As tax negotiations continue this week on Capitol Hill, a coalition of 17 national real estate organizations submitted a unified message to congressional leadership urging preservation of current law on carried interest. (Letter)

Why It Matters

• The coalition letter, led by the National Multifamily Housing Council and joined by The Real Estate Roundtable (RER) and others, highlighted that taxing all carried interest as ordinary income would raise taxes on 2.2 million real estate partnerships and nearly 9.7 million partners, potentially stalling new housing, infrastructure, and redevelopment projects.

• Since carried interest and its tax treatment first emerged as a controversial political issue in 2007, RER has consistently opposed legislative proposals to tax all carried interest at ordinary income rates. (Axios, March 24 | NYT, March 8)

• Research cited in the letter demonstrates that carried interest legislation would lower wages, reduce property values, and undermine economic growth. (Letter)

What's At Stake

• “Taxing carried interest at ordinary income rates would discourage the risk taking that drives job creation and economic growth. It would reduce economic mobility by increasing the tax burden on cash-poor entrepreneurs who want to retain an ownership interest in their business. It would have profound unintended consequences for housing affordability and main streets all across our country,” said Jeffrey DeBoer, President and CEO of The Real Estate Roundtable. Roundtable Weekly, Feb. 21)

• The coalition emphasized that changing the tax treatment would particularly impact small and mid-sized real estate entrepreneurs who contribute sweat equity rather than large capital contributions to their projects.

• The letter notes that the tax code ”has never, and should never, limit the reward for risk-taking to taxpayers who have cash to invest.”

• Retroactive application of new tax policies on longstanding partnership agreements could harm small businesses, stifle entrepreneurs and sweat equity, and threaten future improvements and infrastructure in neglected areas.

• Under the headline “Carried Interest Fight Gets Real,” media outlet Politico wrote that the real estate industry was “laying down a marker as lawmakers begin working to pass a deficit-conscious extension of the 2017 tax cuts.” (Politico, March 27)

• The signatories of the letter included: National Multifamily Housing Council; American Hotel and Lodging Association; American Resort Development Association; American Seniors Housing Association; CCIM Institute; Council for Affordable and Rural Housing; ICSC Institute of Real Estate Management; Latino Hotel Association; Manufactured Housing Institute; Mortgage Bankers Association; NAIOP, the Commercial Real Estate Development Association; National Apartment Association; National Association of Black Hotel Owners, Operators, and Developers; National Association of Home Builders; NATIONAL ASSOCIATION OF REALTORS®

RER urges lawmakers to retain current law and avoid policies that would disincentivize investment, threaten housing affordability, and penalize job-creating entrepreneurs.

Congress returned to Capitol Hill this week facing a tight window to deliver on a range of policy priorities ahead of its April recess. As discussions intensify, Roundtable advocacy efforts continue to focus on avoiding harmful limitation on the deductibility of state and local business-related property taxes. (Punchbowl News, March 28)

Tax Talks

• Congressional Republicans are navigating a range of considerations amid pressure from the White House to enact its tax agenda and from conservatives mindful of the deficit. (WSJ, March 26)

• If Senate Republicans succeed in using the baseline strategy, it would significantly alter the final instructions for the House and Senate tax committees.

• Under this approach, extending or making permanent many provisions from the 2017 tax cuts would effectively be cost-free. However, GOP deficit hawks may still need offsets for other elements of the tax package.

• “Business SALT” and potential restrictions on the deductibility of state and local property taxes as a possible revenue offset for the tax bill. (WSJ, March 25)

• State and local property taxes represent 40 percent of the operating costs of U.S. commercial real estate, a greater expense than utilities, maintenance and insurance costs combined. This tax change could reverse the benefits of the 2017 Tax Cuts and Jobs Act (TCJA) and Section 199A, potentially raising effective tax rates to 1970s-era levels near 50%. (Roundtable Weekly, Feb. 28; March 14) 

• RER continues to lead advocacy efforts surrounding business SALT. RER members and staff are actively engaging with Congressional leaders on Capitol Hill, and educating lawmakers on the potentially devastating impacts of the proposals under consideration.

• Earlier this month, RER and sixteen other national real estate organizations wrote to members of the House Ways and Means and Senate Finance Committees urging them to oppose any proposal that would cap or eliminate the deductibility of state and local business property taxes.  (Roundtable Weekly, March 14) (BisNow, March 13)

• RER members are proactively contacting congressional offices, reinforcing opposition to any legislation that would restrict or eliminate deductions for state and local business property taxes.

• All RER members are strongly encouraged to amplify this message to their representatives in Congress. Read more here.

State of Play – Budget

• Congressional Republicans are grappling with how to pay for President Donald Trump's multi-trillion-dollar tax-cut and immigration reform agenda. (Reuters, March 27)

• With GOP lawmakers eager to finalize a budget framework for the planned megabill, House Speaker Mike Johnson (R-LA) and Senate Majority Leader John Thune (R-SD) are signaling that they will move forward on the fiscal blueprint without first resolving major disputes over the offsets needed to extend Trump' s 2017 Tax Cuts and Jobs Act (TCJA). (Politico, March 26)

• Meanwhile, the Congressional Budget Office (CBO) has projected that the U.S. government may reach its statutory debt ceiling by August or September unless Congress and the president agree to raise or suspend the borrowing limit.

• Despite ongoing disagreements, an area of consensus has emerged: Speaker Johnson and Leader Thune are aligning around including a debt limit increase in the budget package—a move Senate Republicans had previously resisted. (Politico, March 26)

• Failure to act could lead to a default on debt, risking economic stability, market volatility and lower property values. (AP, March 26)

Both chambers are targeting the week of April 7 to finalize the budget resolution, which would enable the reconciliation process needed to advance their legislative agenda in the months ahead.

On Thursday, House Ways and Means Committee Members Mike Carey (R-OH) and Jimmy Gomez (D-CA) reintroduced the bipartisan Revitalizing Downtowns and Main Streets Act of 2025 (H.R.2410), which would create a market-based tax incentive for converting older commercial buildings to residential use.

Revitalizing Downtowns and Main Streets Act

• The bipartisan bill, introduced by 15 House Democrats and 12 House Republicans, is strongly supported by The Real Estate Roundtable and a broad coalition of national organizations. The bill would help modernize U.S. real estate, create new and affordable housing, and strengthen cities and neighborhoods that continue to suffer from the aftereffects of the pandemic. (Bill Summary)

• “Right now, vacant commercial and office space is sitting unused, and converting these properties into housing is often so expensive it isn’t worth doing,” said Rep. Carey (R-OH). “This bipartisan bill will allow communities to expand their supply of affordable housing by upgrading existing buildings, allowing American downtowns and main streets to thrive with new investments.” (Rep. Carey Press Release)

• The bill would create a new and temporary 20% tax credit for qualified property conversion expenditures, modeled after the historic rehabilitation credit. (RER’S One-Page Summary)

• “The housing crisis is squeezing family budgets, while empty commercial and office buildings sit unused in downtowns and in suburban and rural communities,” Rep. Gomez said. “Our bipartisan bill converts these empty commercial buildings into homes families can afford—a smart way to fix both problems.” (Rep. Gomez Press Release)

• The total credit authority would be limited to $15 billion, allocated by state housing finance agencies based on feasibility and impact.

• Larger credits would be available for projects in rural areas, low-income census tracts, and economically distressed areas.

• The credit could be stacked with other federal tax benefits, including LIHTC, the rehabilitation credit, and Opportunity Zone benefits. 

Roundtable Advocacy

• The Real Estate Roundtable (RER) has supported similar versions of conversion legislation, such as the Revitalizing Downtowns Act (S. 2511, H.R. 4759, H.R.9002). (Roundtable Weekly, July 2024)

• The bill addresses and incorporates many of the recommendations a RER-led coalition had collectively made to the Revitalizing Downtowns Act in comment letters submitted in October 2022 and June 2024.  

• Both letters are the product of a property conversions working group created by RER’s Tax Policy Advisory Committee (TPAC). The working group has reviewed and considered the challenges and impediments confronting potential property conversion activities. (Roundtable Weekly, June 2024)

RER’s Tax Policy Advisory Committee will continue working with policymakers to advance tax policies that encourage and facilitate property conversion efforts.

The Financial Crimes Enforcement Network (FinCEN) issued an interim final rule last week that removes the requirement for U.S. companies and persons to report Beneficial Ownership Information (BOI) to FinCEN under the Corporate Transparency Act (CTA). (Bloomberg, March 25)

Why It Matters

• The March 21 rule significantly narrows the scope of the CTA—effectively dismantling key provisions and easing compliance burdens for millions of domestic businesses. (National Law Review, March 25)

• Treasury previously estimated that 32 million entities would be subject to the requirement. Under the revised rule, only about 11,600 foreign firms operating in the U.S. would have to disclose their ownership on average each year. (FinCen, March 21)

• Due to the far-reaching scope of the CTA, RER has long raised concerns about the regulatory burden and cost the CTA would impose on many commercial and residential real estate investment businesses. (Roundtable Weekly, March 7)

• The decision marks a major shift in financial transparency regulation, easing compliance burdens on small businesses and other domestic entities.

New Reporting Framework

• FinCEN prepared a series of questions and answers (Q&As) to address inquiries relating to the Beneficial Ownership Information Interim Final Rule.

• In the interim final rule, FinCEN revises the definition of “reporting company” in its implementing regulations to mean only those entities that are formed under the law of a foreign country and that have registered to do business in any U.S. State or Tribal jurisdiction by the filing of a document with a secretary of state or similar office (formerly known as “foreign reporting companies”).

• FinCEN also exempts entities previously known as “domestic reporting companies” from BOI reporting requirements.

• Domestic companies and their beneficial owners are no longer required to file BOI reports, nor update or correct previously filed reports.

• Foreign reporting companies must still report—but only for non-U.S. owners.

• U.S. persons with ownership in foreign entities are exempt from BOI disclosure.

• New deadlines apply for foreign companies to file initial reports—either 30 days after the rule’s Federal Register publication or 30 days post-registration to do business in the U.S., whichever is later.

What’s Next

• FinCEN is accepting comments on the interim rule for 60 days and intends to finalize it later this year.

As RER works to develop comments for FinCEN on the March 21 Interim Final Rule, we welcome member input.

Housing policy remains at the forefront this week as The Real Estate Roundtable (RER) responded to the Federal Trade Commission’s (FTC) request for public comment on the impact that the large-scale single-family rental (SFR) owner-operators are having on the housing market; the Trump administration continues to explore privatizing Fannie Mae and Freddie Mac; and Federal Housing Finance Agency (FHFA) Director Bill Pulte rescinded a renter protection directive.

Single-Family Rental Housing Study

• RER and Nareit responded this week to the FTC’s request for public comment  regarding the impact that large-scale Single-Family Rental (SFR) operators and institutional investors are having on home prices and rents in the single-family housing. (Letter)

• The FTC aims to assess whether "mega investors" influence housing prices negatively.

• The letter underscores that institutional capital is essential to expanding housing supply and addressing the chronic housing shortage affecting affordability nationwide.

• As stated in the letter, “Single-family rentals, now part of an institutionally supported asset class, add balance to the U.S. housing market.  SFRs play an important role in the nation’s housing landscape by boosting supply and offering flexible, high-quality housing options that have broad demographic appeal at lower price points compared to home ownership.” 

• SFR homes constitute only 32 percent of rental units nationally, consistent with historical averages.

• Institutional investors accounted for a mere 0.3 percent of single-family home purchases in the past year. (BisNow, Feb. 3)

• The letter emphasized that institutional investors own less than 0.5 percent of U.S. single-family homes, thus not driving the housing affordability crisis.

GSE Reform

• The Trump administration is actively exploring housing finance reform options, including privatizing Fannie Mae and Freddie Mac. (WSJ, March 23)

• Recent proposals suggest transferring the Treasury's stakes to a newly envisioned U.S. sovereign wealth fund. Treasury Secretary Scott Bessent recently discussed this possibility on a podcast, although he provided limited details. (Bloomberg, March 23)

• Director Bill Pulte and Sec. Bessent have stated that they would like Freddie and Fannie to go private, but not at the cost of disrupting mortgage rates. (Commercial Observer, March 21)

• An executive order is also under consideration, which could direct federal departments to examine the privatization of Fannie and Freddie.

• This proposal has drawn substantial attention from housing industry leaders concerned about potential impacts on mortgage markets and affordable housing.

Tenant Protection Policy Rescinded

• This week, FHFA Director Pulte rescinded a Biden-era directive requiring multifamily housing providers with Fannie Mae or Freddie Mac-backed mortgages to provide renters a 30-day rent increase notice, lease term expirations and a five-day late payment grace period. (GlobeSt, March 26)

• Pulte contended that this directive increased compliance burdens for lenders and property owners, noting existing state and local regulations already cover lease notices and late fee guidelines.

• RER along with other national real estate organizations Industry groups such as the National Apartment Association and the National Multifamily Housing Council had opposed the policy, arguing it imposed undue burdens on housing providers. (Bisnow, March 25 | Roundtable Weekly, Jan. 2023)

• This move aligns with broader industry efforts advocating fewer regulatory constraints to foster housing market stability.

Department of Housing & Urban Development (HUD) Secretary Scott Turner will be a featured speaker at The Roundtable’s Spring Roundtable Meeting on April 8, 2025 (Roundtable-level members only).