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HB 4136
This proposal did not become law. The measure would have eliminated the Oregon state income tax deduction for mortgage interest on second homes, with a narrow exception for properties sold or actively marketed at year-end. It simultaneously would have created a dedicated revenue stream from the resulting tax increase to fund down payment assistance programs administered by the Housing and Community Services Department.
Generated explanation · Introduced · Analyzed 8/19/2026 · Open official Introduced text
This proposal did not become law.
Generated analysis of Introduced text; it does not establish that the bill applies to you. Read the full decision brief.
No upcoming event is verified in the available records.
Plain-language analysis
Generated analysis, not an official summary or legal advice. Confirm with linked Oregon documents.
This proposal did not become law. The generated effects below describe what it would have required if enacted.
The measure would have eliminated the Oregon state income tax deduction for mortgage interest on second homes, with a narrow exception for properties sold or actively marketed at year-end. It simultaneously would have created a dedicated revenue stream from the resulting tax increase to fund down payment assistance programs administered by the Housing and Community Services Department.
Basis: Bill text · Source: Introduced
Official sources do not state why this measure was proposed.
Sponsor testimony, staff summaries, committee materials, or statutory findings may explain it.
Inferred from cited text; not a stated purpose.
The measure appears designed to redirect tax incentives from subsidizing secondary property ownership toward subsidizing initial homeownership entry. By pairing a deduction restriction with a revenue-matched account for down payment assistance, the text suggests a policy shift aimed at expanding housing access for first-time buyers while discouraging non-primary residence mortgage subsidies.
Basis: Inferred · Source: Introduced
Potential effect if enacted: Lose the state mortgage interest deduction for that property, increasing annual state tax liability unless the property is sold or actively marketed by year-end.
Basis: Bill text · Source: Introduced
Potential effect if enacted: Retain the deduction under the statutory exception, preserving current tax treatment for that year.
Basis: Bill text · Source: Introduced
Potential beneficiaries of a continuously appropriated funding stream for down payment assistance, though access would have depended on future departmental program design and eligibility rules.
Basis: Bill text · Source: Introduced
Might have experienced increased demand for listing and marketing services as taxpayers seek to satisfy the 'actively marketing' requirement to preserve the deduction.
Basis: Bill text · Source: Introduced
Taxpayers might have accelerated property sales or initiate formal marketing campaigns near the end of the tax year to qualify for the exception, creating seasonal market activity.
Basis: Bill text · Source: Introduced
Administrative compliance would have required clear definitions of 'actively marketing' for audit purposes, likely necessitating departmental rules specifying acceptable evidence (e.g., MLS listings, broker agreements).
Basis: Bill text · Source: Introduced
Potential effect if enacted: The revenue transfer mechanism ties down payment assistance funding to annual tax estimates, making program capacity sensitive to housing market fluctuations and taxpayer compliance rates.
Basis: Bill text · Source: Introduced
The measure would have applied to tax years beginning on or after January 1, 2026, giving taxpayers and administrators a transition window before the deduction restriction would have taken effect.
Basis: Bill text · Source: Introduced
Taxpayer with a highly appreciated second home
Potential effect if enacted: A taxpayer sells their second home in December, retains the full mortgage interest deduction for that year, and immediately qualifies for down payment assistance to purchase a primary residence at a heavily subsidized rate. The combined effect converts a luxury asset into affordable housing while preserving tax benefits through timing.
Basis: Bill text · Source: Introduced
Taxpayer with an illiquid or inherited second home
Potential effect if enacted: A taxpayer inherits a second home in a depressed market and cannot sell it within a reasonable timeframe due to probate, structural issues, or lack of buyers. Unable to meet the 'actively marketing' threshold without incurring prohibitive costs, they face sustained higher state tax liability on mortgage interest for multiple years with no viable exit strategy.
Basis: Bill text · Source: Introduced
The text would have legally permitted marketing activities to preserve the deduction, but enforcement gaps could have transformed this exception into a loophole that undermines the measure's revenue and policy objectives.
Sources · Introduced
Potential effect if enacted: Restricting a tax subsidy for secondary homeownership to fund down payment assistance shifts housing policy toward first-time buyers but increases costs and administrative complexity for existing multi-property owners.
Would have created a dedicated, continuously appropriated funding stream specifically for down payment assistance, potentially expanding affordable housing access.
Basis: Bill text · Source: Introduced
Potential effect if enacted: Aligns state tax incentives with primary residence ownership, potentially reducing speculative or non-primary mortgage subsidies.
Basis: Bill text · Source: Introduced
Potential effect if enacted: Increases state tax liability for taxpayers who itemize and own second homes, with limited relief mechanisms beyond sale or active marketing.
Basis: Bill text · Source: Introduced
Relies on annual revenue estimates that might have fluctuated with market conditions, creating uncertainty for long-term down payment assistance program planning.
Basis: Bill text · Source: Introduced
The 'actively marketing' exception introduces compliance ambiguity that might have required extensive departmental rulemaking and audit resources to administer fairly.
Basis: Bill text · Source: Introduced
Model self-rating: high. Analysis is strictly derived from the provided introduced bill text. No external assumptions or prior versions were used. Rationale fields reflect explicit constraints on available evidence. This is the model’s assessment of its own analysis, not independent verification or human review.
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Records available in the current snapshot.
Earliest loaded signal
Introduced bill text posted
Posted Jan 28, 2026, 3:25 PM PST
Not a qualifying replacement
Only the introduced version is available as adopted text; no qualifying replacement is shown.
AI assessment dated 2026-09-29. This classification is separate from enactment and legal effect.
Evidence snapshot: 2026-09-29. Later legislative records are not automatically reassessed.
Policy purpose: broadly retained.
Reviewer: /root/review_recent_a · 2026-09-29
Not a qualifying replacement
Only the introduced version is available as adopted text; no qualifying replacement is shown.
Policy purpose: broadly retained.
“SECTION 1. ORS 316.695 is amended to read: 6 316.695. (1) In addition to the modifications to federal taxable income contained in this chapter, 7 there shall be added to or subtracted from federal taxable income: 8 (a) If, in computing federal income tax for a tax year, the taxpayer deducted item”
Introduced
“SECTION 1. ORS 316.695 is amended to read: 6 316.695. (1) In addition to the modifications to federal taxable income contained in this chapter, 7 there shall be added to or subtracted from federal taxable income: 8 (a) If, in computing federal income tax for a tax year, the taxpayer deducted item”
Introduced
Reviewer: /root/review_recent_b · 2026-09-29
Not a qualifying replacement
Only the introduced tax proposal is documented.
Policy purpose: broadly retained.
“SECTION 1. ORS 316.695 is amended to read: 6 316.695. (1) In addition to the modifications to federal taxable income contained in this chapter, 7 there shall be added to or subtracted from federal taxable income: 8 (a”
Introduced
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Chief sponsors: Representative Annessa Hartman, Senator Jeff Golden, Senator Courtney Neron Misslin
Regular sponsors: Representative Mark Gamba, Representative Ken Helm, Representative John Lively, Representative Lamar Wise, Senator Lew Frederick, Senator Sara Gelser Blouin, Senator James Manning Jr., Senator Deb Patterson, Senator Khanh Pham, Senator Floyd Prozanski, Senator Janeen Sollman, Representative Zach Hudson, Representative Susan McLain, Representative Lesly Muñoz, Representative Willy Chotzen, Representative Farrah Chaichi, Representative Rob Nosse, Representative Tom Andersen
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5 events
Full timeline
5 entries shown.
In committee upon adjournment.
Public Hearing held.
Referred to Revenue.
First reading. Referred to Speaker's desk.
“Digest: The Act ends the tax deduction for mortgage interest paid for a taxpayer's second home. (Flesch Readability Score: 61.8). Disallows, for purposes of personal income taxation, a mortgage interest deduction for a residence other than the taxpayer's principal residence, unless the taxpayer sells the residence or actively markets the residence for sale. Establishes the Oregon Homeownership Opportunity Account. Transfers an amount equal to the estimated increase in revenue attributable to restrictions on the deduction of mortgage interest to the account, for the purpose of making down payment assistance payments. Applies to tax years beginning on or after January 1, 2026. Takes effect on the 91st day following adjournment sine die.”
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