[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2224 Introduced in Senate (IS)]

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118th CONGRESS
  1st Session
                                S. 2224

    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

                             July 11, 2023

 Mr. Brown (for himself, Mr. Wyden, Mr. Reed, Ms. Smith, Mr. Merkley, 
 Mr. Fetterman, Ms. Warren, and Ms. Baldwin) 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.
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