NAR Secures Key Wins in New Tax Reform Legislation

As real estate professionals and homeowners alike look for stability in an ever-evolving economic landscape, important news has emerged from the National Association of Realtors (NAR). The recent tax legislation signed into law on July 4 by President Donald Trump brings significant positive changes for the real estate sector. After years of advocacy and negotiation, NAR has successfully secured its top five priorities within this sweeping tax reform bill, ensuring a healthier environment for both real estate practitioners and consumers.

The first major win is the permanent extension of the individual tax rates that were originally set in 2017. These tax rates have provided essential relief and affordability for individuals across various income levels. By ensuring that these rates remain stable, the legislation helps maintain confidence among consumers, encouraging home buying and investment—which is crucial for a thriving real estate market.

Another highlight of the new legislation is the permanent qualified business income deduction, commonly known as Section 199A. This provision allows real estate professionals who qualify to deduct up to 20% of their business income, providing them with a vital tax break. By enhancing cash flow for real estate professionals, this deduction encourages entrepreneurship and helps agents invest back into their businesses, ultimately benefiting their clients and communities.

The tax reform bill also features a key adjustment regarding the state and local tax (SALT) deduction. The cap on this deduction has been quadrupled for five years, starting with the 2025 tax year, which brings substantial financial relief to homeowners and real estate investors situated in areas with high property taxes. This change is particularly important for states with elevated tax burdens, as it enhances the overall appeal of homeownership and stimulates market activity.

Moreover, the protection of business SALT deductions and the beloved 1031 like-kind exchange was a critical win for the industry. The 1031 exchange allows real estate investors to defer capital gains taxes on investment property sales when reinvesting the proceeds into similar properties. This provision is vital for maintaining liquidity and encouraging growth in the real estate investment sector. With the permanence of these protections in the new legislation, investors can make long-term plans without the fear of sudden tax changes undermining their investment strategies.

Lastly, the permanent extension of the mortgage interest deduction maintains an essential feature of homeownership that incentivizes buyers to purchase homes. This deduction has long been a key element of the American dream, facilitating home financing and making monthly mortgages more manageable. By ensuring its continuity, the legislation reinforces the value of homeownership in the U.S. economy.

Overall, these victories signify a monumental step forward for the real estate industry, as NAR’s advocacy efforts have shaped a favorable tax landscape. The changes enacted in this legislation not only support real estate professionals but also benefit consumers and homeowners across the country. As we move forward, these tax provisions are likely to contribute to a more robust and resilient real estate market, balancing the interests of all stakeholders and enhancing the status of housing as an integral part of the American economy.