Build Back Better Framework Spares Real Estate Investment from Worst Taxes

Congressional leaders released the framework for President Joe Biden’s Build Back Better plan. The National Association of Realtors fought hard for certain priorities in the framework including investments in affordable housing and down-payment assistance and sparing real estate investment from major taxes, according to NAR.

Tax Provisions Spare Real Estate Investments

The Build Back Better plan is paid for with new taxes on high-income individuals and businesses, but the most feared taxes on real estate investment were excluded, according to NAR. In a recent press release from NAR, the chief advocacy officer commented on the proposal.

“Some of the earlier tax proposals floated would have devastated the real estate sector, which makes up nearly one-fifth of the entire economy,” says Shannon McGahn, chief advocacy officer at NAR.  “This framework has no 1031 like-kind exchange limits, no capital gains tax increases, no change in step-up in basis, no tax on unrealized capital gains, no increased estate tax, no carried-interest provisions, and no 199A limits. The tax provision of this framework is very positive for consumers, property owners, and the real estate economy.”

“We worked for more than a year to educate lawmakers on these issues and launched a targeted Call For Action on taxes. The tax provision of this framework is testament to the effectiveness of our education campaign in Washington,” McGahn continues.

The plan does not mention State and Local Tax (SALT) deduction relief. However, congressional leaders still support an increase in the SALT cap, and a group of bipartisan House members is still demanding a solution.

“Congressional leadership can address SALT through an amendment once a bill is under formal debate,” McGahn says. “We won’t let down our guard on SALT and are still hopeful for a solution.”

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Historic Investment in Affordable Housing

The framework includes a $150 billion investment in affordable housing. It includes funding for the following programs within the housing section:

Public housing

Housing Trust Fund
HOME
Down-payment assistance
Housing vouchers
Minority Business Development Agency

Under the agreement, public housing and rental assistance would get funding boosts and it would create more than one million new affordable rental and single-family homes and invest in down-payment assistance, according to NAR.

The White House says the down-payment assistance under the plan would allow “hundreds of thousands of first-generation homebuyers to purchase their first home and build wealth.”

“We continued to press both publicly and privately for these provisions,” McGahn says. “Affordable housing is the key to unlocking prosperity for millions of Americans currently excluded from the American Dream. This investment is critical for closing the racial homeownership gap and addressing income disparity. It opens up homeownership for first-generation and first-time buyers.”

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