I 
119TH CONGRESS 
1ST SESSION H. R. 4352 
To amend the Internal Revenue Code of 1986 to deny interest and deprecia-
tion deductions for taxpayers owning 50 or more single family properties. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 10, 2025 
Mrs. SYKES (for herself and Ms. LEE of Pennsylvania) 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 deny inter-
est and depreciation deductions for taxpayers owning 
50 or more single family properties. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Houses Over Middle- 
Class Exploitation Schemes Act’’ or the ‘‘HOMES Act’’. 
SEC. 2. DISALLOWANCE OF INTEREST DEDUCTION FOR DIS-
QUALIFIED SINGLE FAMILY PROPERTY OWN-
ERS. 
(a) IN GENERAL.—Section 163 of the Internal Rev-
enue Code of 1986 is amended by redesignating subsection 
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(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 disquali-
fied single family property owner, no deduction shall 
be allowed under this chapter for any interest paid 
or accrued in connection with any single family resi-
dential 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 ac-
crued 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
ORGANIZA-
TION.— 
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‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘qualified non-
profit organization’ means any organiza-
tion which— 
‘‘(I) is not organized for profit, 
and 
‘‘(II) has as a principal purpose 
the creation, development, or preser-
vation of affordable housing. 
‘‘(ii) CERTAIN
ORGANIZATIONS
IN-
CLUDED.—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 De-
velopment, and Independent Agencies 
Appropriations Act, 1997 (12 U.S.C. 
1715z–11a(b))), 
‘‘(II) any community housing de-
velopment organization (as defined in 
section 104 of the Cranston-Gonzales 
National Affordable Housing Act (42 
U.S.C. 12704)), 
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‘‘(III) any community-based de-
velopment 
organization 
qualified 
under section 570.204 of title 24, 
Code of Federal Regulations, as in ef-
fect on the date of the enactment of 
this subsection, 
‘‘(IV) any land bank, 
‘‘(V) any resident-owned coopera-
tive 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 pro-
gram, or a special purpose nonprofit entity 
formed by one or more units of govern-
ment in accordance with State or local 
land bank enabling law, that has been des-
ignated by one or more State or local gov-
ernments to acquire, steward, and dispose 
of vacant, abandoned, or other problem 
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properties in accordance with locally-deter-
mined 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 en-
sure 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 re-
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spect 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 tax-
payer for purposes of this section. 
‘‘(C) MODIFICATIONS.— 
‘‘(i) IN
GENERAL.—For purposes of 
applying subparagraph (B)— 
‘‘(I) section 52(a) shall be ap-
plied 
by 
substituting 
‘component 
members’ for ‘members’, and 
‘‘(II) for purposes of applying 
section 52(b), the term ‘trade or busi-
ness’ shall include any activity treated 
as a trade or business under para-
graph (5) or (6) of section 469(c) (de-
termined 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 ‘com-
ponent member’ has the meaning given 
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such term by section 1563(b), except that 
the determination shall be made without 
regard to section 1563(b)(2). 
‘‘(iii) NO INFERENCE.—The modifica-
tions made by clause (i) shall not be con-
strued 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 fam-
ily 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 de-
fined in section 168(e)(2)(A)(ii)(I)), and 
‘‘(ii) improvements to real property 
directly related to such dwelling units lo-
cated on the site of such dwelling units. 
For purposes of clause (i), each townhouse or 
rowhouse shall be treated as a separate build-
ing. 
‘‘(B) EXCEPTION
FOR
CERTAIN
PROP-
ERTIES.—Such term shall not include any resi-
dential rental property (as so defined)— 
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‘‘(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 tax-
payer, 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 pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations to prevent the avoid-
ance 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 add-
ing 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 dis-
allowed under section 163(n).’’. 
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(2) CARRYING CHARGES.—Section 266 of such 
Code is amended— 
(A) by striking ‘‘No deduction’’ and insert-
ing 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 DIS-
QUALIFIED SINGLE FAMILY PROPERTY OWNERS.—No 
election may be made under this section to treat as 
chargeable to capital account any interest for which a de-
duction 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. 3. DISALLOWANCE OF DEPRECIATION IN CONNEC-
TION WITH PROPERTY USED BY DISQUALI-
FIED SINGLE FAMILY PROPERTY OWNERS. 
(a) IN GENERAL.—Section 167 of the Internal Rev-
enue 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.— 
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‘‘(1) IN GENERAL.—In the case of a disquali-
fied single family property owner, no deduction shall 
be allowed under this section for any single family 
residential rental property owned by such disquali-
fied 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 sub-
section, the terms ‘disqualified single family property 
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owner’ and ‘single family residential rental property’ 
have the respective meanings given such terms under 
section 163(n). 
‘‘(4) REGULATIONS.—The Secretary shall pre-
scribe such regulations as may be necessary or ap-
propriate to carry out the purposes of this sub-
section, including regulations to prevent the avoid-
ance 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. 
Æ 
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