I 111th CONGRESS 2d Session H. R. 5263 IN THE HOUSE OF REPRESENTATIVES May 11, 2010 Mr. Yarmuth introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to provide a 5 percent maximum rate of tax on gain from the sale or exchange of depreciable real property by individuals.

1.

Short title

This Act may be cited as the Real Estate Investment Incentive Act of 2010.

2.

5 percent maximum rate of tax on depreciable real property

(a)

Regular tax

(1)

In general

Subparagraph (C) of section 1(h)(1) of the Internal Revenue Code of 1986 is amended to read as follows: (C)with respect to the amount of adjusted net capital gain (or, if less, taxable income) in excess of the amount on which a tax is determined under subparagraph (B)— (i)5 percent of the lesser of such excess or the net depreciable 2010 real property gain, and (ii)15 percent of the remainder of such excess (if any);. (2)

Net depreciable 2010 real property gain

Subsection (h) of section 1 of such Code is amended by adding at the end the following new paragraphs: (12)

Net depreciable 2010 real property gain

For purposes of this subsection, the term net depreciable 2010 real property gain means the lesser of— (A)net capital gain determined by taking into account only gains and losses from the sale or exchange of depreciable real property first placed in service by the taxpayer after the date of the enactment of this paragraph and before January 1, 2011, or (B)net capital gain. For purposes of the preceding sentence, net capital gain shall be determined without regard to the amount of long-term capital gain (not otherwise treated as ordinary income) which would be treated as ordinary income if section 1250(b)(1) included all depreciation and the applicable percentage under section 1250(a) were 100 percent. (13)

Depreciable real property

For purposes of this subsection, the term depreciable real property means section 1250 property (as defined in section 1250(c)) other than residential rental property which is part of a building with fewer than 2 residential rental units.. (b)

Minimum tax

Subparagraph (C) of section 55(b)(3) of such Code is amended to read as follows: (C)with respect to the amount of adjusted net capital gain (or, if less, taxable excess) in excess of the amount on which a tax is determined under subparagraph (B)— (i)5 percent of the lesser of such excess or the net depreciable 2010 real property gain, and (ii)15 percent of the remainder of such excess (if any);. (c)

Effective date

The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act.