Disallowance of certain deductions taken in connection with single-family residences of hedge fund 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) No deduction for interest on acquisition indebtedness of single-Family residences of certain taxpayers (1) In general In the case of a hedge fund taxpayer, no deduction shall be allowed under this chapter with respect to interest paid or accrued on acquisition indebtedness with respect to any single-family residence. (2) Definitions For purposes of this subsection— (A) Hedge fund taxpayer The term hedge fund taxpayer means, for any taxable year, any taxpayer— (i) who is described in section 5000E(c), and (ii) who is in the trade or business of renting or leasing single-family residences. (B) 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 subsection (n)) for qualified residence, and (ii) without regard to clause (ii) thereof. (C) Single-family residence The term single-family residence means any residential property which consists of 1-to-4 dwelling units.. (2) Effective date The amendments made by this subsection shall apply to taxable years beginning after December 31, 2030. (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 single-Family residences of certain taxpayers (1) In general In the case of a hedge fund taxpayer, no deduction shall be allowed under this section for any single-family residence. (2) Definitions For purposes of this subsection— (A) Hedge fund taxpayer The term hedge fund taxpayer means, for any taxable year, any taxpayer— (i) who is described in section 5000E(c), and (ii) who is in the trade or business of renting or leasing single-family residences. (B) Single-family residence The term single-family residence means any residential property which consists of 1-to-4 dwelling units.. (2) Effective date The amendments made by this subsection shall apply to taxable years beginning after December 31, 2030. (c) Qualified business income (1) In general Section 199A(d)(1) of the Internal Revenue Code of 1986 is amended by striking or at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting, or, and by adding at the end the following new subparagraph: (C) any trade or business of hedge fund taxpayer (as defined in section 163(n)(2)(A)).. (2) Effective date The amendments made by this subsection shall apply to taxable years beginning after December 31, 2035.