Bill includes permanent tax relief, SALT cap expansion, and housing incentives
The US House of Representatives has passed a major tax reform bill that delivers several major wins for real estate investment, including permanent tax relief and expanded incentives for property investment and housing development.
Among the most impactful changes for the real estate industry is the permanent increase in the qualified business income (QBI) deduction, raised from 20% to 23%. This provision is expected to provide meaningful tax relief to the vast majority of real estate professionals, many of whom operate as independent contractors or small business owners.
The bill also makes current individual tax rates permanent and indexes them to inflation, a move supported by 86% of voters in a recent national survey.
A notable revision to the state and local tax (SALT) deduction cap is also featured in the legislation. The cap has been quadrupled from $10,000 to $40,000 for households earning less than $500,000, although the marriage penalty remains in place.
In addition, the bill permanently preserves the mortgage interest deduction (MID), which continues to be a key tax benefit for homeowners. Other longstanding provisions critical to real estate investors, such as Section 1031 like-kind exchanges and the deductibility of business interest, have also been retained.
The reform package includes several measures aimed at expanding affordability and long-term housing access. It enhances the Low-Income Housing Tax Credit (LIHTC), renews Opportunity Zone incentives, and introduces tax-advantaged child investment accounts that can be used for qualified expenses, including first-time home purchases. It also provides greater estate tax certainty, further stabilizing financial planning for investors and property owners.
Mortgage Bankers Association President and CEO Bob Broeksmit, CMB, expressed support for the legislation.
“MBA is pleased that this bill includes numerous tax provisions that will help to increase real estate investment in communities and improve the financial outcomes of homeowners, renters, and our members’ businesses,” Broeksmit said in a statement.
He noted that the MBA supported maintaining key provisions of the 2017 Tax Cuts and Jobs Act, including the mortgage interest deduction, the up to $500,000 exclusion on capital gains from the sale of a primary residence, and the continuation of business interest deductions.
The tax reform package appears to align with strong voter sentiment in favor of real estate-oriented provisions.
According to a national survey of 1,000 registered voters by Public Opinion Strategies and Hart Research on behalf of NAR, 91% of respondents supported preserving the mortgage interest deduction, 92% favored tax-free savings accounts for first-time homebuyers, and 83% backed the pass-through deduction for small businesses earning under $400,000. Additionally, 67% of respondents supported raising the capital gains exemption on the sale of a primary residence.
Read next: How has tax reform affected homebuyers?
The bill’s SALT provisions were shaped with input from Republican members of the bipartisan SALT Caucus, particularly those representing high-tax states like New York and California. With House approval now secured, the legislation moves to the Senate, where revisions are possible.
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