S. 4080 provides tax incentives for investors who build or acquire new residential rental properties with at least two dwelling units. The bill allows these property owners to claim a special depreciation deduction of up to $150,000 per dwelling unit in the year the property is placed in service, which reduces their taxable income and tax liability. If the rental property qualifies as affordable housing under existing tax credit programs, the deduction increases to $250,000 per unit. However, if the owner stops using the property as a rental within 10 years (or 15 years for affordable housing), they must recapture the tax benefits through what is known as depreciation recapture. The tax changes would take effect 12 months after the bill is enacted, applying to rental properties placed into service after that date.
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