A massive budget bill signed into law last week brings sweeping changes for different economic players, including real estate.
President Donald Trump signed the “One Big, Beautiful Bill Act” on July 4. The 870-page bill touches upon a variety of sectors — from dairy policies to energy and defense — and it presents game-changers for real estate stakeholders.
The Mortgage Bankers Association, a D.C.-based organization, praised its passage.
“We believe these provisions will benefit homeowners and renters, increase housing production,” Adam DeSanctis, vice president of communications at the MBA, said in a statement.
The legislation:
- Quadruples the state and local tax, or SALT, deduction cap to $40,000 in 2025, after which it will grow by 1 percent each year until 2029. The deduction has a $500,000 income threshold, after which it phases out, or decreases. The cap is slated to revert back to $10,000 in 2030. The cap was set to expire in December.
- Expands Opportunity Zones to rural areas, incentivizing real estate development outside urban cores. The Trump administration's first term provided tax savings incentives to developers who built mixed-use projects — thinks apartments or condominiums above shops — in overlooked pockets in or near the urban core.
"I'm especially pleased to see Opportunity Zones made a permanent part of our tax code, providing much-needed continuity," Scott Turner, secretary of the U.S. Department of Housing and Urban Development, said in a statement after the bill's passage. "Additional enhancements, including a rolling designation cycle and expanded investment incentives for underserved rural communities, will build on the momentum of Opportunity Zones."
Turner went on to say the current Opportunity Zones program, one he helped push forward during the first Trump administration, added 30,000 residences.
- Permanently sets the Low-Income Housing Tax Credit program at 12% for state contributions. It also lowers the bond-financing threshold from 50% to 25% to allow more affordable housing developers to qualify for financing.
- Reinstates private mortgage insurance premiums so homeowners can deduct them from their taxes.
“We welcome the inclusion of this deduction in the One Big Beautiful Bill Act and the tax relief it will deliver to millions of hard-working American homeowners with low-downpayment mortgages," Seth Appleton, president of U.S. Mortgage Insurers, said in a statement. These savings, Appleton said, "protects taxpayers writ large from the risks of future housing downturns."
Cut hits energy savings
Some potential changes got axed, including clean energy credits, to balance out with other tax savings. These encouraged owners to incorporate clean energy solutions into their homes. When contacted by Homes, the U.S. Environmental Protection Agency released a statement saying the agency will still implement all changes in the "One Big, Beautiful Bill."
Some industry players issued statements of support days before Trump signed the bill into law.
“This legislation will help spur economic growth and allow our members to invest more resources in multifamily rental construction, land development to build more single-family homes, and new equipment to expand their businesses,” Buddy Hughes, chairman of the National Association of Home Builders, said in a statement. “In turn, this will create a better business climate that allows builders to increase the nation’s housing supply, which is crucial to help ease America’s housing affordability crisis.”