IRS Shake-Up: What Billy Long’s Ouster Means for the U.S. & California Real Estate Markets
- Fourth Wall Production
- 2 days ago
- 4 min read
On August 8, 2025, President Trump abruptly removed IRS Commissioner Billy Long—less than two months after his confirmation in June—naming Treasury Secretary Scott Bessent as acting commissioner (Reuters, AP News).
While this might seem like a political shake-up with no connection to your next home purchase or property investment, changes at the IRS can ripple into real estate markets, especially when they involve tax enforcement, deductions, and compliance policies that shape investment decisions.
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Why the IRS Matters to Real Estate
The IRS may not set mortgage rates or housing supply, but it plays a critical role in:
Capital Gains Taxes: Affecting how much sellers keep after a profitable sale.
1031 Exchanges: Allowing investors to defer taxes by reinvesting proceeds into similar properties.
Mortgage Interest Deductions: Reducing taxable income for homeowners.
Depreciation & Tax Credits: Influencing investor appetite for rental properties, development projects, and green building.
Why this matters: When leadership changes abruptly, uncertainty creeps in. Investors, developers, and even homeowners may hesitate to make big moves until they understand where policy enforcement is heading.
National Impacts: A Climate of Uncertainty
1. Tax Policy Ambiguity
Frequent turnover at the IRS disrupts policy continuity. For instance, if you’re planning a 1031 exchange or navigating capital gains from a high-value property sale, unclear enforcement timelines can stall your decision-making.
2. Investor Hesitation
Large institutional and private investors value predictability. The ouster of Long, without a clear successor plan, may prompt them to delay acquisitions, flips, or tax-sensitive transactions until leadership stabilizes.
3. Project Delays
Developers relying on federal tax credits (e.g., Low-Income Housing Tax Credit, energy efficiency incentives) may delay breaking ground until they have more certainty about compliance oversight.
📌 Related Resource: For sellers and agents creating high-impact property listings in competitive markets, professional real estate media production can make the difference between a slow sale and a bidding war.
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California & Los Angeles: Higher Stakes for High-Value Markets
In California, particularly Los Angeles, this type of IRS leadership change carries even more weight.
1. Capital Gains Pressure in High-Value Areas
With median home prices in LA County above $900,000, many sellers exceed the $250K (single) / $500K (married) capital gains exclusion limit. That means any shift in IRS enforcement or rules could directly hit the bottom line for homeowners cashing out (NAR Data).
2. SALT Deduction & OBBBA Impact
In July 2025, the One Big Beautiful Bill Act (OBBBA) raised the SALT deduction cap from $10,000 to $40,000 through 2029—a major win for Californians in high-tax areas (Lucas Real Estate). It also preserved 1031 exchanges and mortgage interest deductions—tools critical for California investors.
But leadership instability at the IRS could slow rollout guidance or lead to more aggressive audits on high-dollar deductions.
3. California-Specific Tax Nuances
1031 “Clawback”: California taxes deferred gains from 1031 exchanges when the replacement property is eventually sold, even if it’s out-of-state (TQD Law).
No Bonus Depreciation: State rules disallow certain federal depreciation benefits, making California less tax-friendly for some investors.
4. Market Sentiment & Volume
California’s market has already been cooling, with high mortgage rates, limited inventory, and Prop 13’s tax protections keeping owners from selling (CalMatters). This IRS shake-up adds one more reason for buyers and sellers to hit pause.
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How This Could Play Out in Los Angeles
Luxury Market: High-end buyers may delay closing on trophy properties if they expect changes in luxury tax enforcement or capital gains rules.
Developers: Large multifamily or mixed-use projects relying on federal tax incentives could see start dates pushed until compliance expectations are clearer.
Foreign Investors: Given LA’s global investor pool, uncertainty in U.S. tax administration could push some buyers to alternative markets until clarity returns.
🎯 Pro Tip for Agents & Sellers: In a market where uncertainty can slow deals, presentation is everything. Professional real estate photography, video, and drone work can help listings stand out even in hesitant markets.
Action Steps for California Property Owners & Investors
Review Your Tax Strategy Now: Don’t wait for IRS stability, consult with a CPA experienced in California and federal real estate tax law.
Track IRS Policy Updates: Follow trusted news outlets like Reuters and AP News for official guidance.
Leverage Market-Ready Media: If you’re selling in 2025, exceptional listing visuals can help overcome buyer hesitation. See how Fourth Wall Production helps properties command top-dollar offers.
Plan for Multiple Scenarios: Build flexibility into your deal timelines, especially if you’re relying on 1031 exchanges, LIHTC, or green building credits.
The Bottom Line
Billy Long’s early exit from the IRS doesn’t directly change mortgage rates or listing prices overnight. But in high-value, tax-sensitive markets like Los Angeles, it does inject uncertainty that can slow deal flow, influence investor strategies, and put a “wait-and-see” cloud over transactions.
For property owners, agents, and developers, the smartest move is to stay informed, keep your tax strategy nimble, and ensure your listings stand out in a cautious market. When buyers are on the fence, marketing can make the difference. Start with expert real estate media production to turn hesitation into action.
FAQ's
Q: Who is Billy Long and why was he removed as IRS Commissioner?
A: Billy Long, confirmed in June 2025, served less than two months as IRS Commissioner before being removed by President Trump (AP News).
Q: Why was Billy Long removed as IRS Commissioner?
A: While the administration has not released full details, leadership changes at the IRS can influence tax enforcement priorities that directly impact real estate transactions.
Q: How does the IRS leadership change affect the real estate market?
A: The removal of IRS Commissioner Billy Long creates uncertainty in tax policy enforcement, which can delay investment decisions and slow deal flow—especially for transactions involving 1031 exchanges, capital gains tax planning, and federal housing tax credits.
Q: Can a change in IRS Commissioner affect property taxes?
A: Not directly. Property taxes are set at the local and state level. However, federal tax rules—such as mortgage interest deductions, SALT caps, and capital gains exclusions—are enforced by the IRS, and leadership changes can affect audit focus and policy guidance.
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