The House narrowly passed, in a 218-214 vote, the One Big Beautiful Bill Act Thursday, delivering key wins for the real estate industry, according to the National Association of Realtors® (NAR).
According to a release this afternoon, after months of advocating before Congress, NAR secured its top five legislative priorities in the package.
“For months, REALTORS® across America have been at the forefront of tax reform, making sure Congress understood that homeownership is not only the cornerstone of the American Dream but a foundation for building wealth and strengthening communities,” said Shannon McGahn, NAR’s executive vice president and chief advocacy officer.
Key real estate provisions
The bill makes several permanent and temporary changes to the housing market, including tax breaks.
- Individual tax rates: Permanent extension of lower individual tax rates
- Business income deduction: Through Section 199A, independent contractors and small businesses qualify for a permanent 20% business income deduction
- Increase in state and local tax deduction cap (SALT): A temporary (five year) quadrupling of the SALT deduction cap
- Protection for businesses: Protection for business SALT deductions and 1031 like-kind exchanges
- Mortgage interest deduction: A permanent extension of the mortgage interest deduction
Realtor.com Senior Economist Jake Krimmel outlined the significant impact the SALT cap increase will have on the industry, particularly on homeowners.
“An additional $30,000 in deductions could amount to about $10,500 in annual tax savings for such homeowners, assuming a 35% federal marginal tax rate,” Krimmel said. “Raising the SALT cap creates a greater incentive to own in expensive, high tax neighborhoods, such as affluent suburbs with high property taxes and good schools. As demand for these neighborhoods rises, expect home prices to edge up there, too.”
NAR points to other noteworthy wins for the industry, including:
- A permanent $15 million estate and gift tax threshold, protecting generational wealth transfer
- Strengthened Opportunity Zones, renewing targeted incentives to drive economic development, including in rural areas
- Immediate expensing for industrial structures, boosting investment in manufacturing, agriculture, and related industries
Public support
In the weeks leading up to the bill’s passing, NAR presented polls showing the public’s support of the bill’s real estate provisions. According to these polls, data showed overwhelming support:
- 92% support tax-free savings accounts for first-time home buyers
- 91% support preserving tax incentives like the mortgage interest deduction
- 86% support lower individual income tax rates
- 83% support the 20% deduction for independent contractors and small businesses
- 61% support increasing or eliminating SALT deduction limits
“We brought these numbers directly to Capitol Hill and to the White House,” McGahn added. “Lawmakers repeatedly told us they appreciated the research, the clear message, and the voices of REALTORS® advocating in their communities. This is what happens when our members—backed by facts and united in purpose—speak up.”
