Disallowance of depreciation in connection with property used by disqualified single family property owners

(a) 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 In the case of a disqualified single family property owner, no deduction shall be allowed under this section for any single family residential rental property owned by such disqualified single family property owner. (2) Exception (A) In general Paragraph (1) shall not apply with respect to depreciation deduction which is allowable— (i) in connection with a single family residential rental property, and (ii) in the taxable year in which such single family residential rental property is sold. (B) Exception Subparagraph (A) shall not apply unless the sale described in clause (ii) thereof is— (i) a sale to an individual for use as the principle residence of the individual (within the meaning of section 121), or (ii) a sale to any qualified nonprofit organization (as defined in section 163(n)(2)(C)). (3) Definitions For purposes of this subsection, the terms disqualified single family property owner and single family residential rental property have the respective meanings given such terms under section 163(n). (4) Regulations The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations to prevent the avoidance of the purposes of this subsection.. (b) Effective date The amendments made by this section shall apply to property placed in service in taxable years beginning after the date of the enactment of this Act.