Article | Crain's New York
Gauging the tax impacts of the House budget resolution
What real estate leaders need to know
April 7, 2025 · Authored by Steven Schlachter
Based on laws proposed and passed on March 17, 2025
The real estate sector is keenly observing the shifting tax environment as Congress endeavors to advance a comprehensive fiscal year 2025 budget resolution that could lead to substantial tax modifications.
With the House narrowly approving a resolution that proposes $4.5 trillion in tax reductions over the next decade, real estate companies must assess the potential effects on their operations, investments, and financial strategies.
Key tax policy developments
The House's budget resolution, passed on February 25 by a 217-215 vote, aligns with President Trump's vision for a unified reconciliation bill encompassing all tax and spending measures. Conversely, the Senate has adopted a more fragmented approach, concentrating on border security, energy, and defense, while deferring tax policy to a later stage. If House Republicans succeed in their strategy, tax legislation – including extensions of key Tax Cuts and Jobs Act (TCJA) provisions – could progress more rapidly than anticipated.
A notable provision for real estate investors and developers is Trump's initiative to restore 100% bonus depreciation, retroactive to his inauguration on Jan. 20, 2025. Initially a cornerstone of the TCJA, this provision allowed businesses to immediately deduct the full cost of qualifying property investments, offering a significant cash flow advantage. The phaseout of this deduction began in 2023, and its reinstatement could directly benefit real estate firms by enhancing liquidity and encouraging new development and property improvements.
Challenges and considerations
Despite the House's assertive stance, the conditional $4.5 trillion tax cut figure introduces fiscal constraints that could necessitate difficult trade-offs. The Congressional Budget Office has estimated that extending TCJA cuts alone would cost approximately $5 trillion over 10 years, indicating that the allocated spending would be insufficient for a full extension. If additional measures are included, lawmakers may need to identify new revenue sources or limit the duration of extensions.
