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
an individual for use as a principal residence;
a non-profit organization that creates, develops, or preserves affordable housing;
certain community development organizations;
a land bank;
any resident-owned cooperative or community land trust; or
a public housing agency subsidiary.
