S.Amdt. 4322

SA 4322. Mr. WARNOCK (for himself, Ms. Baldwin, and Mr. Heinrich)
submitted an amendment intended to be proposed by him to the bill H.R.
6644, a bill to increase the supply of housing in America, and for
other purposes; which was ordered to lie on the table; as follows:

At the appropriate place, insert the following:

SEC. __. 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. __. 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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