S. 969 — Stop Predatory Investing Act

This section disallows the deduction under IRC §163 for interest paid or accrued by a disqualified single family property owner in connection with any single family residential rental property owned directly or indirectly by such owner. A disqualified single family property owner is any taxpayer owning 50 or more such properties in a taxable year (with aggregation rules treating related persons or entities as a single taxpayer under modified IRC §§52 and 414 rules); single family residential rental property means residential rental property (as defined in IRC §168(e)(2)(A)) containing four or fewer dwelling units (treating each townhouse or rowhouse as a separate building), excluding low-income housing tax credit properties (IRC §42) and certain properties constructed or first occupied after taxpayer acquisition. The disallowance does not apply to interest in the taxable year the property is sold to (1) an individual for use as their principal residence (within the meaning of IRC §121) or (2) a qualified nonprofit organization with a principal purpose of creating, developing, or preserving affordable housing (i.e., community development corporations, community housing development organizations, certain community-based development organizations, land banks, resident-owned cooperatives or community land trusts, or public housing agency subsidiaries). This section also amends IRC §263A(f)(2) to [text cuts off in provided provision].

This section disallows the depreciation deduction under §167 of the Internal Revenue Code for single family residential rental property owned by a disqualified single family property owner (terms as defined in new §163(n)). An exception applies for any such deduction allowable in the taxable year the property is sold to an individual for use as a principal residence (within the meaning of §121) or to a qualified nonprofit organization (as defined in §163(n)(2)(C)). The provision applies to property placed in service in taxable years beginning after enactment.