This bill would add a new tax rule that gives a big, one-time depreciation deduction for certain newly placed residential rental properties. A taxpayer who elects the rule can deduct an amount equal to the lesser of (1) the total number of dwelling units in the property multiplied by $150,000 or (2) 100% of the property’s adjusted basis (not including land). The rule applies only to property placed in service in the United States after the date of enactment, and only for properties with at least 2 dwelling units whose original use begins with the taxpayer. The election must be made on the taxpayer’s return and generally cannot be revoked without permission from the Treasury Secretary. If the property stops being used as rental housing within 10 years, the taxpayer faces recapture treatment under section 1245. For projects that meet certain low-income housing requirements, the per-unit amount is $250,000 and the recapture period is 15 years. The bill also treats these properties as section 1245 property and says the deduction is allowed when computing alternative minimum taxable income without some usual adjustments. The Treasury Secretary must issue regulations to implement the rule. The rule would apply to property placed in service more than 12 months after enactment.
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