Sec. 13. Denial of depreciation deduction for properties with failed NSPIRE inspections
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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: Except as provided in paragraph (2), no depreciation deduction shall be allowed under this section (and no depreciation or amortization deduction shall be allowed under any other provision of this subtitle) to the taxpayer for the taxable year with respect to any property described in section 168(e)(2)(A)(i) which fails an NSPIRE inspection during the taxable year. No deduction shall be denied under paragraph
(1)in the case of a health or safety violation which causes a property to fail an NSPIRE inspection if either— such violation is cured within 90 days of the date of a failed inspection, or the inspector finds sufficient evidence that such violation was caused by the tenant and not by the owner or management of the property. The Secretary of Health and Human Services may provide 30-day extensions of the 90-day period described in subparagraph (A)(i) on a case-by-case basis and communicate such extensions to the Secretary of the Treasury. The term NSPIRE inspection means any housing inspection required under the National Standards for the Physical Inspection of Real Estate of the Real Estate Assessment Center of the Department of Housing and Urban Development. In the case of a property which fails two consecutive NSPIRE inspections, paragraph
(1)shall be applied by substituting for the taxable year, and for the immediately succeeding taxable year, for for the taxable year . The depreciation deduction allowed with respect to the property described in paragraph
(1)with respect to any future taxable year shall be determined without regard to the amount denied for any year for which such deduction was denied. If, but for this subsection, a depreciation or amortization deduction would be allowable to the taxpayer with respect to any property— the taxpayer’s basis in such property shall be reduced by any depreciation or amortization deductions disallowed under this subsection, and the basis of the remainder interest in such property shall be increased by the amount of such disallowed deductions. The Secretary, after consultation with the Secretary of Housing and Urban Development, shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection. Not later than one year after the date of the enactment of this subsection, the Secretary of Housing and Urban Development shall prescribe regulations to establish a mechanism for providing information to the Secretary detailing which properties have failed an NSPIRE inspection during the taxable year and which properties have received extensions of time to cure. In creating this mechanism, the Secretary of Housing and Urban Development shall ensure that the Secretary of the Treasury receives information about failing properties at least once per calendar quarter. . The amendment made by this section shall apply to taxable years beginning after the date that is one year after the date of the enactment of this Act.