H.R. 3139 - Access to Credit for our Rural Economy (ACRE) Act of 2023

118TH CONGRESS
1ST SESSION

H.R. 3139

To amend the Internal Revenue Code of 1986 to exclude from gross income
interest received on certain loans secured by rural or agricultural real property.

IN THE HOUSE OF REPRESENTATIVES

MAY 9, 2023

Mr. FEENSTRA (for himself and Mr. NICKEL) introduced the following bill;
which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to exclude from gross income interest received on certain loans secured by rural or agricultural real property.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the "Access to Credit for our Rural Economy Act of 2023" or as the "ACRE Act of 2023".

SEC. 2. EXCLUSION OF INTEREST ON LOANS SECURED BY RURAL OR AGRICULTURAL REAL PROPERTY.

(a) IN GENERAL. — Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139I the following new section:

“SEC. 139J. INTEREST ON LOANS SECURED BY RURAL OR AGRICULTURAL REAL PROPERTY.

“(a) IN GENERAL. — Gross income shall not include interest received by a qualified lender on any qualified real estate loan.

“(b) QUALIFIED LENDER. — For purposes of this section, the term 'qualified lender' means —

“(1) any bank or savings association the deposits of which are insured under the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.), and

“(2) any entity wholly owned, directly or indirectly, by a company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978 (12 U.S.C. 3106) if —

“(A) such entity is organized, incorporated, or established under the laws of the United States or any State of the United States, and

“(B) the principal place of business of such entity is in the United States.

“(c) QUALIFIED REAL ESTATE LOAN. — For purposes of this section —

“(1) IN GENERAL. — The term 'qualified real estate loan' means any loan —

“(A) secured by rural or agricultural real estate or by a leasehold mortgage (with a status as a lien) on rural or agricultural real estate, and

“(B) in the case of any loan with respect to single family residence described in paragraph (2)(B) —

“(i) the proceeds of which are used to purchase or improve such residence, and

“(ii) the principal of which (when added to the principal of all other such loans with respect to such residence) does not (as of the time the interest income on such loan is accrued) exceed $750,000.

For purposes of the preceding sentence, the determination of whether property securing such loan is rural or agricultural real estate shall be made as of the time the interest income on such loan is accrued.

“(2) RURAL OR AGRICULTURAL REAL ESTATE. — The term 'rural or agricultural real estate' means —

“(A) any real property which is substantially used for the production of one or more agricultural products,

“(B) any single family residence —

“(i) which is the principal residence (within the meaning of section 121) of its occupant, and

“(ii) which is located in a rural area within the meaning of section 1.11(b)(3) of the Agricultural Credit Act of 1987 (12 U.S.C. 2019(b)(3)), and

“(C) any aquaculture facility.

“(3) AQUACULTURE FACILITY. — The term 'aquaculture facility' means any land, structure, or other appurtenance that is used for aquaculture (including any hatchery, rearing pond, raceway, pen, or incubator) that is located in any State.

“(d) COORDINATION WITH SECTION 265. — Qualified real estate loans shall be treated as obligations described in section 265(a)(2) the interest on which is wholly exempt from the taxes imposed by this subtitle.".

(b) CLERICAL AMENDMENT. — The table of sections for such subpart III is amended by inserting after the item relating to section 139I the following new item:

“Sec. 139J. Interest on loans secured by rural or agricultural real property.".

(c) EFFECTIVE DATE. — The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.