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HR 8996

Rental Housing Investment Act

119th Congress Introduced by Darin LaHood and 4 co-sponsors

The bill offers an upfront depreciation allowance for new long-term residential rental property, capped per unit, with higher caps for affordable housing projects.

Introduced in House
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WeVote Research Nonpartisan
Bill Summary · HR 8996

Overview

  • Bill: HR 8996, the Rental Housing Investment Act
  • Purpose: Amend the Internal Revenue Code to provide a bonus depreciation-style deduction for long-term residential rental property placed in service after enactment.
  • Introduced: May 21, 2026 (House), by Ms. Sanchez, with several co-sponsors
  • Status: Referred to the House Committee on Ways and Means

Main purpose and intent

  • Create a new special depreciation allowance specifically for long-term residential rental property.
  • Allow qualifying property to receive an upfront depreciation deduction in the year the property is placed in service, with the deduction limited by an annual cap and adjusted basis rules.
  • Expand treatment of long-term residential rental property for depreciation and related tax calculations, with an emphasis on encouraging investment in multi-unit housing.

Key provisions and changes

  1. Special depreciation allowance for long-term residential rental property

    • New subsection (o) added to Section 168.
    • In the year the property is placed in service, the depreciation deduction under Section 167(a) would include an allowance equal to the lesser of:
      • (i) The product of: (A) the total number of dwelling units in the property and (B) $150,000; or
      • (ii) 100% of the adjusted basis of the property (excluding land).
    • The adjusted basis of the property would be reduced by the amount of this deduction for that year and for the following year(s).

  2. Definition of long-term residential rental property

    • Property must meet the following criteria:
      • Placed in service after enactment.
      • Used as residential rental property (as defined in the Internal Revenue Code).
      • Has at least 2 dwelling units.
      • The original use commences with the taxpayer.
      • Designated by the taxpayer in the election made under this subsection.

  3. Tax computations and related mechanics

    • The Section 167 deduction for such property (for purposes of alternative minimum tax under Section 55) would be determined under the new subsection (o) without regard to Section 56 adjustments.
    • Recapture provisions: If the property ceases to meet the specified use within a 10-year period, the tax treatment would adjust as if the property were disposed of at the time it ceases to meet the use, with corresponding adjustments to basis and depreciation.

  4. Additional affordable housing incentive

    • If the property is part of a project meeting certain requirements under Section 42(g)(1) (low-income housing credit program), the deduction limit in paragraph (1)(A)(i)(II) increases from $150,000 to $250,000.
    • In such cases, the extended recapture period lasts 15 years (instead of 10 years) for purposes of applying the recapture rules.

  5. Election mechanics

    • An election under this new subsection must specify the qualifying property and be filed with the taxpayer’s return for the year in which the property is placed in service (subject to Secretary’s regulations).
    • The election, once made, generally cannot be revoked without the Secretary’s consent, except in extraordinary circumstances.

  6. Regulatory guidance

    • The Secretary would issue regulations or guidance to implement the new provisions, including coordination with Section 42(g) and certification of compliance.

  7. Effective date

    • The amendments apply to property placed in service after the date that is 12 months after enactment.

Who and what would be affected

  • Taxpayers who acquire and place in service long-term residential rental properties (2 or more units) after the act’s effective date.
  • Property types covered: multi-unit residential rental properties meeting the specified criteria.
  • Projects eligible for the expanded incentive: projects that qualify under the low-income housing credit framework (Section 42(g)(1)) may receive a higher deduction cap ($250,000) and a longer recapture period (15 years).
  • Tax calculation implications: changes affect depreciation deductions, basis adjustments, recapture rules, and minimum tax calculations under AMT.

Procedural and timing aspects

  • Effective date: 12 months after enactment.
  • Election mechanics: must be made on the tax return for the year the property is placed in service; consent required for revocation.
  • Regulatory authority: Secretary to issue implementing regulations and guidance.
  • Recapture and minim tax considerations: integrated into the new subsections and existing depreciation and AMT rules.

Practical impact and considerations

  • The bill creates an upfront depreciation incentive intended to boost investment in long-term residential rental housing.
  • The incentive is capped by a per-unit cap ($150,000 per unit) or 100% of adjusted basis, whichever is smaller, with a higher cap of $250,000 per unit for projects meeting affordable housing criteria.
  • Recapture and extended recapture provisions provide a period-based safeguard if the property’s use changes.
  • Real-world effects depend on taxpayer elections, project financing, and adherence to the affordable housing criteria.

Compiled from official sources — confirm details with the bill’s official record.

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