New bill lets apartment developers immediately deduct up to $250,000 per unit

If you are trying to build an apartment building right now, the tax code treats you like you committed a crime. While a business that buys a machine can deduct the cost immediately, an apartment developer must spread those deductions out over 27.5 years. That ridiculous rule drives deductions down to about 50 cents on the dollar in present value. You end up paying taxes on income that does not even exist. That tax penalty kills multifamily projects before they ever start. Now, a new proposal aims to fix that exact headache. US Senator Lisa Blunt Rochester, a Democrat from Delaware, introduced the Rental Housing Investment Act in March. A bipartisan companion bill hit the House in May. Under this new plan, developers building rental housing with two or more units could immediately deduct up to $150,000 per unit. If the project meets affordability tests borrowed from the Low-Income Housing Tax Credit program, that deduction jumps to $250,000 per unit. Think of it as finally giving real estate builders the same speed equipment buyers get. This matters for you because the country is starving for housing supply, which keeps your rent and housing costs sky-high. Most government programs are a total waste because they subsidize existing homes instead of building new ones. For example, existing home sales outnumber new home sales by roughly six to one. That means most tax dollars just bid up the price of old houses instead of pouring concrete. The new bill smartly limits tax relief strictly to property where the original use starts with the taxpayer. Existing buildings are completely out of luck. This creates a brilliant incentive for cities to finally loosen up zoning laws. Consider Austin, Texas, and San Diego, California. Both metros have roughly the same number of homes, around 1.1 million to 1.2 million. But Austin permits about 20,100 new multifamily units a year, while San Diego permits a measly 6,800. Tax relief tied strictly to new construction rewards cities that actually let people build. At least someone finally realized that writing rules to stop new apartments is a great way to make sure nobody can afford to live anywhere.