HOMES Act

Summary

Prohibits large owners of single-family rental homes from claiming interest and depreciation tax deductions. Taxpayers who directly or indirectly own 50 or more single-family residential rental properties would no longer be able to deduct interest paid on those properties or claim depreciation, with narrow exceptions when a property is sold to an individual for use as a primary residence or to certain qualified nonprofit organizations. The change defines which properties and owners are covered, sets aggregation rules to count related owners together, and directs the Treasury to write regulations to prevent avoidance. The interest rule applies to indebtedness incurred in taxable years beginning after enactment; the depreciation rule applies to property placed in service in taxable years beginning after enactment.

• Eliminates interest deductions for taxpayers owning 50+ single-family rental properties.
• Eliminates depreciation deductions for those same owners for qualifying single-family rental properties.
• Provides narrow exceptions when properties are sold to individuals for primary residence use or to defined nonprofit housing organizations.
• Defines covered properties as residential rentals of four or fewer units, with specific exclusions (e.g., low-income housing credit properties).
• Uses aggregation rules to count related owners together so ownership across entities can push a taxpayer over the 50-property threshold.
• Prevents capitalization or other tax treatment of the disallowed interest and forbids an election to capitalize it.
• Directs the Treasury to issue regulations to prevent avoidance and to implement the rules.
• Applies to indebtedness or property placed in service in taxable years beginning after enactment.