ACRE Act of 2025

This bill amends the Internal Revenue Code to allow qualified lenders to exclude from their gross income the interest received on certain loans secured by rural or agricultural real property. Sec. 2, Exclusion of interest on loans secured by rural or agricultural real property: This section adds a new tax code section 139J. It defines a qualified lender as a bank or savings association with FDIC-insured deposits, a state or federally regulated insurance company, certain wholly owned entities of bank or insurance holding companies, and certain federally chartered Farm Credit System instrumentalities. A qualified real estate loan is any loan made after the bill's enactment that is secured by rural or agricultural real estate, forestland, or a leasehold mortgage on such property, made to a person other than a foreign adversary entity, and for single-family residences, the loan proceeds must be used to purchase or improve the principal residence and the principal cannot exceed $750,000. Refinancing of loans made on or before the enactment date does not qualify. Rural or agricultural real estate includes property used for agricultural production, a principal residence in a rural area, property used for fishing or seafood processing, and aquaculture facilities. A foreign adversary entity includes entities from China, Cuba, Iran, North Korea, Russia, and Venezuela under Maduro. The interest exclusion is coordinated with existing tax rules. The Treasury Secretary must report to Congress within 5 years on the impact of this provision. The amendment applies to taxable years ending after the bill's enactment.