T
he "One Big Beautiful Bill" has far-reaching implications for the residential housing market in Florida and nationwide. While opinions on the bill's impact will vary, this article focuses on its provisions related to real estate. The extension of 2017 tax cuts is a positive development, maintaining the status quo and reducing uncertainty in spending and investment behaviors.
However, increasing the federal debt ceiling may have negative long-term consequences, including higher mortgage rates due to increased interest carry and lower bond demand. The preservation of the mortgage interest deduction is beneficial for homeownership, providing planning certainty and aligning with recent home price appreciation.
The bill's lack of support for first-time and low-income buyers is a concern, as housing prices in many parts of Florida remain elevated. Excluding federal assistance pushes affordability solutions to state and local governments. On the other hand, making mortgage insurance premiums permanent is a positive change, allowing homeowners to deduct these premiums without waiting for renewed Congressional approval.
The temporary increase in State and Local Taxes (SALT) deductions will benefit affluent property buyers, while the Qualified Business Income deduction becomes permanent, enhancing investor cash flow and tax efficiency. However, eliminating energy efficiency investments may lead to increased household energy bills and industrial energy spending.
The expansion of the Low-Income Housing Tax Credit is a long-term benefit for affordable rental housing development. The introduction of a second round of Opportunity Zone designations has potential for expanded redevelopment and reinvestment in rural and underserved communities.
Overall, many will find much to like in the bill's real estate provisions, offering clarity and incentives for buyers and developers. However, others may view the increased debt and interest obligations as a cost that may be passed on to homebuyers and Americans in the future.
