Congress quietly offers tax break to mall owners on forgiven debt

What it does

This bill amends the tax code to allow commercial and retail property owners to exclude certain debt forgiveness from taxable income. Specifically, if a mall, shopping center, or retail business had debt secured by real property that was incurred before March 1, 2023, and that debt was forgiven between December 31, 2023, and January 1, 2028, the owner can now treat the forgiven amount as non-taxable income rather than reporting it as taxable gain. This is a tax break for real estate owners in the retail and commercial property sector.

Why we flagged it

The bill's operative mechanism is a targeted income-exclusion for a specific class of taxpayers (commercial/retail property owners) in a narrow time window. It is functionally a tax subsidy for real estate investors, not a broad public-interest measure.

What the text implies

• The time window (debt incurred before March 1, 2023; discharged Dec 31, 2023–Jan 1, 2028) appears designed to capture pandemic-era commercial real estate distress and foreclosures, creating a retroactive bailout for properties that may have already been written down or sold.
• The exclusion applies only to debt 'secured directly or indirectly' by specified real property, which may capture refinanced or restructured debt far removed from the original loan, broadening the benefit beyond the stated intent.
• By excluding debt forgiveness from income, the bill also triggers the coordination rules in §108(b), which normally require reduction of tax attributes (basis, credits, etc.). The bill amends these rules, potentially allowing owners to preserve tax benefits while erasing debt—a double benefit.
• The 'specified real property' definition excludes property described in §168(3) (certain agricultural property) and §144(6) (certain tax-exempt bond-financed property), but the bill does not explain why these exclusions exist or what properties they protect from the benefit.

Section numbers refer to the bill text the analysis read — linked under Primary records below.

Who it affects

This bill provides a targeted tax break to commercial and retail property owners, allowing them to avoid taxation on forgiven debt. The benefit flows to a narrow class of real estate investors and businesses, not to ordinary citizens. The tax revenue foregone must be made up elsewhere or adds to the deficit, representing a cost to the broader public.

Who stands to gain

• commercial real estate owners
• retail property investors
• mall operators and REITs
• commercial mortgage servicers and lenders (indirectly, through reduced defaults)

Named in the bill

Internal Revenue Code §108, IRC §168(3), IRC §144(6), commercial real estate sector, retail property owners

Where it stands

3 cosponsors: 2 Democrats, 1 Republicans.

• Jun 24, 2025 — Introduced · Congress.gov: “Introduced in House”
• Jun 24, 2025 — Referred to House Committee on Ways and Means · Congress.gov: “Referred to the House Committee on Ways and Means”

Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.

Money around this bill

1 lobbying clients named this bill on 1 disclosure filings across 1 quarter, Jun 2026 to Jun 2026. Those filings disclosed $99,577 in lobbying spend. A filing names 48 bills on average, so that figure is what each filing reported, not a share belonging to this bill.

More lobbying clients named this bill than 0% of bills with at least one filing.

Claudia Tenney, the sponsor, reported $1,189,908 in PAC receipts in the 2026 cycle.

• Public Citizen — $99,577 on 1 filing

Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.