President Donald Trump is floating a new tax idea that could fundamentally change how much it costs you to own a home.
During a speech at the World Economic Forum in Davos on January 21, 2026, the president suggested that regular homeowners should be allowed to claim a tax deduction that has long been reserved for businesses and real estate investors: depreciation.
The logic is simple. If a company buys a house and rents it out, the IRS lets them write off a portion of the home’s value every year as it wears out. But if you buy that same house to live in, you get no such break.
Trump called this discrepancy crazy and indicated it is something his administration wants to fix to help level the playing field for families.
How home depreciation works for pros
To understand how this would help you, it helps to look at how it works for the big guys. Currently, the IRS allows owners of residential rental property to depreciate the building over 27.5 years. This isn’t about the home actually falling apart — it is a paper loss that reduces their taxable income.
If a corporation buys a rental house for $300,000 (excluding the land value), they can divide that by 27.5 and deduct roughly $10,900 from their taxes every single year. For a high-income investor, that deduction could easily lower their annual tax bill by thousands of dollars.
See also Can you deduct rental property lawn care on your taxes? for more on how professional landlords use these rules.
Doing the math on your savings
To see how this turns into real cash in your pocket, you have to look at how a deduction lowers your taxable income. A deduction isn’t a direct credit; it simply reduces the amount of your salary that the IRS is allowed to touch.
Imagine you bought a home where the structure itself is valued at $400,000. Under the current corporate rules, your annual deduction would be approximately $14,545.
If you are a family in the 22% tax bracket, you would multiply that deduction by your tax rate ($14,545 x 0.22). The result is a $3,200 reduction in your federal tax bill. Instead of that money going to Washington, it stays in your bank account.
The catch: depreciation recapture
While those annual savings are great for your monthly cash flow, the IRS keeps a very close tally of every dollar you deduct. This leads to what experts call depreciation recapture. Every time you take a depreciation deduction, you are lowering your cost basis, which is used to determine your profit when you sell your home, which in turn determines yo.
If you bought a home for $400,000 and took $50,000 in depreciation over several years, the IRS now considers your basis to be $350,000. If you sell the home for $500,000, your taxable profit isn’t $100,000 — it is $150,000. The IRS treats previously claimed depreciation as taxable income when you sell, often at a rate of up to 25%.
Why this is on the table now
This idea isn’t happening in a vacuum. It is part of a larger push to stop what the president calls the nation of renters. Earlier this week, he signed an executive order aimed at restricting large institutional investors from buying up single-family homes.
(See why the staggering wealth gap between owners and renters matters for context on this policy shift.)
By giving you the same tax breaks as the big corporations, the administration hopes to make it easier for you to outbid investors for the house across the street. It essentially turns your home into a tax shelter, similar to how a 401(k) protects your retirement savings.
While the president has started the conversation, this change would likely require an act of Congress to become a permanent part of the tax code. We are already seeing major shifts with the One Big Beautiful Bill Act, which has already made 100% bonus depreciation permanent for businesses.
Adding a homeowner’s depreciation could be the next phase of this tax overhaul. For now, it is a proposal to watch closely, especially if you are thinking about buying a home in the near future. It could turn the money pit of home maintenance into a significant tax advantage.
