The U.S. House of Representatives narrowly passed a tax reform measure, the One Big Beautiful Bill Act, by a vote of 215-214, legislation which will impact the real estate sector and affect household finances. Key aspects of the One Big Beautiful Bill Act of importance to the real estate and housing industries that will strengthen housing affordability, investment, and generational wealth include:
- Enhancements to the Low-Income Housing Tax Credit (LIHTC)
- Mortgage Interest Deduction (MID)
- Estate tax certainty
- Renewed Opportunity Zone incentives
- The creation of tax-advantaged child investment accounts that can be used for qualified expenses of the beneficiary such as first-time home purchases
Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB, said, “MBA is pleased that this bill includes numerous tax provisions that will help to increase real estate investment in communities and improve the financial outcomes of homeowners, renters, and our members’ businesses.”
Expansion of the LIHTC
The One Big Beautiful Bill Act includes changes to the LIHTC, impacting both the 9% and 4% LIHTCs. It also addresses tax-exempt entities, including private foundations and universities, and makes changes to employee compensation limits for tax-exempt organizations. For 9% LIHTC, the bill restores the 9% LIHTC to its 2021 level for the years 2026-2029, and increases the allocation by 12.5%. The bill also lowers the bond-financing threshold for projects financed by bonds issued after 2025, but before 2030 to 25%, according to a report from CliftonLarsonAllen.
Impact of the MID
The bill preserves and makes permanent the Mortgage Interest Deduction (MID) at its current level. This means the bill intends to keep the deduction with the 2017 Tax Cuts and Jobs Act (TCJA)’s limitations. The TCJA was one of the biggest tax overhauls in decades, and many of the provisions of the One Big Beautiful Bill Act that pertain to individuals are set to expire after 2025. According to the law firm Duane Morris, a significant portion of the current reconciliation bill focuses on extending or making permanent these provisions to preserve the existing framework for individuals, pass-through entities, and estates beyond 2025.
There had been concern the MID might be reduced or eliminated as a budget offset from the bill.
The National Association of Realtors (NAR) has expressed its support for this aspect of the measure, viewing it as a crucial benefit for homeowners and supporting housing market stability. In a recent national survey commissioned by NAR, Americans expressed strong support for retaining provisions in the 2017 Tax Cuts and Jobs Act critical to the real estate economy and homeownership. The survey found that 76% of voters are aware of efforts to extend the Tax Cuts and Jobs Act. Among those familiar with the law, support grows significantly when specific provisions are highlighted, as 86% back lower income tax rates for individuals and married couples, 83% support a new 20% deduction for independent contractors and small businesses earning under $400,000, and 80% favor tax incentives aimed at spurring investment in underserved communities.
Estate Tax Certainty
One Big Beautiful Bill will make permanent the doubled estate and gift tax exemption, currently at $13.99 million per person in 2025, and increase it to $15 million. This calculation was indexed for inflation, beginning in 2026. The estate and gift tax exemption provision would provide certainty for estates and families, ensuring that they can pass down assets to future generations without the threat of a fluctuating exemption amount. One Big Beautiful Bill also includes other tax provisions, such as permanent extensions of business tax benefits and increased standard deductions for individuals.
“We appreciate House leaders for taking this important step with a bill that supports hardworking families and strengthens the real estate economy. With lower tax rates, SALT [State and Local Tax] relief, and new incentives for small businesses and community development, this proposal brings real benefits to everyday Americans,” said Shannon McGahn, NAR’s EVP and Chief Advocacy Officer.
Opportunity Zone Incentives
The One Big Beautiful Bill Act proposes a renewed Qualified Opportunity Zone (QOZ) program starting January 1, 2027, and ending December 31, 2033.
An Opportunity Zone is a designation and investment program created by the Tax Cuts and Jobs Act of 2017 allowing for certain investments in lower income areas to have tax advantages. Their purpose is to spur economic growth and job creation in low-income communities, while providing tax benefits to investors.
The One Big Beautiful Bill Act includes modified eligibility requirements, focusing on rural areas and narrowing the definition of low-income communities by narrowing the threshold for census tract eligibility. Tax incentives, such as deferred capital gains taxation, will be available for investments made in QOZs during this period. A significant portion of new QOZ designations, at least 33% (or all eligible rural areas if less than 33%), must be in entirely rural communities.
In a recent report from ATTOM, 3,558 opportunity zones around the U.S. with sufficient data were analyzed (meaning they had at least five home sales in the first quarter of 2025), and found that median single-family home and condominium prices increased from Q4 of 2024 to Q1 of 2025 in 48% of Opportunity Zones nationwide.
“Home-value patterns inside Opportunity Zones remain pretty much in lock-step with the rest of the country, just as we’ve seen ever since we started looking at this niche of the market. From one to another, those very local markets remain volatile, with troubling signs in the very lowest-priced areas. But the big picture shows remarkable, and mostly positive, consistency,” said Rob Barber, CEO for ATTOM.
The Creation of Tax-Advantaged Child Investment Accounts
President Trump’s 2017 tax cuts temporarily boosted the maximum child tax credit to $2,000 from $1,000, a move set to expire after 2025 without action from Congress. The One Big Beautiful Bill Act would make the $2,000 credit permanent and raise the cap to $2,500 from 2025 through 2028. After 2028, the credit’s highest value would revert to $2,000, and be indexed for inflation. The child tax credit supports U.S. families, and could help with housing affordability.
“Provisions supporting homeownership, including those related to mortgage interest and capital gains exclusions, help provide certainty for buyers, sellers and lenders alike—strengthening the entire housing ecosystem,” said American Land Title Association (ALTA) CEO Diane Tomb. “We urge the Senate to build on this momentum and protect the real estate and housing incentives that help Americans build wealth, promote generational stability and drive our economy forward.”
Click here for more on the One Big Beautiful Bill Act.
