S. 3904

119 S3904 IS: American Homeownership Act
 U.S. Senate
 2026-02-24
 text/xml
 EN
 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  2d Session  S. 3904  IN THE SENATE OF THE UNITED STATES   February 24, 2026   Ms. Warren  (for herself,  Mr. Merkley ,  Ms. Klobuchar ,  Ms. Smith ,  Mr. Blumenthal ,  Ms. Duckworth ,  Mr. Durbin ,  Mr. Heinrich ,  Ms. Hirono ,  Mr. Kaine ,  Mr. Kim ,  Mr. Markey ,  Mr. Murphy ,  Mr. Schatz ,  Mr. Sanders ,  Mr. Schiff ,  Mr. Van Hollen ,  Mr. Welch , and  Mr. Booker ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to deny interest and depreciation deductions for certain taxpayers, and for other purposes.
1.
Short title
This Act may be cited as the   American Homeownership Act  .
2.
Disallowance of deduction for interest paid on real property owned by certain real property owners
(a)
In general
 Section 163  of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:
(n)
Interest paid on residential rental property owned by certain real property owners
(1)
In general
No deduction shall be allowed under this chapter for any interest paid or accrued in connection with—
(A)
any applicable residential property in which an institutional investment entity (directly or indirectly) holds a majority interest, or
(B)
single-family residential property in which a large owner (directly or indirectly) holds a majority interest.
(2)
Exception for sales to individuals or qualified nonprofit organizations
(A)
In general
Paragraph (1) shall not apply with respect to interest paid or accrued in the taxable year in which applicable residential 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 organization
(i)
In general
For purposes of this paragraph, the term  qualified nonprofit organization  means any organization which—
(I)
is not organized for profit, and
(II)
has as a principal purpose the creation, development, or preservation of affordable housing.
(ii)
Certain organizations included
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 Development, and Independent Agencies Appropriations Act, 1997 (12 U.S.C. 1715z–11a(b))),
(II)
any community housing development organization (as defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act ( 42 U.S.C. 12704 )),
(III)
any community-based development organization qualified under section 570.204 of title 24, Code of Federal Regulations, as in effect on the date of the enactment of this subsection,
(IV)
any land bank,
(V)
any resident-owned cooperative 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 program, or a special purpose nonprofit entity formed by one or more units of government in accordance with State or local land bank enabling law, that has been designated by one or more State or local governments to acquire, steward, and dispose of vacant, abandoned, or other problem properties in accordance with locally determined priorities and goals.
(iv)
Community land trust
For purposes of this subparagraph, the term  community land trust  means a nonprofit entity, a State, a unit of local government, or an instrumentality of a State or unit of local government that—
(I)
is not managed by, or an affiliate of, a for-profit organization,
(II)
has as a primary purpose of acquiring, developing, or holding land to provide housing that is permanently affordable to low- and moderate-income persons,
(III)
monitors properties to ensure affordability is preserved,
(IV)
provides housing that is permanently affordable to low- and moderate-income persons using a ground lease, deed covenant, or other similar legally enforceable measure, determined acceptable by the Secretary, that—
(aa)
keeps housing affordable to low- and moderate-income persons for not less than 30 years, and
(bb)
enables low- and moderate-income persons to rent or purchase the housing for homeownership, and
(V)
maintains preemptive purchase options to purchase the property if such purchase would allow the housing to remain affordable to low- and moderate-income persons.
(3)
Exception for new single-family housing
(A)
In general
In the case of a single-family residential property the original use of which begins with an eligible taxpayer after December 31, 2023, paragraph (1) shall not apply to interest paid or accrued by such eligible taxpayer with respect to such property in any taxable year during the 5-taxable-year period beginning with the taxable year in which property is placed in service.
(B)
Eligible taxpayer
For purposes of this paragraph, the term  eligible taxpayer  means the person who constructed the single-family residential property.
(4)
Exception for new multi-family housing
(A)
In general
Paragraph (1) shall not apply to any multi-family residential property the original use of which begins with an eligible taxpayer after December 31, 2023.
(B)
Eligible taxpayer
For purposes of this paragraph, the term  eligible taxpayer  means the person who constructed the multi-family residential property.
(C)
Multi-family residential property
For purposes of this paragraph, the term  multi-family residential property  means any applicable residential property which has 5 or more dwelling units (as defined in section 168(e)(2)(A)(ii)(I)).
(5)
Exception to preserve uninhabitable housing
(A)
In general
In the case of any interest paid or accrued with respect to debt which is incurred for the primary purpose of substantially rehabilitating previously uninhabitable applicable residential property, paragraph (1) shall not apply to interest paid or accrued in any taxable year during the 5-taxable-year period beginning with taxable year in which such debt is originally paid or accrued.
(B)
Uninhabitable
For purposes of this paragraph, the term  uninhabitable  means, with respect to applicable residential property, property that is not fit for human occupancy, contains serious defects posing risks to health or safety, or does not meet structural or core system elements of local building codes.
(C)
Substantial rehabilitation
For purposes of this paragraph, the term  substantial rehabilitation  means, with respect to applicable residential property, structural repairs or rebuilding, with the cost of rehabilitation generally being a significant portion of the property’s value after the work is completed.
(6)
Exception for affordable housing
Paragraph (1) shall not apply to any interest paid or accrued with respect to any property—
(A)
which is Federally assisted housing (as defined in section 579 of the Quality Housing and Work Responsibility Act of 1998), or
(B)
(i)
which—
(I)
has received an allocation of housing credit dollar amount under section 42(h) for such taxable year or any prior taxable year, or
(II)
is a building described in section 42(h)(4)(B), and
(ii)
for which an extended low-income housing commitment described in section 42(h)(6) is in effect as of the end of the taxable year.
(7)
Definitions
For purposes of this subsection—
(A)
Institutional investment entity
The term  Institutional investment entity  means—
(i)
any issuer that is exempt from registration under section 3(c) of the Investment Company Act of 1940, or
(ii)
any other investment vehicle that pools funds exclusively from accredited investors as defined in section 230.501 of title 17, Code of Federal Regulations (or any successor regulation).
(B)
Large owner
(i)
In general
For purposes of this subsection, the term  large owner  means any person who (directly or indirectly) holds a majority interest in single-family residential rental properties which in the aggregate contain 50 or more dwelling units.
(ii)
Aggregation rules
For purposes of this subparagraph, 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 taxpayer for purposes of this section.
(iii)
Modifications
(I)
In general
For purposes of applying clause (ii)—
(aa)
section 52(a) shall be applied by substituting  component members  for  members , and
(bb)
for purposes of applying section 52(b), the term  trade or business  shall include any activity treated as a trade or business under paragraph (5) or (6) of section 469(c) (determined without regard to the phrase  To the extent provided in regulations  in such paragraph (6)).
(II)
Component member
For purposes of this subparagraph, the term  component member  has the meaning given such term by section 1563(b), except that the determination shall be made without regard to subparagraphs (B), (C), (D) or (E) of paragraph (2) thereof.
(III)
No inference
The modifications made by subclause (I) shall not be construed to create any inference with respect to the proper application of section 52 with respect to any other provision of this title.
(C)
Applicable residential property
(i)
In general
The term  applicable residential property  means any property which is—
(I)
residential rental property (as defined in section 168(e)(2)(A)(i)),
(II)
a manufactured housing community, or
(III)
a manufactured home (as defined in section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974 ( 42 U.S.C. 5402 )) which is not residential rental property (as so defined).
(ii)
Manufactured housing community
The term  manufactured housing community  means a residential real estate development with lots on which factory-built homes, including manufactured homes, are located, together with supporting infrastructure.
(D)
Single-family residential property
The term  single-family residential property  means any applicable residential property which contains 4 or fewer dwelling units (as defined in section 168(e)(2)(A)(ii)(I)).
(8)
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including—
(A)
regulations for identifying the amount of interest paid or accrued in connection with applicable residential property and single-family residential property, including any interest paid or accrued through indirect financing arrangements,
(B)
regulations, in consultation with the Secretary of Housing and Urban Development, for identifying and, to the extent provided by the Secretary, substantiating the amount of interest paid or accrued with respect to debt which is incurred for the primary purpose of substantially rehabilitating previously uninhabitable applicable residential property under paragraph (5), and
(C)
regulations to prevent the avoidance 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 adding at the end the following new subparagraph:
(D)
Exception for certain interest of certain real property owners
Subparagraph (A) shall not apply to any interest for which a deduction would be disallowed under section 163(n).
 .
(2)
Carrying charges
Section 266 of such Code is amended—
(A)
by striking  No deduction  and inserting 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 certain real property owners
No election may be made under this section to treat as chargeable to capital account any interest for which a deduction would be disallowed under section 163(n).
 .
(c)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
3.
Disallowance of depreciation in connection with property of certain real property owners
(a)
In general
 Section 167  of the Internal Revenue 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 certain real property owners
(1)
In general
No deduction shall be allowed under this section for—
(A)
any applicable residential property in which an institutional investment entity (directly or indirectly) holds a majority interest, or
(B)
single-family residential property in which a large owner (directly or indirectly) holds a majority interest.
(2)
Exceptions
Rules similar to the rules of paragraphs (2), (3), (4), (5), and (6) of section 163(n) shall apply for purposes of this subsection.
(3)
Definitions
For purposes of this subsection—
(A)
Applicable residential property
The term  applicable residential property  means—
(i)
any property described in section 163(n)(7)(C), and
(ii)
any improvements to real property which—
(I)
are directly related to dwelling units contained on property described in clause (i), and
(II)
are located on the site of such dwelling units.
(B)
Single-family residential property
The term  single-family residential property  means—
(i)
any property described in section 163(n)(7)(D), and
(ii)
any improvements to real property which—
(I)
are directly related to dwelling units contained on property described in clause (i), and
(II)
are located on the site of such dwelling units.
(C)
Institutional investment entity; large owner
The terms  institutional investment entity  and  large owner  have the respective meanings given such terms under section 163(n).
(4)
Regulations
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations to prevent the avoidance of the purposes of this subsection.
 .
(b)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.
4.
Prohibition on sale or provision of Federally backed mortgage loans to certain investors
(a)
Definitions
In this section:
(1)
Covered entity
The term  covered entity  means—
(A)
the Department of Housing and Urban Development, including the Federal Housing Administration and the Government National Mortgage Association;
(B)
the Department of Veterans Affairs;
(C)
the Department of Agriculture;
(D)
the Federal National Mortgage Association;
(E)
the Federal National Mortgage Corporation; and
(F)
any other Federal agency that is selling or otherwise disposing of covered residential property.
(2)
Covered residential property
The term  covered residential property —
(A)
means residential real property or a manufactured housing community; and
(B)
does not include—
(i)
Federally assisted housing, as defined in section 579 of the Quality Housing and Work Responsibility Act of 1998 ( 42 U.S.C. 13664 ); or
(ii)
any residential property that uses tax credits under  section 42  of the Internal Revenue Code of 1986.
(3)
Federally backed mortgage loan
The term  Federally backed mortgage loan  has the meaning given the term in section 4022(a) of the CARES Act ( 15 U.S.C. 9056(a) ).
(4)
Institutional investment entity; large owner
The terms  institutional investment entity  and  large owner  have the meanings given those terms in subparagraphs (A) and (B)(i) of  section 163(n)(7)  of the Internal Revenue Code of 1986, as added by this Act.
(5)
Manufactured housing community
The term  manufactured housing community  means a residential real estate development with lots on which factory-built homes, including manufactured homes (as defined in section 603 of the National Manufactured Housing Construction and Safety Standards Act of 1974 ( 42 U.S.C. 5402 )), are located, together with supporting infrastructure.
(6)
Residential real property
The term  residential real property  has the meaning given the term in section 1004 of the Residential Lead-Based Paint Hazard Reduction Act of 1992 ( 42 U.S.C. 4851b ).
(b)
Prohibition on sale
A covered entity may not sell or otherwise dispose of Federally backed mortgage loans or covered residential properties to a large owner or an institutional investment entity, including a loan or property that is—
(1)
a nonperforming or re-performing loan;
(2)
a foreclosed home;
(3)
a real estate-owned property; or
(4)
any other real estate-related asset held by the covered entity.
(c)
Prohibition on financing
(1)
In general
A covered entity may not issue, insure, guarantee, or securitize any mortgage loan where the borrower is a large owner or an institutional investment entity, unless the mortgage loan is related to—
(A)
the construction or rehabilitation of housing with affordability use restrictions; or
(B)
the refinance of existing loans related to such housing, and such refinance will not result in the elimination of affordability use restrictions.
(2)
Application
The prohibition under paragraph (1) shall not apply with respect to a mortgage loan that is issued, insured, guaranteed, or securitized before the date of enactment of this Act.
5.
Investments in housing supply and homeownership
(a)
Definitions
In this section:
(1)
Heir property
The term  heir property  means residential property for which title passed by operation of law through intestacy and is held by 2 or more heirs as tenants in common.
(2)
Qualified homebuyer
The term  qualified homebuyer  means a homebuyer that meets all of the following requirements:
(A)
Income
The household of the homebuyer has an income that does not exceed—
(i)
120 percent of median income for the area (as determined by the Secretary of Housing and Urban Development) within which—
(I)
the home to be acquired using assistance under this section is located; or
(II)
the place of residence of the homebuyer is located; or
(ii)
in the case of a homebuyer acquiring a home that is located in a high-cost area, as determined by the Secretary of Housing and Urban Development, 140 percent of the median income for the area within which the home to be acquired using assistance under this section is located.
(B)
First-time homebuyer
The homebuyer, as self-attested by the homebuyer, is a first-time homebuyer, as defined in section 104 of the Cranston Gonzalez National Affordable Housing Act ( 42 U.S.C. 12704 ), except that—
(i)
for the purposes of this section, the reference in such section 104 to title II shall be considered to refer to this section; and
(ii)
ownership of heir property shall not be treated as owning a home for purposes of determining whether a borrower qualifies as a first-time homebuyer.
(C)
First-generation homebuyer
The homebuyer, as self-attested by the homebuyer, is—
(i)
an individual—
(I)
whose parents or legal guardians do not, or did not at the time of their death, to the best of the individual’s knowledge, have any present ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel; and
(II)
whose spouse or domestic partner has not, during the 3-year period ending upon acquisition of the eligible home to be acquired using such assistance, had any present ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel, whether the individual is a co-borrower on the loan or not; or
(ii)
an individual who has at any time been placed in foster care or institutional care whose spouse or domestic partner has not, during the 3-year period ending upon acquisition of the home to be acquired using assistance under this section, had any ownership interest in a residence in any State, excluding ownership of heir property or ownership of chattel, whether such individuals are co-borrowers on the loan or not.
(b)
Transfers
For fiscal year 2026 and each fiscal year thereafter, there are hereby appropriated amounts equal to the following percentages of savings (as estimated by the Secretary of the Treasury) resulting from the limits on deductions established under sections 163(n) and 167(i) of the Internal Revenue Code of 1986, as added by this Act:
(1)
80 percent of such amounts to the Secretary of Housing and Urban Development to provide additional funding for the HOME Investment Partnerships program under subtitle A of title II of the Cranston-Gonzalez National Affordable Housing Act ( 42 U.S.C. 12741 et seq. ), to be allocated in accordance with the formula under that program, except that such amounts shall not be subject to the requirements under section 231 of such Act ( 42 U.S.C. 12771 ), for the following purposes:
(A)
Acquisition of affordable housing, and associated rehabilitation or preservation of such acquired housing.
(B)
60 percent of the 80 percent under this paragraph to be used for new construction of affordable housing, with at least half of such funds to be used for new construction of affordable housing for the benefit of extremely low-income households.
(2)
20 percent of such amounts to the Secretary of Housing and Urban Development to establish a fund to provide grants of assistance on behalf of qualified homebuyers, the amount of which shall not exceed the greater of $20,000 or 10 percent of the purchase price for each qualified homebuyer, for down payments, closing costs, and interest rate buydowns associated with acquiring owner-occupied primary residences.
6.
Increase antitrust monitoring for real property owners
(a)
Housing acquisitions review and transparency
(1)
Definitions
In this section:
(A)
Residential property
The term  residential property —
(i)
means property that is zoned or intended to be used as a dwelling for individuals or households, including multifamily housing, condominiums, manufactured homes, or single-family homes; and
(ii)
does not include any place of short-term lodging.
(B)
Investment rental property
The term  investment rental property  means real property that—
(i)
will not be rented to an entity, including any entity of the acquiring person, except for the sole purpose of maintaining, managing, or supervising the operation of the real property; and
(ii)
will be held solely for rental or investment purposes.
(C)
Place of short-term lodging
The term  place of short-term lodging  means a hotel, motel, inn, short-term rental, or other place of lodging that advertises at a price that is a nightly, hourly, or weekly rate.
(2)
Amendments making housing transactions reportable
(A)
Single acquisition
Section 7A(a) of the Clayton Act ( 15 U.S.C. 18a(a) ) is amended by adding at the end the following:  For purposes of this subsection, all acquisitions of residential property (as defined in section 6(a) of the  American Homeownership Act  by any person within a single calendar year shall be deemed to be a single acquisition and notification pursuant to this subsection shall be filed by the acquiring person upon acquiring the property that brings such single acquisition within any requirement described in paragraph (2) when aggregated with all other prior acquisitions of residential property by the person in that calendar year. .
(B)
Exemption
Section 7A(c)(1) of the Clayton Act ( 15 U.S.C. 18a(c)(1) ) is amended by inserting  , unless the transaction includes residential property or investment rental property (as defined in section 6(a) of the  American Homeownership Act ), including in the form of a real estate investment trust, that is not solely intended for the personal use of an individual. .
(C)
Code of Federal Regulations
The Federal Trade Commission, with the concurrence of the Assistant Attorney General in charge of the Antitrust Division of the Department of Justice, shall, by rule, in accordance with section 553 of title 5, United States Code—
(i)
amend part 802 of title 16, Code of Federal Regulations to conform with the amendments to section 7A(a) of the Clayton Act ( 15 U.S.C. 18(a) ) made by this paragraph; and
(ii)
rescind any rules exempting residential property or investment rental property pursuant to section 7A(d)(2)(B) of that Act.
(3)
Rulemaking
The Federal Trade Commission, with the concurrence of the Assistant Attorney General in charge of the Antitrust Division of the Department of Justice and by rule, in accordance with section 553 of title 5, United States Code, shall issue rules relating to the form and documentary material and information relevant to any acquisition or aggregated acquisitions of residential property is necessary and appropriate under section 7A(a) of the Clayton Act ( 15 U.S.C. 18a(a) ), as amended by paragraph (2), to enable the Federal Trade Commission and the Assistant Attorney General to determine whether such acquisition or aggregated acquisitions may violate the antitrust laws, as defined in subsection (a) of the first section of the Clayton Act ( 15 U.S.C. 12 ).
(b)
Presumption of unlawful merger or acquisition
(1)
Sense of Congress
It is the sense of Congress that—
(A)
market concentration and the change in market concentration due to a merger or acquisition can be an important indicator of the merger or acquisition’s risk of substantially lessening competition; and
(B)
in a landmark case, the Supreme Court correctly explained that the  intense congressional concern with the trend toward concentration warrants dispensing, in certain cases, with elaborate proof of market structure, market behavior, or probable anticompetitive effects.  United States v. Philadelphia National Bank, 374 U.S. 321 (1963).
(2)
Presumption
(A)
In general
For the avoidance of doubt, the Department of Justice and the Federal Trade Commission shall apply the presumption that an acquisition involving residential property increasing the relevant market share of the acquiring person to more than 30 percent violates the antitrust laws, as defined in subsection (a) of the first section of the Clayton Act ( 15 U.S.C. 12 ), and that such acquisition constitutes an unfair method of competition under section 5 of the Federal Trade Commission Act ( 15 U.S.C. 45 ).
(B)
Rule of construction
The clarification described in subparagraph (A) shall not be read to limit the use of the presumption under that subparagraph in other markets, cast doubt on other presumptions in antitrust enforcement, or suggest that a market share that is less than 30 percent is presumptively lawful.