-level members only. 

Trump’s First 100 Days: Top Commercial Real Estate Policies to Watch

Posted on by Trey Jackson

President Donald Trump’s second term is rapidly taking shape, with sweeping executive orders, quick nominations and bold policy announcements advancing in the first few days of his second administration. From tax policy to housing, immigration, and energy initiatives, the commercial real estate sector faces a dynamic and fast-changing landscape.

Tax Policy

  • TCJA Renewal: Efforts to extend key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are a key priority for the Trump administration and Republicans in Congress, with significant implications for commercial real estate.
  • A number of RER priorities are at stake, including maintaining the reduced tax rate on capital gains, extending Opportunity Zones and the Section 199A deduction, safeguarding like-kind exchanges and enacting federal tax incentives for property conversions to address the housing shortage. (Roundtable Weekly, Jan. 10)
  • The content of the reconciliation package continues to be heavily debated, with multiple areas of intra-party disagreement among Republicans to overcome in order to reach a deal. Concerns about pay-fors, the growing debt, budget cuts and proposals to eliminate the state and local tax deduction (SALT) remain. (Politico, Jan. 22)
  • RER President & CEO Jeffrey DeBoer appeared on Marcus & Millichap’s 2025 Economic & CRE Outlook webinar with a panel of industry leaders discussing the macro environment, the potential policies of the new administration and tariffs, affordable housing, tax policy expectations and more.

Tariffs

  • Proposed Tariffs: Trump has signaled a desire to implement sweeping tariffs, including a 25% tariff on goods from Mexico and Canada that could go into effect on Feb. 1. Trump has also considered a universal 20% tariff on all imports and a 60% tariff on China. (CNN, Jan. 21)

  • These measures are aimed at boosting domestic manufacturing and addressing trade imbalances but could have ripple effects on construction costs and material availability. Any tariffs on imported materials like steel, aluminum and lumber are likely to drive up costs for developers and impact efforts to address the housing shortage. (BisNow, Jan. 17)

  • The scale and scope of the President’s tariff plans are in flux. Trump’s advisors have reportedly considered a phased-in tariff approach. It’s also possible that Trump makes use of the White House’s exemption authority to protect certain industries or goods deemed vital. (Bloomberg, Jan. 13)

Regulatory Work

  • President Trump also signed an executive order freezing all ongoing regulatory work across the federal government, halting the proposal or publication of new rules until reviewed and approved by his administration.
  • The freeze delays the effective date of recently published rules by 60 days, allowing time to decide which Biden-era regulations to keep, rewrite, or discard. (National Law Review, Jan. 23)
  • As with many other parts of the U.S. financial regulatory framework, the pending Basel III Endgame proposal may end up being reproposed with a capital neutral scheme, giving a potential boost to liquidity and credit capacity under the new Trump administration. 

Disaster Aid and NFIP Extension

  • California Fires: Congress and the new administration will soon need to provide billions of dollars in aid to assist those affected by the Los Angeles wildfires. The catastrophe could reach up to $275 billion, with then of thousands of homes and businesses will need to be rebuilt, making federal assistance essential. (Roundtable Weekly, Jan. 17)
  • NFIP: The increasing severity of natural disasters—including the devastating hurricanes last year—has increased the importance of the National Flood Insurance Program (NFIP), whichis set to expire on March 14 unless reauthorized. The Senate Banking, Housing and Urban Affairs Committee held a hearing on Thursday to discuss the program’s renewal. (Politico, Jan. 22)

Housing

  • Fannie Mae and Freddie Mac Privatization: Trump’s team is expected to resume efforts to privatize the government-sponsored enterprises (GSEs), which could significantly reshape multifamily financing markets.
  • Trump has nominated Bill Pulte, to lead the Federal Housing Finance Agency (FHFA), which oversees the GSEs—a move experts say is part of Trump’s push towards privatization. (CRE Daily, Jan. 17)
  • Deregulation to Spur Housing Development: Trump has pledged to roll back environmental and building regulations that hinder housing construction. This includes streamlining permitting processes, relaxing restrictions and accelerating project timelines.
  • Trump’s nominee for the Department of Housing and Urban Development (HUD), Scott Turner, has pledged to cut regulations that he says are stifling development. These efforts aim to increase housing supply, particularly in high-demand markets. (BisNow, Jan. 17)

Immigration and Labor

  • Deportations: Trump’s plans for mass deportations could have significant effects on the housing industry. Immigrants make up over 25% of the construction laborer workforce in the U.S., an industry where more workers are sorely needed—especially if affordable housing goals are to be met. (Bisnow, Jan. 17)
  • Depending on the extent of Trump’s deportation plans, CRE projects may face rising costs and delays if the construction workforce is severely affected. (NBC News, Jan. 21)
  • According to the Associated Builders and Contractors, the construction industry needs 439,000 new workers this year to meet rising demand. The need for construction resources is urgent, with Los Angeles requiring rebuilding after devastating fires and a nationwide surge in data center construction on the horizon. (Axios, Jan. 24)

Energy and Infrastructure

  • Emergency Powers: On the day Trump took office, he declared an energy emergency—giving the White House new authority to speed up the manufacture of certain products under the Defense Production Act, issue waivers on certain gasoline restrictions and restrict energy trade, among other powers—likely in service of Trump’s stated effort to “drill, baby, drill.” (The Hill, Jan. 20)
  • Data Centers: Trump also announced a $500 billion “Stargate” initiative designed to expand AI-focused data center infrastructure. The executive order prioritizes the use of fossil fuels to power these facilities and streamlines permitting processes for large-scale projects. (AP News, Jan. 22)
  • The investment could help hasten the buildout of high-demand data centers, which are limited by the availability of energy resources and infrastructure. (BisNow, Jan. 22)

Looking Ahead

With the whirlwind of activity coming out of the Trump administration and Congress, RER will continue to proactively evaluate policy developments as legislative efforts and White House implementation of executive orders progress.

House Freedom Caucus Members Propose Ending Deductibility of State and Local Business Taxes

Posted on by Trey Jackson

This week, House Freedom Caucus Members proposed ending the ability of businesses to deduct their state and local business and property taxes on their federal income tax returns.  (Politico, Jan. 15)

Why It Matters

  • The proposal was raised as a potential offset for relief from the SALT cap on individuals. 
  • The proposal was also included in a “menu” of potential policy options prepared by the House Budget Committee for tax and budget reconciliation legislation.  (PoliticoPro, Jan. 17)
  • The Budget Committee has a key role in setting the overall size of any reconciliation bill, but the actual details of tax changes fall under the jurisdiction of the House Ways and Means Committee.

Industry & Congressional Response

  • “Property taxes and other state-level business taxes are a basic cost of doing business.  Denying the deductibility of these business taxes is nonsensical and would be devastating to American businesses, and especially U.S. real estate.  The purpose of the income tax is to measure and tax income.  Under the proposal, we would no longer have an income tax, we would have a tax on gross revenue.  It would penalize existing property owners, artificially distort business decisions, and raise flashing red lights for anyone even considering a long-term capital investment in the United States,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable.
  • Senate Democratic Leader Chuck Schumer (D-NY) addressed the proposal on the Senate floor earlier today.  (Senate Democrats, Jan. 17)
  • “There is no scenario under God’s green Earth that New York taxpayers will ever accept another unfair SALT cap like the House Freedom Caucus proposes….I will do everything I can, first to remove the entire SALT cap tax, and second to never let a new proposal that for the first time imposes the SALT cap on businesses, small and large, to be put into effect. I’m going to do everything I can to fight this dastardly proposal,” said the Senator.
  • The House Freedom Caucus is one of many factions in the House Republican Conference that will have significant leverage over any tax changes in 2025 due to Republicans’ extraordinary slim majority in the House.

House Ways and Means Committee Chairman Jason Smith (R-MO) and House SALT Caucus Co-Chair Rep. Tom Suozzi (D-NY) are scheduled to address Roundtable members at the State of the Industry Meeting next week.