Trump’s Big Beautiful Bill = Big Changes for Real Estate

Everyone at Happy Hour is going to be talking that “One Big Beautiful Bill.”  Depending on who you hang out with, they might be concerned about the increases on government spending and deficit. Or they may be confident that cutting Medicaid coverage for sex transfer surgery will fill the budget gaps. Now I am not sure where you stand in terms of government spending (or gender switching), I do want you to be fully informed on how this bill will impact the real estate market. 

The One Big Beautiful Bill Act would have several impacts, both direct and indirect, to the real estate market if signed into law. This tax bill passed the house by one vote and needs to clear the Senate next before landing on Trump’s desk for signature. Republicans hope to deliver this by July 4 as a birthday gift to the country. 

Here are the potential impacts to our industry, in no particular order: 

SALT Deduction 

Let’s bring people back to the big (and expensive cities). You might have seen my Instagram Reel about $200k being the new middle class in certain American cities. Grant Cardone did which was pretty cool. Anyways the new tax bill increased the State and Local Tax deduction cap from $10,000 to $40,000 which might further boost prices in affluent suburbs in California, New York, Chicago. This benefits higher income homebuyers in high tax areas. 

Real Estate Investors and Developers 

The new tax bill also held status quo on Capital Gains tax and 1031 exchange benefits. Which is great for real estate investors. I think some were hoping for improvements here though.  

In Trump’s first term, Congress passed the Tax Cuts and Jobs Act. One of the best parts of that bill was the incentives for Opportunity Zones. The goal with these zones is to ignite interest in developing/gentrifying low-income areas which have the potential of reducing crime and providing more housing. There are rumors of more Opportunity Zone incentives in the new bill. 

Many real estate investors (and realtors) take advantage of the Qualified Business Income deduction that allows a 20% deduction on pass through income from LLCS and S Corps. This will be made permanent. It is a pretty massive win because it reduces the effective tax rate on real estate income. 

Bad News for Luxury Homeowner’s 

The mortgage interest deduction will remain capped at $750k. With housing costs increasing, some were hoping for an increase in this as well. 

Rising Deficit = Rising Interest Rates 

This is a sad reality. Independent analyses of this bill confirm that it will cause a substantial increase in the federal deficit with an extremely limited offset from potential revenue gains that are hoped to come from increased consumer spending. Well, let me not lean one way or another and just share facts. The bill will increase the deficit from $3.8 trillion to $4.1 trillion over 10 years. Now when we are talking trillions is that like a few deck chairs blowing off the Queen Mary? Like would anyone notice? 

Mortgage interest rates will because when the government issues more debt, the demand for mortgage bonds dampens. In turn that dampens our party, unfortunately. This obviously impacts refi volume, but also new construction and certainly first-time home buyers. I am advising my buyers to get in bed with the devil they know, rather than the one they don’t and try to lock in mortgage terms sooner rather than later. I believe this is a better, more fiscally responsible move, than taking a wait and see approach but I would love to hear what you think.