S-4080-119
Read twice and referred to the Committee on Finance.
Sponsored by Lisa Blunt Rochester (D-DE)
What it does
This bill would amend the Internal Revenue Code to allow landlords who build new residential rental properties (with at least 2 units) to immediately deduct up to $150,000 per dwelling unit from their taxable income in the first year the property is placed in service, rather than spreading depreciation deductions over the standard 27.5-year period. The deduction cap would increase to $250,000 per unit for properties that meet affordable housing income requirements under Section 42 of the tax code. If a property stops being used as residential rental housing within 10 years (or 15 years for affordable housing), the tax benefit would be "recaptured" — meaning the landlord would owe back taxes on the accelerated deductions.
Who benefits
Real estate developers and investors who build new multi-unit residential rental properties, who would receive a significant upfront tax reduction. Landlords who qualify for the enhanced affordable housing deduction. Renters who may benefit if increased housing supply puts downward pressure on rents. Construction workers and building trades who may see increased demand for new residential construction. Investors in real estate partnerships and funds that develop rental housing. Low-income renters, if the affordable housing bonus incentivizes more income-restricted units.
Who is hurt
The federal government would collect less tax revenue in the near term, shifting costs to other taxpayers or increasing the deficit. Existing landlords who built properties before the bill's effective date would not qualify, potentially creating a competitive disadvantage. Homebuilders focused on for-sale housing may face increased competition for construction labor and materials. Renters in markets where new supply does not materialize may see no benefit. State and local governments that conform to federal tax rules could see reduced state tax revenues as well.
Supporters argue
Supporters argue that the United States faces a shortage of approximately 4–7 million housing units, according to estimates from Freddie Mac and the National Association of Realtors, and that the current 27.5-year depreciation schedule discourages new rental construction by delaying the tax benefits of investment. They contend that front-loading depreciation deductions lowers the effective cost of building new rental units, particularly affordable ones, and that the recapture provision ensures the tax benefit is tied to sustained rental use rather than short-term speculation.
Opponents argue
Opponents argue that accelerated depreciation primarily benefits wealthy real estate investors and large developers rather than renters directly, and that there is no guarantee new supply will be affordable or located where housing need is greatest. They contend that the revenue cost of the deduction — potentially billions of dollars annually — could instead fund direct housing assistance programs that more reliably reach low- and moderate-income households, and that similar supply-side tax incentives have historically produced uneven results across housing markets.
Constitutional context
This bill amends the Internal Revenue Code and falls squarely within Congress's taxing and spending power under Article I, Section 8. The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House; this bill was introduced in the Senate, which could raise a procedural challenge, though courts have generally held that tax-reduction measures are not "revenue bills" in the Origination Clause sense. No active constitutional tension area is implicated.
Checks and balances
Congress gains authority to shape private investment behavior through the tax code; the IRS (executive branch) would implement and enforce the deduction and recapture rules, with taxpayers subject to audit and courts available for disputes.
Historical precedent
The Tax Cuts and Jobs Act of 2017 expanded bonus depreciation to 100% for many business assets, and the Low-Income Housing Tax Credit (Section 42, enacted 1986) similarly uses tax incentives to encourage affordable rental housing construction.