Republicans in the House of Representatives unveiled a draft of their tax reform legislation on Monday, proposing a series of changes that could have broad implications for the real estate industry. These include several tax benefits related to homeownership and small-business operations that would be made permanent.
The House Ways and Means Committee released the full text of its section of the bill one day before a formal markup is scheduled to begin.
Among the most notable provisions are increases to the cap for state and local tax (SALT) deduction, preservation of the mortgage interest deduction and enhanced benefits for independent contractors.
“This is a very strong opening bid for our advocacy priorities. This draft language preserves or strengthens a raft of provisions vital to housing affordability, including making the current lower income tax brackets permanent,” said Shannon McGahn, executive vice president and chief advocacy officer at the National Association of Realtors (NAR).
McGahn also noted that the proposal would triple the SALT deduction limit for households earning less than $400,000 — raising it from $10,000 to $30,000 — although it does not remove the marriage penalty.
“It is very possible the SALT deduction could become even more favorable during the amendment process,” McGahn said. “A national poll commissioned by NAR in April showed that 61% of voters support increasing or eliminating SALT caps, and 74% say double taxation fairness is a compelling reason to do so.”
The proposal maintains and increases the Qualified Business Income deduction from 20% to 23%, benefiting independent contractors and small-business owners. More than 90% of NAR members fall into this category, according to the trade group.
While the legislation includes several wins for the real estate industry, McGahn emphasized that the bill is far from final.
“While the early details are overwhelmingly positive for the real estate economy and small businesses, I would caution that this is just the first draft,” she said. “The bill will continue to evolve as it moves through the committee process and eventual passage in the House and Senate — with many amendment votes to come.
“At a time when we face a historic shortage in housing supply, it is essential that this legislation does not worsen the affordability crisis. With real estate accounting for nearly one-fifth of the U.S. economy, a strong real estate sector is vital to the health of the broader economy,” she added.
The draft also includes:
- Mortgage interest deductions: Preserved at current levels and made permanent.
- Child tax credits: Increased to $2,500 from 2025 through 2028, then indexed for inflation starting in 2029.
- Estate and gift tax thresholds: Permanently set at $15 million, adjusted for inflation.
- Low-Income Housing Tax Credit: Expanded with provisions from the LIHTC Improvement Act.
- Section 1031 like-kind exchanges: Retained with no changes, maintaining a tax deferral tool used frequently in real estate.
- Business SALT: Maintained for most industries, with limitations applying only to specific high-income professional services. NAR said the provisions “do not appear to impact real estate professionals.”
- Bonus depreciation and research and development expensing: Fully restored under “Big 3” business tax provisions.
- Carried interest: Left unchanged.
- Opportunity zones: Renewed with new incentives aimed at boosting development activity in rural and underserved communities.
First Time Home Buyer FAQs - Via HousingWire.com
