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As President Donald Trump and 119th Congress reach the close of the “first 100 days”—the period during which presidents traditionally convene their cabinets and the Administration and Congress begin the work of legislative and regulatory rulemaking— there are big questions about what impact the next four years will have on the real estate industry.
Things may be unpredictable for a while in Washington, D.C., but real estate industry leaders can predict with some certainty the top priority issues likely to impact commercial real estate this year.
Tax Reform: Provisions from 2017’s Tax Cuts and Jobs Act (TCJA) will expire at the end of 2025 unless Congress reauthorizes them. Those provisions include the Qualified Opportunity Zone program and the 199A Qualified Business Interest Deduction.
The National Association of REALTORS® has already begun meeting with lawmakers to discuss the future of the TCJA and its programs. NAR continues to advocate for reauthorization, supporting changes to the opportunity zone program to make it more effective, keeping the 199A deduction, raising the state and local tax deduction, enhancing the capital gains exclusion and, of course, doing all this without harming important tax provisions like the 1031 like-kind exchange.
Inflation Reduction Act Changes: The Inflation Reduction Act (IRA) of 2022 included new programs to encourage sustainability in business and building practices. As Congress looks to tax reform, lawmakers will need to find other areas to cut spending to make up for any additions to the deficit, and it is likely that many provisions from the IRA will be impacted.
Waters of the U.S. Rule: Each new administration examines existing regulations and frequently “repeals and replaces” them with their own through notice-and-comment rulemaking. The Waters of the U.S. (WOTUS) rule is one that is particularly susceptible, especially as it has been subject to a string of lawsuits alleging that it exceeds the authority of the Environmental Protection Agency under the Clean Water Act. In a win for property owners, EPA Administrator Lee Zeldin, joined by NAR President Kevin Sears, announced March 12 that the EPA will simplify the rule, cutting red tape and permitting costs.
Increasing Housing: In one of his first executive orders, President Trump affirmed his commitment to addressing the nation’s housing shortage via policies that support preserving and adding to the existing stock. Commercial real estate experts know that the housing shortage goes well beyond impacting residential real estate. Communities lack workforce housing and affordable rental housing, both of which affect the ability to build and expand, and economies stagnate when they cannot grow.
Additionally, some proposed solutions may bring opportunities to commercial practitioners, such as the “Revitalizing Downtowns and Main Streets Act” which would create a tax incentive to adapt underutilized commercial properties into housing.
As the dust settles and Congress gets down to its priority issues for the year, NAR will continue to monitor these issues and advocate for policies and programs that benefit members who work in commercial real estate and their clients. Commercial real estate plays a critical role in our nation’s economy, and it’s important that our national policies reflect that.
