S. 838 — ACRE Act of 2025

This section establishes a new exclusion from gross income (under new IRC §139J) for interest received by qualified lenders—including FDIC-insured banks and savings associations, regulated insurance companies, certain U.S.-based entities owned by bank or insurance holding companies, and Farm Credit System institutions—on qualified real estate loans made after enactment. A qualified real estate loan is secured by rural or agricultural real estate (i.e., property used for agricultural products, fishing or seafood processing, aquaculture facilities, or forestland), a leasehold mortgage thereon, or a single-family principal residence in a rural area (i.e., outside cities or villages exceeding 2,500 population); is not made to a foreign adversary entity (e.g., entities from China, Cuba, Iran, North Korea, Russia, or Maduro-led Venezuela); and, for single-family residences, has principal not exceeding $750,000 with proceeds used for purchase or improvement (refinancings of pre-enactment loans are ineligible). (Thus, such loans are treated as tax-exempt obligations under IRC §265(a)(2).) This section also requires a Treasury Department report to specified congressional committees within five years analyzing the provision's impact, including effects on interest rates, and applies the exclusion to taxable years ending after enactment.