What Realtors® Need to Know About the Latest Tax Reform
Housing Policy Update
The One Big Beautiful Bill, a sweeping tax reform package backed by the National Association of Realtors® (NAR), passed its final hurdle last Thursday and includes several provisions aimed at promoting homeownership, increasing housing supply, and strengthening the real estate sector - a key contributor to nearly one-fifth of the nation's GDP.
NAR successfully secured its top five legislative priorities in the final package:
- A permanent extension of lower individual tax rates
- A permanent qualified business income deduction (Section 199A)
- A temporary (five-year) quadrupling of the state and local tax (SALT) deduction cap, beginning in 2025
- Protection for business SALT deductions and 1031 like-kind exchanges
- A permanent extension of the mortgage interest deduction
Additional Real Estate-Related Provisions Include:
- Permanent improvements to the Low-Income Housing Tax Credit to support affordable housing development
- An increased Child Tax Credit of $2,200, indexed to inflation, helping ease housing costs for families
- A permanent $15 million estate and gift tax threshold, supporting generational wealth transfer
- Restoration of key business provisions, including full expensing for research and development and bonus depreciation
- Immediate expensing for industrial structures to encourage investment in manufacturing, agriculture and related industries
- Strengthened Opportunity Zones to incentivize economic development, including in rural communities
The bill also introduces a new “baby bonds” program, a one-time $1,000 government investment for each child born after the bill’s enactment. These bonds, once matured, are intended to help future generations build wealth, including saving for a first home.
As a result of the bill’s passage, the state legislature will reconvene for a special session to address impacts to Medicaid funding and artificial intelligence regulation. Originally, the bill included a 10-year moratorium on state-level AI regulations exceeding federal standards, but a bipartisan group of U.S. Senators removed that provision from the final version.
Zoning Ordinances and Colorado Housing Development
This week, Governor Polis released a statement alongside a study from the National Zoning Atlas examining local zoning ordinances in Colorado. He stated:
“Colorado is leading the way in passing common-sense housing legislation that cuts through the red tape to expand more housing options that Coloradans can afford in places they want to live. But there is more work ahead to stop government from preventing housing that meets our needs from being built with less bureaucracy and red tape. This study solidifies that we value data and our approach to housing is what works, and that unnecessary zoning restrictions make it difficult for people to build housing that is needed and wanted by Coloradans.”
The Denver Metro Association of Realtors® (DMAR) supports the efforts of Housing Colorado and the National Zoning Atlas in highlighting the connection between zoning and housing affordability across the state. As Colorado continues to grow, housing demand remains high. Despite increased construction activity, many communities still face a gap between what is being built and what Coloradans need, particularly in terms of affordability, location and housing type.
DMAR believes zoning changes should be approached thoughtfully, with respect for individual property rights and public input. We support housing diversity, including accessory dwelling units (ADUs), which are increasingly seen as a practical solution to the nationwide shortage of affordable rental housing.
Key Takeaways from the National Zoning Atlas Study:
- 92% of zoned land in Colorado allows single-family housing “as of right,” meaning no public hearing or special approval is required.
- 33% of residential land allows two-family housing as of right.
- 5% of residential land allows three-family housing as of right.
- Most land in the Denver metro area is zoned for single-family housing.
- Colorado ranks 5th in home prices and 3rd in rent nationwide.
- Colorado’s minimum lot size mandates are the largest recorded by the National Zoning Atlas in any state
