United States
August 22, 2023
PayProp Insights US

Senate targets institutional investors’ tax breaks on SFR

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A new bill in the Senate targets corporate investors by restricting tax deductions on single-family rentals.

If passed, the “Stop Predatory Investing Act” would prohibit investors who purchase 50 or more single-family rentals after the date of enactment from deducting interest or depreciation on those properties from their taxes.

There are exceptions: investors would still qualify for deductions on build-to-rent homes or properties financed through Low-Income Housing Tax Credits. If they sell a single-family rental to homeowners or a nonprofit, they could also still benefit from tax breaks for the year of the sale.

The thinking behind the "Stop Predatory Investing Act" is that institutional investors are driving up housing costs and increasing competition in an already tight housing market.

By placing limits on the tax advantages granted to large investors, the bill aims to discourage the mass acquisition of single-family properties, which would make more homes available for average Americans and level the playing field in the housing market.

If this new rule encourages landlords to sell, property management businesses could suffer.

The bill is still in the early stages of the legislative process, having just been introduced on July 11. Due to the government's current partisan divide, some predict the bill will fail to pass, but Senator Sherrod Brown, its primary sponsor, remains optimistic.

More investor headlines

Gov. Abbott signs off on property tax relief, sending $18 billion deal to voters for final say – Houston Chronicle

The typical US real estate investor – Zillow

Multifamily concessions are up while renewals fall – GlobeSt

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