HOMES Act

This bill changes federal tax rules for very large owners of single-family rental homes. If a taxpayer owns 50 or more single-family rentals, they would lose tax deductions for mortgage interest and for wear-and-tear (depreciation) on those properties. Related companies are counted together toward the 50-home threshold.

“Single-family residential rental property” means homes with four or fewer units, including townhomes and rowhouses. It does not include properties that get the low‑income housing tax credit, or homes the owner built (or bought before anyone moved in).

There is a narrow break: in the year a property is sold to a person who will live there as their main home, or to a qualified affordable‑housing nonprofit, the seller can take the interest and depreciation deductions for that year. Qualified nonprofits include groups like community development corporations, community housing development organizations, land banks, resident‑owned co‑ops, community land trusts, and certain public‑housing affiliates.

Key points

• Who is affected: Taxpayers that own 50+ single‑family rentals (counting related entities together).
• What changes: No federal tax deduction for mortgage interest or depreciation on those rentals, except in the sale year if the buyer is an owner‑occupant or a qualified nonprofit.
• What counts as a “single‑family” rental: Homes with up to four units; excludes LIHTC properties and certain new builds.
• When it starts: The interest rule applies to debt taken on in tax years beginning after the law takes effect; the depreciation rule applies to property first placed in service in tax years beginning after the law takes effect.