I 

111TH CONGRESS 

2D SESSION H. R. 5263 

To amend the Internal Revenue Code of 1986 to provide a 5 percent maximum rate of tax on gain from the sale or exchange of depreciable 

real property by individuals. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 11, 2010 

Mr. YARMUTH introduced the following bill; which was referred to the 

Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

a 5 percent maximum rate of tax on gain from the 

sale or exchange of depreciable real property by individuals. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Real Estate Invest5 ment Incentive Act of 2010’’. 

6 SEC. 2. 5 PERCENT MAXIMUM RATE OF TAX ON DEPRE7 CIABLE REAL PROPERTY. 

8 (a) REGULAR TAX.— 


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1 (1) IN GENERAL.—Subparagraph (C) of section 

2 1(h)(1) of the Internal Revenue Code of 1986 is 

3 amended to read as follows: 

4 ‘‘(C) with respect to the amount of ad5 justed net capital gain (or, if less, taxable in6 come) in excess of the amount on which a tax 

7 is determined under subparagraph (B)— 

8 ‘‘(i) 5 percent of the lesser of such ex9 cess or the net depreciable 2010 real prop10 erty gain, and 

11 ‘‘(ii) 15 percent of the remainder of 

12 such excess (if any);’’. 

13 (2) NET DEPRECIABLE 2010 REAL PROPERTY

14 GAIN.—Subsection (h) of section 1 of such Code is 

15 amended by adding at the end the following new 

16 paragraphs: 

17 ‘‘(12) NET DEPRECIABLE 2010 REAL PROPERTY

18 GAIN.—For purposes of this subsection, the term 

19 ‘net depreciable 2010 real property gain’ means the 

20 lesser of— 

21 ‘‘(A) net capital gain determined by taking 

22 into account only gains and losses from the sale 

23 or exchange of depreciable real property first 

24 placed in service by the taxpayer after the date 


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1 of the enactment of this paragraph and before 

2 January 1, 2011, or 

3 ‘‘(B) net capital gain. 

4 For purposes of the preceding sentence, net capital 

5 gain shall be determined without regard to the 

6 amount of long-term capital gain (not otherwise 

7 treated as ordinary income) which would be treated 

8 as ordinary income if section 1250(b)(1) included all 

9 depreciation and the applicable percentage under 

10 section 1250(a) were 100 percent. 

11 ‘‘(13) DEPRECIABLE REAL PROPERTY.—For 

12 purposes of this subsection, the term ‘depreciable 

13 real property’ means section 1250 property (as de14 fined in section 1250(c)) other than residential rent15 al property which is part of a building with fewer 

16 than 2 residential rental units.’’. 

17 (b) MINIMUM TAX.—Subparagraph (C) of section 

18 55(b)(3) of such Code is amended to read as follows: 

19 ‘‘(C) with respect to the amount of ad20 justed net capital gain (or, if less, taxable ex21 cess) in excess of the amount on which a tax is 

22 determined under subparagraph (B)— 

23 ‘‘(i) 5 percent of the lesser of such ex24 cess or the net depreciable 2010 real prop25 erty gain, and 


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1 ‘‘(ii) 15 percent of the remainder of 

2 such excess (if any);’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years ending after the 

5 date of the enactment of this Act. 

Æ 


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