Rental Housing Investment Act
HB8996, titled the Rental Housing Investment Act, would amend the Internal Revenue Code to create a new bonus depreciation election for certain long-term residential rental housing. For qualifying property placed in service after the effective date, a taxpayer could deduct in the first year an amount equal to the lesser of the property’s adjusted basis (excluding land) or a per-unit cap multiplied by the number of dwelling units. The base cap is $150,000 per dwelling unit, and the bill raises that cap to $250,000 for projects that meet certain low-income housing tax credit-style affordability requirements.
The bill defines eligible property as newly placed-in-service U.S. residential rental property with at least two dwelling units, original use beginning with the taxpayer, and designated by election. It also provides that the accelerated deduction is allowed for alternative minimum tax purposes and includes recapture rules if the property stops being used as qualifying rental housing within 10 years, or 15 years for the affordable-housing category. The Treasury Secretary would be directed to issue regulations and guidance to administer the election, compliance, and recapture provisions.
If enacted, the bill would modify sections 168 and 1245 of the Internal Revenue Code to add a new class of depreciable property for bonus depreciation treatment and to treat long-term residential rental property as section 1245 property for recapture purposes. The practical effect would be to accelerate tax deductions for developers and owners of newly constructed or newly placed-in-service multifamily rental housing, reducing near-term federal tax liability and potentially improving project economics. Affordable housing projects meeting specified section 42(g)(1) criteria would receive a larger per-unit deduction cap and a longer recapture period.
No committee transcript or vote record is available, so there is no documented floor or committee debate to gauge broader sentiment. The bill’s bipartisan sponsorship by Ms. Sánchez, Ms. Tenney, Mr. Panetta, and Mr. LaHood suggests cross-party interest in encouraging rental housing investment. Based on the text alone, the measure appears designed as a pro-development tax incentive with an affordability component, which may appeal to housing advocates and real estate stakeholders.
The main policy tension is between using tax incentives to spur rental housing construction and the revenue cost of allowing accelerated depreciation. Supporters are likely to emphasize increased housing supply, especially multifamily and affordable units, while critics may question whether the benefit will translate into lower rents or simply subsidize investors and developers. Another point of potential contention is the complexity of the election, recapture, and compliance rules, including the need for Treasury regulations and the longer recapture period for affordable projects.