The Senate has agreed to remove a provision in the Trump Administration’s One Big Beautiful Bill that would would impose retaliatory income taxes on foreign companies and investment in the U.S.
While the measure has raised concern among business leaders in a wide range of industry segments, it has been of particular concern to professionals in the commercial real estate finance industry, as it would reduce lending capital by restricting foreign investment
Section 899, as it is known, would have a chilling effect on cross border flows into commercial real estate and would add costs to lenders that fund U.S. borrowers.
On Thursday, Treasury Secretary Scott Bessent asked Congress to remove the controversial “revenge tax” provision after striking a G7 deal on global corporate taxes, according to a report on Axios.
“After months of productive dialogue with other countries on the OECD Global Tax Deal, we will announce a joint understanding among G7 countries that defends American interests,” Bessent posted on X.
David McCarthy, managing director and head of legislative affairs for the CRE Finance Council, expressed relief that the controversial provision will be stricken from the final bill.
“This is a victory for capital availability and tax clarity,” McCarthy tells MortgageOrb. “Cross-border investors and lenders serve a pivotal role in helping fund purchases and refinancings of commercial and multifamily real estate across the U.S.”
“Section 899 was a looming source of uncertainty for CRE finance industry participants, but the administration’s global tax deal avoids unintended consequences, including increased borrowing costs and asset value fluctuations,” McCarthy adds.
In an interview with MortgageOrb last week, McCarthy said the measure “could add cost and uncertainty to cross-border investment in real estate. CREFC is concerned on the potential impact to foreign investment in U.S. real estate, both on a debt and equity basis.”
Photo: Louis Velazquez