The House-passed bill is partially offset with new taxes on high-income individuals and businesses and new money for increased IRS enforcement, but the tax increases most likely to harm real estate investment were excluded.
“Some of the earlier tax proposals floated would have devastated the real estate sector, which makes up nearly one-fifth of the entire economy,” McGahn says. “This revised bill has no 1031 like-kind exchange limits, no capital gains tax increases, no change in step-up in basis, no tax on unrealized capital gains, no increased estate tax, no carried-interest provisions, and no 199A deduction limits.
The plan also includes an increase in the state and local tax deduction limit. The current $10,000 SALT deduction cap would be raised to $80,000 through 2030.
The House-passed bill also includes a $150 billion investment in affordable housing, a key NAR priority and focus of its advocacy efforts for the past year.
In addition, House leaders added back several programs not included in the original framework announcement, including $12 billion to expand the Low-Income Housing Tax Credit and $6 billion for a new initiative, the Neighborhood Homes Investment Act. NAR is a supporter of both programs.
Under the revised bill, public housing and rental assistance get funding boosts. The bill would also create more than 1 million new affordable rental and single-family homes and invest in down payment assistance. The White House says the down payment assistance under the plan would allow “hundreds of thousands of first-generation homebuyers to purchase their first home and build wealth.”
The bill includes funding for the following programs in the housing section:
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