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This bill would change federal tax rules so people or businesses would not have to count certain profits as income when they sell qualified real estate interests as part of the Defense Department’s REPI program. The goal is to make it easier for property owners to take part in land sales that support military readiness and environmental protection. In simple terms, if a land deal is done for REPI purposes and meets the bill’s rules, the seller could exclude the gain from federal income tax.
- The tax break would apply to sales of certain property interests, including a full ownership interest, a remainder interest, or a permanent land-use restriction.
- A sale would count only if it is made to a qualified organization and is for REPI purposes under the Defense Department program.
- There is a limit for pass-through businesses such as partnerships and S corporations: the tax break would not apply if the property was bought and then resold within 3 years. A family-owned partnership would be exempt from that limit.
- The rule would take effect for tax years beginning after the bill becomes law.
Official Summaries
Incentivizing Readiness and Environmental Protection Integration Sales Act of 2025
This bill excludes the gain from the sale of a qualified real property interest under the Readiness and Environmental Protection Integration (REPI) Program from gross income for federal tax purposes. (Some limitations apply.)
As background, the REPI Program supports cost-sharing agreements between the Armed Forces, other federal agencies, state and local governments, and certain private organizations to address land use near military installations, address environmental restrictions that limit military activities, and increase military installation resilience.
Under the bill, the exclusion from gross income applies to gain from the sale of a real property interest (pursuant to an agreement under the REPI Program) to
- a state or U.S. possession (or a political subdivision of a state or U.S. possession) or the District of Columbia;
- the United States;
- certain corporations, trusts, community chest, funds, or foundations; or
- certain charitable organizations.
Further, under the bill, the real property interest that is sold may be (1) the entire interest in the real property, (2) a remainder interest in the real property, or (3) a restriction on the use of the real property (e.g., easement) that is granted in perpetuity and created under state law.
However, the bill limits such exclusion from gross income for a partnership or other pass-through entity (other than a family partnership or family pass-through entity) to gain from the sale of a real property interest that is held for at least three years.
Current Full Text
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 439 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 439
To amend the Internal Revenue Code of 1986 to exclude from gross income
gain from the sale of qualified real property interests acquired under
the authority of the Readiness and Environmental Protection Integration
(REPI) program administered by the Department of Defense pursuant to
section 2684a of title 10, United States Code, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 6 (legislative day, February 5), 2025
Mr. Budd (for himself and Mr. Kaine) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income
gain from the sale of qualified real property interests acquired under
the authority of the Readiness and Environmental Protection Integration
(REPI) program administered by the Department of Defense pursuant to
section 2684a of title 10, United States Code, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Incentivizing Readiness and
Environmental Protection Integration Sales Act of 2025''.
SEC. 2. EXCLUSION OF GAIN FROM SALE OF QUALIFIED REAL PROPERTY
INTERESTS ACQUIRED FOR PURPOSES RELATED TO THE READINESS
AND ENVIRONMENTAL PROTECTION INTEGRATION PROGRAM.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after section
139I the following new section:
``SEC. 139J. GAIN FROM SALE OF QUALIFIED REAL PROPERTY INTEREST FOR
PURPOSES RELATED TO THE READINESS AND ENVIRONMENTAL
PROTECTION INTEGRATION PROGRAM.
``(a) In General.--Gross income shall not include any gain from the
sale of qualified real property interest to a qualified organization
for REPI purposes.
``(b) Definitions.--For purposes of this section--
``(1) Qualified real property interest.--
``(A) In general.--The term `qualified real
property interest' means any of the following interests
in real property:
``(i) The entire interest of the taxpayer.
``(ii) A remainder interest.
``(iii) A restriction (granted in
perpetuity and created pursuant to State real
property law) on the use which may be made of
the real property.
``(B) Special rule for mineral interests.--An
interest in real property shall not fail to be treated
as a qualified real property interest solely by reason
of a retention of a qualified mineral interest (as
defined in section 170(h)(6)), but only if the right to
access such mineral interest is not accomplished by any
surface mining method.
``(2) Qualified organization.--The term `qualified
organization' has the meaning given such term by section
170(h)(3).
``(3) REPI purposes.--A sale of qualified real property
interest shall be treated as being for REPI purposes if such
sale is pursuant to the authority of the Readiness and
Environmental Protection Integration (REPI) program
administered by the Department of Defense under section 2684a
of title 10, United States Code.
``(c) Limitation.--
``(1) In general.--In the case of a pass-through entity, no
amount shall be excluded from gross income under subsection (a)
with respect to a sale if such entity acquired the qualified
real property interest by sale within 3 years of the date of
the sale described in subsection (a).
``(2) Exception for family partnerships or family pass-
through entities.--
``(A) In general.--Paragraph (1) shall not apply
with respect to any sale made by any partnership if
substantially all of the partnership interests in such
partnership are held, directly or indirectly, by an
individual and members of the family of such
individual.
``(B) Members of the family.--For purposes of this
paragraph, the term `members of the family' means, with
respect to any individual--
``(i) the spouse of such individual, and
``(ii) any individual who bears a
relationship to such individual which is
described in subparagraphs (A) through (G) of
section 152(d)(2).
``(C) Application to other pass-through entities.--
Except as may be otherwise provided by the Secretary,
the rules of this paragraph shall apply to S
corporations and other pass-through entities in the
same manner as such rules apply to partnerships.''.
(b) Clerical Amendment.--The table of sections for part III of
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after the item relating to section 139I the
following new item:
``Sec. 139J. Gain from sale of qualified real property interest for
purposes related to the readiness and
environmental protection integration
program.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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