What's in the 'big, beautiful' Trump tax bill for lenders?

Real estate trade groups are applauding the progression of President Trump's "big, beautiful bill" that could deliver, and sustain, numerous tax benefits for real estate players.

The U.S. House of Representatives early Thursday morning narrowly passed the Republican-led bill, which now faces a likely arduous journey in the Senate. While lawmakers fretted over spending cuts to items like Medicaid, they prioritized extending Trump's hallmark Tax Cuts and Jobs Act and increasing a coveted state and local tax deduction.

"MBA is pleased that this bill includes numerous tax provisions that will help to increase real estate investment in communities and improve the financial outcomes of homeowners, renters, and our members' businesses," said MBA President and CEO Bob Broeksmit in a statement Thursday. 

The tax considerations for mortgage professionals 

The trade group highlighted lawmakers' preservations from the 2017 TCJA, such as the deduction for qualified residence interest, and an up to $500,000 homeowner exclusion on the gain on the sale of a principal residence. Also intact are the deductibility of business interest for real estate, and Section 1031 like-kind exchanges relevant to commercial real estate players. 

Republicans expanded a deduction for Qualified Business Income from 20% to 23% under a permanent Section 199A, a desired provision for partnerships and S Corps. The benefit introduced in Trump's first term aids small businesses alongside corporations who received a permanent tax break to 21% eight years ago. 

The American Land Title Association in a statement Thursday lauded the tax provisions which will aid the thousands of title and settlement companies it represents. 

"The expanded deduction under Section 199A is a welcome step that supports the long-term health of our small business members and the communities they serve," said ALTA CEO Diane Tomb in a statement Thursday. 

The MBA also supported improvements to the Low-Income Housing Tax Credit program, and a new round of Opportunity Zones, a development effort championed by current Department of Housing and Urban Development Secretary Scott Turner. 

The House bill also includes numerous benefits to consumers, such as no taxes on tips, overtime, and on interest on some auto loans, according to reports. Lawmakers also slightly bumped up the standard deduction and child tax credit. The individual estate tax exemption will also rise to $15 million and continue to be adjusted for inflation. 

One of the largest battles occurred over the SALT cap, which was set at $10,000 in 2017 and set to expire this year. Mortgage bankers have rooted for the tax break to stay, and GOP lawmakers pushed the cap to $40,000 to appease Representatives in higher-income blue states.

"MBA looks forward to engaging with the Senate on possible improvements to this House-passed reconciliation baseline as changes are considered and crafted," said Broeksmit in a statement. 

The bill heads to the Senate, where Republicans also hold a slim majority. Lawmakers this summer must also weigh the debt ceiling, as U.S. Treasury Secretary Scott Bessent has warned Capitol Hill to increase or suspend the limit ahead of Congress' August recess. Missing that deadline could have grave consequences on the economy, including roiling mortgage markets, observers commented.