Disallowance of mortgage interest and depreciation in connection with single family residences owned by covered taxpayers

(a) Mortgage interest (1) 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) Certain interest paid by covered taxpayers (1) In general No deduction shall be allowed under this chapter for a taxable year with respect to interest paid or accrued on acquisition indebtedness with respect to any single-family residence if the owner of such single-family residence is liable for tax under chapter 50B for such taxable year. (2) Definitions For purposes of this subsection— (A) Acquisition indebtedness The term acquisition indebtedness has the meaning given such term under subsection (h)(3)(B), determined— (i) by substituting single-family residence (as defined in section 5000E(d)) for qualified residence, and (ii) without regard to clause (ii) thereof. (B) Single-family resident The term single-family residence has the meaning given such term under section 5000G(b). (C) Ownership The rules of section 5000G(c) shall apply for purposes of determining ownership.. (2) Effective date The amendments made by this subsection shall apply to indebtedness incurred in taxable years beginning after the date of the enactment of this Act. (b) Depreciation (1) 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 disqualified single family property owners (1) In general No deduction shall be allowed under this section for a taxable year with respect to a single-family residence if the owner of such single-family residence is liable for tax under chapter 50B for such taxable year. (2) Definitions For purposes of this subsection— (A) Single-family resident The term single-family residence has the meaning given such term under section 5000G(b). (B) Ownership The rules of section 5000G(c) shall apply for purposes of determining ownership.. (2) Effective date The amendments made by this subsection shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.