Sponsor
Lisa Blunt Rochester
Senator · D-DE
Senator · D-DE
The bill gives rental-property owners substantial up-front tax relief (and extra incentives for low-income housing) in exchange for longer-term constraints and risks: possible recapture, smaller future depreciation benefits, reduced federal revenue, and limited taxpayer flexibility.
Owners of long-term residential rental properties (including small landlords and developers) can immediately deduct up to $150,000 per dwelling unit (or $250,000 per unit for qualifying low-income projects) in the first year, lowering current taxable income and increasing near-term cash flow.
Owners and developers of qualifying low-income housing can elect the higher $250,000 per-unit allowance, strengthening financial incentives to build or preserve affordable rental units.
Taxpayers claiming the allowance get simpler tax treatment for Alternative Minimum Tax (AMT) purposes (no section 56 adjustments), reducing AMT exposure and administrative complexity for affected owners.
Federal taxpayers broadly may face reduced federal revenue because the bill accelerates deductions, which could increase the budget deficit or require offsetting revenue increases or spending cuts.
Owners who stop meeting the qualification rules within 10 years (15 years for low-income projects) face recapture that treats at least the allowance amount as taxable gain, creating a significant backward-looking tax bill for those owners.
Claiming large immediate allowances reduces the property's future depreciation basis, which lowers future depreciation deductions and can increase taxable income upon disposition of the property.
Based on analysis of 4 sections of legislative text.
Creates an elective per-unit first-year bonus depreciation for qualifying long-term residential rental property with higher caps for qualifying low-income projects.
Official title: Amend the Internal Revenue Code of 1986 to provide bonus depreciation for long-term residential rental housing.
Introduced March 12, 2026 by Lisa Blunt Rochester · Last progress March 12, 2026
Creates a new first-year bonus depreciation allowance for qualifying long-term residential rental property, letting owners immediately deduct up to a per-unit cap of a portion of a building’s basis (generally $150,000 per dwelling unit, or $250,000 per unit for qualifying low-income projects) subject to limits and recapture rules. The allowance applies to regular tax and AMT, requires an election on the tax return, treats the property as Section 1245 property, and triggers recapture if the property stops being rental within 10 years (15 years for low-income projects). The rule applies to property placed in service more than 12 months after enactment and the Secretary must issue implementing regulations.