The so-called Big Beautiful Bill undeniably lives up to the first part of its name, coming in at 887 pages of legislative text. How does the bill, which has narrowly passed the U.S. Senate, impact housing and the real estate industry?
The version of the bill just passed by the U.S. House earned the praise of the National Association of REALTORS® (NAR)—as has the Senate version. NAR specifically supported “five key provisions” that were preserving the mortgage interest tax deduction; raising the cap on the State and Local Tax (SALT) deduction; keeping the lower marginal tax rates passed in the 2017 Tax Cuts and Jobs Act (TCJA); a permanent qualified business income deduction; and the preservation of 1031-like kind property exchanges. All of these made it into the Senate bill in some form.
In their statement, NAR says that the House is “expected to take up and approve the Senate-amended version in the coming days, sending the legislation to the president’s desk for signature shortly thereafter.”
“We’ve worked for months to educate Congress through original NAR research, analysis and polling to demonstrate the value and broad support for the many real estate provisions in this bill,” says NAR Executive Vice President and Chief Advocacy Officer Shannon McGahn in a public statement shared over email. “Congressional leaders were receptive to our message. Our team had many conversations with lawmakers, and they thanked us for our public support and for providing the data they needed to support these provisions.”
The SALT deduction has been one of the most contested parts of the bill. In a nutshell, SALT allows taxpayers to deduct the cost of certain state and local taxes from their federal tax bill. Since property taxes are paid at the local level, the deduction generally benefits homeowners. In the TCJA, the deduction was capped at $10,000 annually (or $5,000 each for a married couple).
The cap was originally set to sunset at the end of 2025. Many Republicans representing districts in states with higher local taxes, such as New York, have been pushing to raise or eliminate the cap. The version of the Big Beautiful Bill that passed the House raised the cap to $40,000. After some back and forth, the compromise in the Senate version keeps the same cap, but only to households making under $500,000 annually—the $40,000 would also sunset in 2029.
During the 2024 presidential campaign, President Donald Trump voiced support for the idea of opening up certain federal lands to housing development to alleviate the inventory shortage. (The Kamala Harris campaign also supported a version of this policy.)
Senator Mike Lee (R-UT) proposed the sale of hundreds of thousands of acres in U.S. federally owned lands across 11 states. After the objections of lawmakers from several of those states, and the Senate parliamentarian ruling that the original acreage violated “reconciliation” rules that the bill must be budget neutral, Lee ultimately pulled the proposal from the Big Beautiful Bill. In a statement shared on X, Lee stated:
“Because of the strict constraints of the budget reconciliation process, I was unable to secure clear, enforceable safeguards to guarantee that these lands would be sold only to American families—not to China, not to BlackRock and not to any foreign interests,” BlackRock referring to the investment company. The company denies that it is one of the “institutional investors” buying up single-family homes.
However, Lee’s statement also indicated the sale of federal lands is a goal he and the president intend to continue pursuing.
“President Trump promised to put underutilized federal land to work for American families, and I look forward to helping him achieve that in a way that respects the legacy of our public lands and reflects the values of the people who use them most.”
Since shortly after Trump’s election, some experts have expressed doubts about the efficacy of federal land development in helping housing inventory and affordability—although NAR supported the initiative.
Another major change to the bill was the removal of a provision that would have banned the passing of laws regulating artificial intelligence (AI) technology at the state level. AI is a hot topic in real estate right now, with many real estate professionals embracing AI-powered tools to help run their businesses.
The ban, originally set at 10 years, was lowered to five during the Senate amendment process in an effort to win support. In the end, this effort failed, and the Senate voted 99-1 to remove the provision from the bill. This is one of the differences between the House and Senate bill that will need to be reconciled on the final voting process.
