How the Latest Budget Bill Impacts Real Estate
While the latest budget reconciliation bill may not be winning over the general public, it’s packed with significant wins for the real estate industry—and that matters whether you're a homeowner, investor, or in the business.
After a narrow 51-50 Senate vote, the bill is on its way back to the House for final approval. Although controversial due to broader spending cuts to programs like Medicaid, it includes several key provisions that directly benefit the real estate world.
Here's what you need to know:
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Mortgage Interest Deduction Stays Intact
The bill protects the mortgage interest deduction on debt up to $750,000—something the industry has pushed hard to preserve. This keeps a major tax incentive alive for buyers and current homeowners, particularly in higher-cost markets. -
SALT Deduction Cap Increased
The cap on state and local tax (SALT) deductions is getting a major boost—quadrupled, in fact. This is especially helpful in states with high property taxes, allowing buyers and homeowners to write off more and ultimately making owning property more financially manageable. -
Lower Individual Tax Rates Extended
By making the lower tax rates from 2017 permanent, the bill gives individuals—especially those who are self-employed or running small businesses—more predictable tax planning. This stability is often a green light for real estate investment. -
Qualified Business Income Deduction Made Permanent
This is a big one for independent contractors, including real estate agents. The 20% deduction for qualified business income will stick around, providing lasting tax relief for many in the industry. -
1031 Exchanges Stay Protected
Investors can breathe a sigh of relief—1031 like-kind exchanges remain untouched. These allow investors to defer capital gains taxes when swapping one investment property for another, and are critical for building long-term real estate portfolios. -
Opportunity Zone Incentives Continue
The bill keeps tax breaks in place for those investing in Opportunity Zones, which could continue to attract development in economically underserved areas. -
Affordable Housing Support Expanded
Enhancements to the Low-Income Housing Tax Credit (LIHTC) are also part of the package, which could lead to the creation or preservation of over 1 million affordable rental homes in the next decade. For developers focused on this segment, it’s a meaningful shift. -
Homebuilders Get a Boost
The National Association of Home Builders supports the bill, pointing to its potential to improve the construction climate for both multifamily and single-family homes. With housing supply still lagging far behind demand, any increase in development capacity is good news.
Bottom Line:
Love it or hate it, this bill has the potential to shape real estate markets in a major way. For buyers, sellers, investors, and professionals alike, the tax provisions and industry protections could offer both opportunity and relief. While the broader economic and political implications remain up for debate, there’s no doubt this is a big moment for housing and real estate.
