President Trump has broken away from the traditions of previous administrations in that his budgets typically do not include many detailed tax proposals. This is the case again for FY 2021. Among the few specific tax proposals that are included in the document, the following are the most relevant to real property and real estate professionals.

  • After many years of serious budget cuts to the Internal Revenue Service, the FY2021 budget proposes substantial increases in funding for the agency. The proposed $528 million (up 5 percent from last year) increase would restore IRS funding to a level nearly as high as it was in 2011, before the recent cuts began. Along with the increase is a legislative proposal to strengthen tax enforcement. If enacted, these changes could increase tax audits and federal tax collections, yielding a substantial net savings.
  • At a projected cost of $1.4 trillion, the budget again calls for the permanent extension of those portions of the Tax Cuts and Jobs Act of 2017 that are set to expire at the end of 2025. This includes provisions affecting individuals, including the tax rate reductions, the increase of the standard deduction, the $10,000 limit on the state and local tax (SALT) deduction, and the 20 percent tax deduction on qualified business income under Section 199A, among many others.
  • Despite talk from some Trump Administration officials about new tax cuts to be proposed this year, the budget is silent about them. Thus, any new tax cuts would have to be paid for from some other source or the cost would be added to the deficit.

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