Senate Version Of Trump Budget Bill 'Strikes The Right Balance' For CRE

Senate Republicans passed the White House’s signature tax and policy bill after a marathon session of intraparty cajoling that ended in Vice President JD Vance casting the tiebreaking vote in favor of passage.

The sprawling policy package includes provisions with profound impacts to the commercial real estate sector that lobbyists have spent the last few weeks huddling with lawmakers to tweak, defend or eliminate. 

The bill must now go back to the House of Representatives, where lawmakers are racing against a Fourth of July deadline imposed by President Donald Trump. As the bill heads across Capitol Hill, the CRE sector is largely lining up behind the legislation.

The One Big Beautiful Bill includes the extension and expansion of major tax cuts leveraged by the commercial real estate sector, measures aimed at boosting factory development, an expansion of opportunity zones, and a host of other provisions that will have wide-reaching impacts on development and investment.

“From the bill's investment in housing and low-income communities to its fair treatment of entrepreneurial and pass-through businesses, the legislation strikes the right balance,” Ryan McCormick, senior vice president at The Real Estate Roundtable, a Washington, D.C.-based industry group, told Bisnow Tuesday. “It should spur job-creating capital investments in commercial properties across the nation.”

One major win for the CRE sector to come out of the Senate debate was the elimination of Section 899 in the bill, which had come to be known as the “revenge tax” proposal. It promised to hit many foreign investors, including key sources of capital for U.S. development, with a 5% tax on U.S. investment in 2026 that could have climbed as high as 20% over the coming years.  

The provision was pulled from the Senate bill last week at the request of Treasury Secretary Scott Bessent after the Trump administration came to an agreement with European officials to exempt U.S. firms from some taxes, including one targeting U.S. tech giants.  

The Senate’s bill also scales back proposed taxes on investments from university endowments and sovereign wealth funds that some investment managers have warned will make U.S. assets less attractive. 

“The Senate’s version of the bill maintains, and in several cases enhances, numerous pro-housing and economic development tax provisions that our Board-level Tax Task Force, representing both our single-family and commercial/multifamily members, advocated for,” Mortgage Bankers Association CEO Bob Broeksmit said in a statement.

There were also notable last-minute changes that promised to bite real estate investors and owners. The Senate bill accelerates the phase-out of clean energy tax credits and adds new taxes on wind and solar projects that use supplies from China.

Those changes to energy policy come as tech firms and industrial developers partner on the explosion of data center demand — and the energy needs that come with it — as artificial intelligence inches closer to mass adoption. 

A provision that would have banned states from regulating AI for 10 years was stricken from the bill in a 99-1 vote on the grounds that the rule was too broad.

States and consumer groups had argued the ban would be a gift to multifamily operators that use AI in rent-setting and are looking to avoid accountability, The Associated Press reported. The provision would have nullified algorithmic rent-setting software bans passed by states as well as cities such as San Francisco, Philadelphia, Minneapolis and San Diego.

The legislation would make permanent several business tax deductions that were included in the Tax Cuts and Jobs Act of 2017, the centerpiece legislation of Trump’s first term, including tax credits meant to spur affordable housing construction.

The Senate’s version of the One Big Beautiful Bill would make permanent a 12% housing credit used by affordable housing developers. It would also cut in half the requirement that affordable housing developers finance at least 50% their project cost with tax-exempt bonds to secure certain tax credits, bringing the minimum to 25%.

Affordable housing advocates supported the changes and celebrated the tweaks to the tax code after the bill cleared the Senate. 

“These Housing Credit provisions represent bold action to increase the nation's housing supply by over one million homes at a time when the affordable housing crisis has reached record levels,” Dudley Benoit, a senior managing director at Walker & Dunlop and president of the board of directors at The Affordable Housing Tax Credit Coalition, said in a statement. 

In addition to provisions aimed at affordable housing development, the version of the bill released late last week changed rules for condo developers that would allow them to hold off on realizing taxes for sold units until after a project delivers instead of when they are sold, which can be years before a buyer gets access to the unit and the developer gets paid in full.

Opportunity zones, another holdover from Trump’s 2017 tax bill, would also be expanded and become a permanent fixture of the tax code under the legislation. The expanded program, which was initially slated to sunset in 2026, would allow states to propose specific properties for additional designation as an opportunity zone and shift the criteria for which census tracts qualify. 

Other changes to the tax code are aimed at incentivizing firms to bring their manufacturing to the U.S. 

The One Big Beautiful Bill includes more than $200B in tax breaks to encourage the construction of factories by allowing businesses to deduct the full cost of equipment and, for the first time, the physical real estate used for manufacturing in a single year on their taxes as opposed to over several tax cycles.

House members could reject the Senate bill as written and force a reconciliation process, but such an outcome would all but eliminate the chances of the legislation reaching Trump’s Independence Day deadline. 

Republican senators failed to convince three of the bill's longstanding critics from their party — Rand Paul, Thom Tillis and Susan Collins — to vote in favor. Amid the bruising fight, which included barbs from the president, Tillis announced he wouldn’t seek reelection.  

Paul, among the staunchest fiscal hawks in Congress, had opposed the legislation from the outset for its deficit spending and provision lifting the debt ceiling by $5T. 

Roughly $1T in cuts to Medicaid will push nearly 12 million people off of health insurance, according to the nonpartisan Congressional Budget Office, and steep cuts to food assistance programs have also made the bill difficult for some Republicans to vote for.

Vance arrived on Capitol Hill in the early hours Tuesday morning after senators' two days of unending debate about those more controversial provisions. He cast the deciding vote to advance the bill a little more than five hours later.

Members of the House Rules Committee have already convened, the first step in the process of the full chamber voting on the bill, which could happen as early as Wednesday.

Billy Wadsack contributed to this story.