Stop Predatory Investing Act
This bill prohibits a taxpayer who owns (directly or indirectly) 50 or more single-family residential rental properties (disqualified single-family property owner) from claiming a federal tax deduction for interest paid (or accrued) in connection with such properties or a federal tax deduction for depreciation in connection with such properties.
The bill generally defines a single-family residential rental property as any residential rental property containing four or fewer dwelling units and improvements to real property related to such dwelling units.
However, under the bill, a disqualified single-family property owner may still claim a tax deduction for interest and depreciation on (1) single-family residential rental property for which the low-income housing tax credit (LIHTC) may be claimed and (2) certain newly constructed single-family residential rental properties. (The LIHTC program awards tax credits for newly-constructed or substantially rehabilitated low-income housing.)
The bill also allows a disqualified single-family property owner to claim a federal tax deduction for interest or depreciation in connection with a single-family residential rental property in the year such property is sold if it is sold to
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 969 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 969
To amend the Internal Revenue Code of 1986 to deny interest and
depreciation deductions for taxpayers owning 50 or more single family
properties.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 11 (legislative day, March 10), 2025
Mr. Warnock (for himself, Ms. Smith, Mr. Wyden, Ms. Baldwin, Ms.
Warren, Mr. Gallego, Mr. Reed, Mr. Sanders, Ms. Klobuchar, Mr. Welch,
Mr. Blumenthal, and Mr. Booker) introduced the following bill; which
was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to deny interest and
depreciation deductions for taxpayers owning 50 or more single family
properties.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Stop Predatory Investing Act''.
SEC. 2. DISALLOWANCE OF INTEREST DEDUCTION FOR DISQUALIFIED SINGLE
FAMILY PROPERTY OWNERS.
(a) In General.--Section 163 of the Internal Revenue Code of 1986
is amended by redesignating subsection (n) as subsection (o) and by
inserting after subsection (m) the following new subsection:
``(n) Interest Paid by Certain Disqualified Single Family Property
Owners.--
``(1) In general.--In the case of a disqualified single
family property owner, no deduction shall be allowed under this
chapter for any interest paid or accrued in connection with any
single family residential rental property owned (directly or
indirectly) by such disqualified single family property owner.
``(2) Exception.--
``(A) In general.--Paragraph (1) shall not apply
with respect to interest paid or accrued in the taxable
year in which such single family residential rental
property is sold.
``(B) Exception.--Subparagraph (A) shall not apply
unless the sale described in such subparagraph is--
``(i) a sale to an individual for use as
the principle residence of the individual
(within the meaning of section 121), or
``(ii) a sale to any qualified nonprofit
organization.
``(C) Qualified nonprofit organization.--
``(i) In general.--For purposes of this
paragraph, the term `qualified nonprofit
organization' means any organization which--
``(I) is not organized for profit,
and
``(II) has as a principal purpose
the creation, development, or
preservation of affordable housing.
``(ii) Certain organizations included.--The
term `qualified nonprofit organization' shall
include--
``(I) any community development
corporation (as defined in section
204(b) of the Department of Veterans
Affairs and Housing and Urban
Development, and Independent Agencies
Appropriations Act, 1997 (12 U.S.C.
1715z-11a(b)),
``(II) any community housing
development organization (as defined in
section 104 of the Cranston-Gonzales
National Affordable Housing Act (42
U.S.C. 12704),
``(III) any community-based
development organization qualified
under section 570.204 of title 24, Code
of Federal Regulations, as in effect on
the date of the enactment of this
subsection,
``(IV) any land bank,
``(V) any resident-owned
cooperative or community land trust,
and
``(VI) any subsidiary of a public
housing agency (as defined in section
3(b)(6) of the United States Housing
Act of 1937 (42 U.S.C. 1437a(b)(6)).
``(iii) Land bank.--For purposes of this
subparagraph, the term `land bank' means a
government entity, agency, or program, or a
special purpose nonprofit entity formed by one
or more units of government in accordance with
State or local land bank enabling law, that has
been designated by one or more State or local
governments to acquire, steward, and dispose of
vacant, abandoned, or other problem properties
in accordance with locally-determined
priorities and goals.
``(iv) Community land trust.--For purposes
of this subparagraph, the term `community land
trust' means a nonprofit organization or State
or local government or instrumentality that--
``(I) use a ground lease or deed
covenant with an affordability period
of at least 30 years or more to--
``(aa) make rental and
homeownership units affordable
to households; and
``(bb) stipulate a
preemptive option to purchase
the affordable rentals or
homeownership units so that the
affordability of the units is
preserved for successive
income-eligible households; and
``(II) monitors properties to
ensure affordability is preserved.
``(3) Disqualified single family property owner.--For
purposes of this subsection--
``(A) In general.--The term `disqualified single
family property owner' means, with respect to any
taxable year, any taxpayer who owns (directly or
indirectly) 50 or more single family residential rental
properties.
``(B) Aggregation rules.--All persons treated as a
single employer under subsection (a) or (b) of section
52, or subsection (m) or (o) of section 414, shall be
treated as one taxpayer for purposes of this section.
``(C) Modifications.--
``(i) In general.--For purposes of applying
subparagraph (B)--
``(I) section 52(a) shall be
applied by substituting `component
members' for `members', and
``(II) for purposes of applying
section 52(b), the term `trade or
business' shall include any activity
treated as a trade or business under
paragraph (5) or (6) of section 469(c)
(determined without regard to the
phrase `To the extent provided in
regulations' in such paragraph (6)).
``(ii) Component member.--For purposes of
this paragraph, the term `component member' has
the meaning given such term by section 1563(b),
except that the determination shall be made
without regard to section 1563(b)(2).
``(iii) No inference.--The modifications
made by clause (i) shall not be construed to
create any inference with respect to the proper
application of section 52 with respect to any
other provision of this title.
``(4) Single family residential rental property.--For
purposes of this subsection--
``(A) In general.--The term `single family
residential rental property' means--
``(i) any residential rental property (as
defined in section 168(e)(2)(A)(i)) which
contains 4 or fewer dwelling units (as defined
in section 168(e)(2)(A)(ii)(I)), and
``(ii) improvements to real property
directly related to such dwelling units located
on the site of such dwelling units.
For purposes of clause (i), each townhouse or rowhouse
shall be treated as a separate building.
``(B) Exception for certain properties.--Such term
shall not include any residential rental property (as
so defined)--
``(i) with respect to which a credit is
allowed under section 42 for such taxable year
or any property, or
``(ii) which--
``(I) was constructed by the
taxpayer, or
``(II) acquired by the taxpayer
after its construction but before the
first date on which any dwelling unit
in such property was occupied by a
resident.
``(5) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection, including regulations to prevent
the avoidance of the purposes of this subsection.''.
(b) Application to Capitalized Amounts.--
(1) In general.--Section 263A(f)(2) of the Internal Revenue
Code of 1986 is amended by adding at the end the following new
subparagraph:
``(D) Exception for certain interest of
disqualified single family property owners.--
Subparagraph (A) shall not apply to any interest for
which a deduction would be disallowed under section
163(n).''.
(2) Carrying charges.--Section 266 of such Code is
amended--
(A) by striking ``No deduction'' and inserting the
following:
``(a) In General.--No deduction'', and
(B) by adding at the end the following new
subsection:
``(b) Special Rule for Certain Interest of Disqualified Single
Family Property Owners.--No election may be made under this section to
treat as chargeable to capital account any interest for which a
deduction would be disallowed under section 163(n).''.
(c) Effective Date.--The amendments made by this section shall
apply to indebtedness incurred in taxable years beginning after the
date of the enactment of this Act.
SEC. 3. DISALLOWANCE OF DEPRECIATION IN CONNECTION WITH PROPERTY USED
BY DISQUALIFIED SINGLE FAMILY PROPERTY OWNERS.
(a) In General.--Section 167 of the Internal Revenue Code of 1986
is amended by redesignating subsection (i) as subsection (j) and by
inserting after subsection (h) the following new subsection:
``(i) Deduction Disallowed for Disqualified Single Family Property
Owners.--
``(1) In general.--In the case of a disqualified single
family property owner, no deduction shall be allowed under this
section for any single family residential rental property owned
by such disqualified single family property owner.
``(2) Exception.--
``(A) In general.--Paragraph (1) shall not apply
with respect to depreciation deduction which is
allowable--
``(i) in connection with a single family
residential rental property, and
``(ii) in the taxable year in which such
single family residential rental property is
sold.
``(B) Exception.--Subparagraph (A) shall not apply
unless the sale described in clause (ii) thereof is--
``(i) a sale to an individual for use as
the principle residence of the individual
(within the meaning of section 121), or
``(ii) a sale to any qualified nonprofit
organization (as defined in section
163(n)(2)(C)).
``(3) Definitions.--For purposes of this subsection, the
terms `disqualified single family property owner' and `single
family residential rental property' have the respective
meanings given such terms under section 163(n).
``(4) Regulations.--The Secretary shall prescribe such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection, including regulations to prevent
the avoidance of the purposes of this subsection.''.
(b) Effective Date.--The amendments made by this section shall
apply to property placed in service in taxable years beginning after
the date of the enactment of this Act.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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