Sponsors (13)
The bill aims to curb perceived tax-avoidance in large or aggregated single-family rental ownership while protecting sales to owner-occupiers and nonprofits, trading broader reductions in rental tax benefits and increased compliance burdens for potential gains in tax fairness and targeted affordability preservation.
Owners who sell covered single-family rental properties to individuals who will use them as their principal residence can claim interest and depreciation in the year of sale, making conversions to owner-occupied homes more financially feasible.
Qualified nonprofit organizations that acquire covered single-family rentals remain eligible to claim interest and depreciation in the year of sale, supporting nonprofit acquisitions that serve affordable-housing goals.
Properties receiving low-income housing tax credits are exempted from the new rule, preserving an existing incentive structure for developing and maintaining affordable rental housing.
Renters and low-income households face higher housing costs and fewer rental options because reduced deductions and disincentives for small-scale owners may lead to higher rents, reduced maintenance, and a contraction in single-family rental supply.
Owners of 50 or more single-family rental properties (and others captured by the aggregation rules) will lose interest and/or depreciation deductions, increasing taxable income and tax liabilities for many landlords.
Owners, prospective buyers, and nonprofits will face increased compliance and administrative costs because of new definitions, cross-references to section 163(n), and forthcoming Treasury/IRS rulemaking and reporting requirements.
Based on analysis of 3 sections of legislative text.
Disallows interest and depreciation deductions for taxpayers owning 50+ single-family rental homes, with narrow sale-year exceptions for individual buyers and qualified nonprofits.
Disallows two major tax breaks — interest expense deductions and depreciation — for taxpayers who directly or indirectly own 50 or more single-family residential rental properties. Owners meeting that threshold can only claim those deductions in the year a covered property is sold if the buyer is an individual who will use it as their principal residence or a defined qualified nonprofit organization. The law defines which properties count, which nonprofit buyers qualify, and how related entities are aggregated for the 50-property test. It also prevents taxpayers from capitalizing the disallowed interest and directs Treasury to issue anti-avoidance regulations. The changes apply to taxable years and properties beginning after enactment as specified for interest and depreciation rules.
Introduced March 11, 2025 by Raphael Gamaliel Warnock · Last progress March 11, 2025