Last Thursday President Joe Biden released his proposed 2024 federal budget of approximately $6.9 trillion, with over $2 trillion in tax increases on higher-income individuals, corporations and pass-through businesses. Many of the proposed budget’s tax provisions, detailed in the explanations accompanying the budget proposal, would directly impact commercial real estate and have been previously rejected by Congress when submitted in prior budget proposals. These include a doubling of capital gains taxes, limitations on Section 1031 like-kind exchanges, expansion of the net investment income tax to real estate trade or business activities, and taxing real estate carried interests at ordinary income tax rates, among others.

While the White House proposals are unlikely to gain much traction in the Republican-controlled House of Representatives, some of them could become part of the larger debate looming in Congress over raising the nation’s debt limit. Republicans are hoping to leverage their agreement to raising the debt ceiling in exchange for the White House entering into a broader deficit-reduction discussion.