A number of Democratic senators are looking to eliminate extensive institutional investment in single-family rentals. Senators Sherrod Brown (D-Ohio), Ron Wyden (D-Ore.), and others introduced a bill called the Stop Predatory Investing Act. However, the chances it could pass into law are highly unlikely.

The text of the act targets any taxpayer that owns 50 or more single-family properties. If made into law, such owners would be unable to deduct depreciation and interest from their taxes. The move would make profitably owning and operating properties highly unlikely. Interest, given current financing rates, would become a significant additional carrying cost. Depreciation is key to typical CRE investment strategies as it allows recognition of non-cash expenses that can reduce taxes, even if the property has a positive net operating income.

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Erik Sherman


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