II
119THCONGRESS
1
STSESSION S. 969
To amend the Internal Revenue Code of 1986 to deny interest and deprecia-
tion deductions for taxpayers owning 50 or more single family properties.
IN THE SENATE OF THE UNITED STATES
MARCH11 (legislative day, MARCH10), 2025
Mr. W
ARNOCK(for himself, Ms. SMITH, Mr. WYDEN, Ms. BALDWIN, Ms.
W
ARREN, Mr. GALLEGO, Mr. REED, Mr. SANDERS, Ms. KLOBUCHAR,
Mr. W
ELCH, Mr. BLUMENTHAL, and Mr. BOOKER) introduced the fol-
lowing bill; which was read twice and referred to the Committee on Fi-
nance
A BILL
To amend the Internal Revenue Code of 1986 to deny inter-
est and depreciation deductions for taxpayers owning
50 or more single family properties.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Stop Predatory Invest-4
ing Act’’. 5
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•S 969 IS
SEC. 2. DISALLOWANCE OF INTEREST DEDUCTION FOR DIS-1
QUALIFIED SINGLE FAMILY PROPERTY OWN-2
ERS. 3
(a) I
NGENERAL.—Section 163 of the Internal Rev-4
enue Code of 1986 is amended by redesignating subsection 5
(n) as subsection (o) and by inserting after subsection (m) 6
the following new subsection: 7
‘‘(n) I
NTERESTPAID BYCERTAINDISQUALIFIED 8
S
INGLEFAMILYPROPERTYOWNERS.— 9
‘‘(1) I
N GENERAL.—In the case of a disquali-10
fied single family property owner, no deduction shall 11
be allowed under this chapter for any interest paid 12
or accrued in connection with any single family resi-13
dential rental property owned (directly or indirectly) 14
by such disqualified single family property owner. 15
‘‘(2) E
XCEPTION.— 16
‘‘(A) I
N GENERAL.—Paragraph (1) shall 17
not apply with respect to interest paid or ac-18
crued in the taxable year in which such single 19
family residential rental property is sold. 20
‘‘(B) E
XCEPTION.—Subparagraph (A) 21
shall not apply unless the sale described in such 22
subparagraph is— 23
‘‘(i) a sale to an individual for use as 24
the principle residence of the individual 25
(within the meaning of section 121), or 26
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•S 969 IS
‘‘(ii) a sale to any qualified nonprofit 1
organization. 2
‘‘(C) Q
UALIFIED NONPROFIT ORGANIZA -3
TION.— 4
‘‘(i) I
N GENERAL.—For purposes of 5
this paragraph, the term ‘qualified non-6
profit organization’ means any organiza-7
tion which— 8
‘‘(I) is not organized for profit, 9
and 10
‘‘(II) has as a principal purpose 11
the creation, development, or preser-12
vation of affordable housing. 13
‘‘(ii) C
ERTAIN ORGANIZATIONS IN -14
CLUDED.—The term ‘qualified nonprofit 15
organization’ shall include— 16
‘‘(I) any community development 17
corporation (as defined in section 18
204(b) of the Department of Veterans 19
Affairs and Housing and Urban De-20
velopment, and Independent Agencies 21
Appropriations Act, 1997 (12 U.S.C. 22
1715z–11a(b)), 23
‘‘(II) any community housing de-24
velopment organization (as defined in 25
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•S 969 IS
section 104 of the Cranston-Gonzales 1
National Affordable Housing Act (42 2
U.S.C. 12704), 3
‘‘(III) any community-based de-4
velopment organization qualified 5
under section 570.204 of title 24, 6
Code of Federal Regulations, as in ef-7
fect on the date of the enactment of 8
this subsection, 9
‘‘(IV) any land bank, 10
‘‘(V) any resident-owned coopera-11
tive or community land trust, and 12
‘‘(VI) any subsidiary of a public 13
housing agency (as defined in section 14
3(b)(6) of the United States Housing 15
Act of 1937 (42 U.S.C. 1437a(b)(6)). 16
‘‘(iii) L
AND BANK.—For purposes of 17
this subparagraph, the term ‘land bank’ 18
means a government entity, agency, or pro-19
gram, or a special purpose nonprofit entity 20
formed by one or more units of govern-21
ment in accordance with State or local 22
land bank enabling law, that has been des-23
ignated by one or more State or local gov-24
ernments to acquire, steward, and dispose 25
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•S 969 IS
of vacant, abandoned, or other problem 1
properties in accordance with locally-deter-2
mined priorities and goals. 3
‘‘(iv) C
OMMUNITY LAND TRUST .—For 4
purposes of this subparagraph, the term 5
‘community land trust’ means a nonprofit 6
organization or State or local government 7
or instrumentality that— 8
‘‘(I) use a ground lease or deed 9
covenant with an affordability period 10
of at least 30 years or more to— 11
‘‘(aa) make rental and 12
homeownership units affordable 13
to households; and 14
‘‘(bb) stipulate a preemptive 15
option to purchase the affordable 16
rentals or homeownership units 17
so that the affordability of the 18
units is preserved for successive 19
income-eligible households; and 20
‘‘(II) monitors properties to en-21
sure affordability is preserved. 22
‘‘(3) D
ISQUALIFIED SINGLE FAMILY PROPERTY 23
OWNER.—For purposes of this subsection— 24
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•S 969 IS
‘‘(A) IN GENERAL.—The term ‘disqualified 1
single family property owner’ means, with re-2
spect to any taxable year, any taxpayer who 3
owns (directly or indirectly) 50 or more single 4
family residential rental properties. 5
‘‘(B) A
GGREGATION RULES .—All persons 6
treated as a single employer under subsection 7
(a) or (b) of section 52, or subsection (m) or 8
(o) of section 414, shall be treated as one tax-9
payer for purposes of this section. 10
‘‘(C) M
ODIFICATIONS.— 11
‘‘(i) I
N GENERAL.—For purposes of 12
applying subparagraph (B)— 13
‘‘(I) section 52(a) shall be ap-14
plied by substituting ‘component 15
members’ for ‘members’, and 16
‘‘(II) for purposes of applying 17
section 52(b), the term ‘trade or busi-18
ness’ shall include any activity treated 19
as a trade or business under para-20
graph (5) or (6) of section 469(c) (de-21
termined without regard to the phrase 22
‘To the extent provided in regulations’ 23
in such paragraph (6)). 24
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•S 969 IS
‘‘(ii) COMPONENT MEMBER .—For 1
purposes of this paragraph, the term ‘com-2
ponent member’ has the meaning given 3
such term by section 1563(b), except that 4
the determination shall be made without 5
regard to section 1563(b)(2). 6
‘‘(iii) N
O INFERENCE.—The modifica-7
tions made by clause (i) shall not be con-8
strued to create any inference with respect 9
to the proper application of section 52 with 10
respect to any other provision of this title. 11
‘‘(4) S
INGLE FAMILY RESIDENTIAL RENTAL 12
PROPERTY.—For purposes of this subsection— 13
‘‘(A) I
N GENERAL.—The term ‘single fam-14
ily residential rental property’ means— 15
‘‘(i) any residential rental property (as 16
defined in section 168(e)(2)(A)(i)) which 17
contains 4 or fewer dwelling units (as de-18
fined in section 168(e)(2)(A)(ii)(I)), and 19
‘‘(ii) improvements to real property 20
directly related to such dwelling units lo-21
cated on the site of such dwelling units. 22
For purposes of clause (i), each townhouse or 23
rowhouse shall be treated as a separate build-24
ing. 25
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‘‘(B) EXCEPTION FOR CERTAIN PROP -1
ERTIES.—Such term shall not include any resi-2
dential rental property (as so defined)— 3
‘‘(i) with respect to which a credit is 4
allowed under section 42 for such taxable 5
year or any property, or 6
‘‘(ii) which— 7
‘‘(I) was constructed by the tax-8
payer, or 9
‘‘(II) acquired by the taxpayer 10
after its construction but before the 11
first date on which any dwelling unit 12
in such property was occupied by a 13
resident. 14
‘‘(5) R
EGULATIONS.—The Secretary shall pre-15
scribe such regulations as may be necessary or ap-16
propriate to carry out the purposes of this sub-17
section, including regulations to prevent the avoid-18
ance of the purposes of this subsection.’’. 19
(b) A
PPLICATION TOCAPITALIZEDAMOUNTS.— 20
(1) I
N GENERAL.—Section 263A(f)(2) of the 21
Internal Revenue Code of 1986 is amended by add-22
ing at the end the following new subparagraph: 23
‘‘(D) E
XCEPTION FOR CERTAIN INTEREST 24
OF DISQUALIFIED SINGLE FAMILY PROPERTY 25
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•S 969 IS
OWNERS.—Subparagraph (A) shall not apply to 1
any interest for which a deduction would be dis-2
allowed under section 163(n).’’. 3
(2) C
ARRYING CHARGES.—Section 266 of such 4
Code is amended— 5
(A) by striking ‘‘No deduction’’ and insert-6
ing the following: 7
‘‘(a) I
NGENERAL.—No deduction’’, and 8
(B) by adding at the end the following new 9
subsection: 10
‘‘(b) S
PECIALRULE FORCERTAININTEREST OFDIS-11
QUALIFIEDSINGLEFAMILYPROPERTYOWNERS.—No 12
election may be made under this section to treat as 13
chargeable to capital account any interest for which a de-14
duction would be disallowed under section 163(n).’’. 15
(c) E
FFECTIVEDATE.—The amendments made by 16
this section shall apply to indebtedness incurred in taxable 17
years beginning after the date of the enactment of this 18
Act. 19
SEC. 3. DISALLOWANCE OF DEPRECIATION IN CONNEC-20
TION WITH PROPERTY USED BY DISQUALI-21
FIED SINGLE FAMILY PROPERTY OWNERS. 22
(a) I
NGENERAL.—Section 167 of the Internal Rev-23
enue Code of 1986 is amended by redesignating subsection 24
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•S 969 IS
(i) as subsection (j) and by inserting after subsection (h) 1
the following new subsection: 2
‘‘(i) D
EDUCTIONDISALLOWED FOR DISQUALIFIED 3
S
INGLEFAMILYPROPERTYOWNERS.— 4
‘‘(1) I
N GENERAL.—In the case of a disquali-5
fied single family property owner, no deduction shall 6
be allowed under this section for any single family 7
residential rental property owned by such disquali-8
fied single family property owner. 9
‘‘(2) E
XCEPTION.— 10
‘‘(A) I
N GENERAL.—Paragraph (1) shall 11
not apply with respect to depreciation deduction 12
which is allowable— 13
‘‘(i) in connection with a single family 14
residential rental property, and 15
‘‘(ii) in the taxable year in which such 16
single family residential rental property is 17
sold. 18
‘‘(B) E
XCEPTION.—Subparagraph (A) 19
shall not apply unless the sale described in 20
clause (ii) thereof is— 21
‘‘(i) a sale to an individual for use as 22
the principle residence of the individual 23
(within the meaning of section 121), or 24
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‘‘(ii) a sale to any qualified nonprofit 1
organization (as defined in section 2
163(n)(2)(C)). 3
‘‘(3) D
EFINITIONS.—For purposes of this sub-4
section, the terms ‘disqualified single family property 5
owner’ and ‘single family residential rental property’ 6
have the respective meanings given such terms under 7
section 163(n). 8
‘‘(4) R
EGULATIONS.—The Secretary shall pre-9
scribe such regulations as may be necessary or ap-10
propriate to carry out the purposes of this sub-11
section, including regulations to prevent the avoid-12
ance of the purposes of this subsection.’’. 13
(b) E
FFECTIVEDATE.—The amendments made by 14
this section shall apply to property placed in service in 15
taxable years beginning after the date of the enactment 16
of this Act. 17
Æ
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