Sponsors
The bill provides sizable, immediate tax deductions to spur rental and affordable-housing development and improve owners' cash flow, but it does so at the cost of reduced near-term federal revenue, added tax complexity, and risks of recapture and locked-in election choices for property owners.
Owners of qualifying rental properties (including small landlords and developers) can immediately deduct up to $150,000 per unit—or $250,000 for qualifying affordable-housing projects—reducing taxable income in the year the property is placed in service and improving cash flow.
Developers of affordable housing: the larger per-unit allowance ($250,000) improves project economics, making affordable rental projects more financially viable and increasing incentives to build affordable units.
Real-estate developers and builders: accelerated cost recovery encourages faster construction and may increase the supply of rental housing, which can relieve rental market pressures over time.
All taxpayers: the large immediate deductions reduce near-term federal tax receipts, potentially increasing budget deficits or reducing funding available for other government services and programs.
Owners of qualifying rental properties: if a property stops qualifying within 10 years (15 years for affordable projects), deduction recapture can trigger sudden taxable income and unexpected tax bills.
Owners and financial intermediaries: the election, certification, AMT interactions, and recapture mechanics add administrative complexity that raises compliance costs and increases IRS oversight burden.
Based on analysis of 4 sections of legislative text.
Creates a per-unit special depreciation allowance for qualifying long-term residential rental property (generally $150k/unit or $250k/unit for elected affordable projects) with recapture rules.
Introduced March 12, 2026 by Lisa Blunt Rochester · Last progress March 12, 2026
Creates a new tax incentive that lets owners of long-term residential rental buildings take a large, immediate depreciation deduction when the property is placed in service. The allowance is calculated per dwelling unit (generally $150,000 per unit, or $250,000 per unit for projects that elect a qualifying affordable-housing treatment), is limited to the building’s adjusted basis (excluding land), and is subject to 10- or 15-year recapture rules if the property stops qualifying. The provision changes the tax code to treat these rental buildings as subject to ordinary income recapture rules, requires the taxpayer to make a one-time election on the tax return, directs the Treasury to issue implementing regulations, and applies to property placed in service more than 12 months after enactment.