Both the Mortgage Bankers Association (MBA) and the National Association of Realtors (NAR) celebrated the real estate tax provisions in the Republican-led tax and spending package that was advanced by the House of Representatives via a narrow 215-214 vote.
MBA applauded the bill’s tax provisions supporting real estate investment.
“We have worked diligently with Congressional leadership and committee members to preserve key elements of the 2017 Tax Cuts and Jobs Act,” MBA President and CEO Bob Broeksmit said. “This includes the deduction for qualified residence interest, the up to $500,000 homeowner exclusion on the gain on the sale of a principal residence, Section 1031 like-kind exchanges, and the continued deductibility of business interest for real estate. We also support the bill's expanded deduction for Qualified Business Income under a permanent Section 199A, needed improvements to the Low-Income Housing Tax Credit program, and a new round of Opportunity Zones.
“MBA looks forward to engaging with the Senate on possible improvements to this House-passed reconciliation baseline as changes are considered and crafted. We will continue to advocate for our industry’s tax priorities throughout the debate this summer.”
NAR noted the Republican-led tax and spending package passed by the House of Representatives includes significant wins for the real estate sector, including NAR’s top five tax priorities. Those provisions include:
- Qualified Business Income (QBI) Deduction – The bill permanently increased the QBI deduction from 20 percent to 23 percent, which will benefit a majority (more than 90 percent) of NAR members, who are classified as independent contractors or small-business owners.
- State and Local Tax Deduction (SALT) – The SALT deduction cap was quadrupled from $10,000 to $40,000 for households earning under $500,000. However, the bill did not eliminate the marriage penalty, meaning, whether taxpayers are single filers or married couples filing a joint return, they can deduct a maximum of $40,000 in state and local taxes.
- Individual Tax Rates – Individual tax rates that were lowered as part of the Tax Cuts and Jobs Act of 2017 were made permanent and indexed for inflation, improving affordability for prospective homebuyers.
- Mortgage Interest Deduction (MID) – The bill made the MID permanent at its current level, after concern was raised that it might be reduced or eliminated.
- Business SALT and 1031 Like-Kind Exchanges – The bill protected Section 1031 like-kind exchanges and did not make changes for most businesses deducting state and local taxes. While the bill did provide limits in state-level business SALT workarounds for certain high-income professionals, they do not appear to impact real estate professionals, NAR said.
Other positive tax provisions in the bill NAR cited include enhancements to the Low-Income Housing Tax Credit to support affordable housing development, estate tax certainty, renewed Opportunity Zone incentives, and the creation of tax-advantaged child investment accounts that can be used for qualified expenses of the beneficiary such as first-time home purchases.
“We appreciate House leaders for taking this important step with a bill that supports hardworking families and strengthens the real estate economy,” NAR Executive Vice President and Chief Advocacy Office Shannon McGahn said in a release. “With lower tax rates, SALT relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans.
“While significant changes are possible as this bill moves to the Senate, NAR will stay closely engaged with lawmakers to ensure real estate remains a central focus. We are committed to advocating for provisions that expand opportunity, support homeownership, strengthen communities nationwide, and put the American Dream within reach for more families.”