How will the ‘One Big Beautiful Bill’ – a sweeping package of tax and other economic reforms – influence the state of residential housing across the country and in the Sunshine State?
First, the bill’s scale and complexity may render any valuation overly simplistic and incomplete – something acknowledged up front. Opinions on the law will, no doubt, radically differ based on individual assessments of the far-reaching implications beyond my singular industry, and I have certainly my own. Yet, this article is limited to those provisions specifically related to real estate, rendering a straightforward thumbs up or down.
Extension of 2017 tax cuts – Thumbs up
Preserving the tax cuts set to expire at the end of the year maintains the status quo, thereby reducing uncertainty and perceived economic drag from potential adjustments in spending and investment behaviors, including key assets such as real estate.
Impact on national debt and future mortgage rates – Thumbs down
Increasing the federal debt ceiling avoids the potential of a national default, thereby benefiting liquidity in the Treasury market in the near term, yet the projected increase in federal debt in the trillions will certainly be viewed by many as fiscally irresponsible. The increased interest carry on the expanded debt is projected to lower future bond demand and prices, requiring higher yields, thereby putting upward pressure on mortgage rates in future years.
Mortgage interest deduction – Thumbs up
While not altering the current provisions for mortgage interest deduction, it provides the continuance of this foundational benefit of homeownership. The deduction offers planning certainty, ensuring better alignment between the benefit and current higher home values based on recent years’ price appreciation.
Affordability for first-time and low-income buyers – Thumbs down
Within the massive bill, there is no new down payment assistance, no first-generation buyer credit and no federal grants aimed at overcoming the barrier to entry. Housing prices in many parts of Florida remain elevated, putting ownership for many out of reach. By excluding federal support for aspiring buyers, the bill pushes the affordability solution down to state and local governments.
Mortgage insurance premiums – Thumbs up
The bill makes permanent the current mortgage insurance deduction, allowing homeowners to annually deduct those premiums without waiting for renewed Congressional approval. For those using FHA, VA, USDA or low-down-payment conventional loans, this provision translates into lower taxable income and greater financial predictability. In 2024, over 800,000 borrowers benefited from private mortgage insurance, and two-thirds, or 65%, of those were first-time homebuyers, according to U.S. Mortgage Insurers. For middle-income buyers, especially those in Florida’s competitive entry-level markets, this change could make homeownership a bit more affordable.
State and local tax deductions – Thumbs up
The bill temporarily increases the deduction for State and Local Taxes (SALT), including property taxes, from $10,000 to $40,000 in 2025, with an escalator through 2029, when some benefits expire or income caps are established. Although a topic of controversy of late in markets with high state income tax burdens, the inclusion of property taxes in the threshold will allow more affluent property buyers to reduce the monetary impact of reassessments at the time of purchase.
Qualified Business Income deduction — Thumbs up
Investors and developers emerge as winners. The Qualified Business Income deduction becomes permanent, enabling rental property owners to continue deducting 20% of their net rental income. Coupled with the continuation of business interest deductibility and the return of 100% bonus depreciation, these changes enhance investor cash flow and tax efficiency. For commercial projects or repurposed developments, this is an incentive to build and reinvest. With the interest in Florida from out-of-state developers, the financial upside is evident.
Elimination of energy efficiency investments – Thumbs down
The legislation reduces funding related to energy efficiency, such as wind and solar. According to one recent study, an increase in national average household energy bills by $78-192 and an increase in total industrial energy spending by $7-11 billion will be felt by 2035. Programs like the HUD Green and the Resilient Retrofit Program, which supported energy-efficient upgrades in affordable multifamily housing, will be eliminated.
Low-Income Housing Tax Credit – Thumbs up
Among the limited benefits afforded to those with moderate means is the expansion of the Low-Income Housing Tax Credit, raising the 9% credit allocation to 12.5% and halving the bond financing requirement to receive credits. These changes will theoretically allow accelerated development of affordable rental housing. This, however, is a long-term benefit over time, so there is little to help today’s families looking to buy their first home.
Opportunity zone expansion – Thumbs?
The bill introduces a second round of zone designations and adds provisions aimed at rural and underserved communities. With 427 federally designated zones across Florida, from dense urban centers like Miami and Tampa to rural counties in the Panhandle, there is potential for expanded redevelopment and reinvestment. Despite the championing of Opportunity Zones by the HUD Secretary and others, there are others who question a lack of scrutiny on actual job creation or affordable housing for existing residents.
Summing up
Many will find much to like in the recent legislation as it relates to real estate. From a business and investment perspective, the bill succeeds in offering clarity and incentives. It ensures many buyers and developers will enjoy permanent, predictable tax advantages, and Florida’s real estate market will likely benefit in key areas, especially in luxury sales, commercial development and investment.
These benefits will come, many others will say, with the cost of further expanding our already bloated debt, annual interest obligations and increased cost of money. They are also not balanced across the economic spectrum and may prove a future cost to homebuyers and all Americans. Real estate ownership will indeed be even more attractive under the new bill. Yet, if we want to create a thriving, inclusive housing market that reflects the full promise of our state and serves all, we must continue opening the door for those still left standing outside.
Now it’s time to offer your personal thumbs up or down.
Budge Huskey is chief executive officer of Premier Sotheby’s International Realty.
