119 HR 1745 IH: Humans over Private Equity for Homeownership Act U.S. House of Representatives 2025-02-27 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

I119th CONGRESS1st SessionH. R. 1745IN THE HOUSE OF REPRESENTATIVESFebruary 27, 2025Mr. Smith of Washington (for himself and Ms. Sánchez) introduced the following bill; which was referred to the Committee on Ways and MeansA BILLTo amend the Internal Revenue Code of 1986 to impose an excise tax on the failure of certain hedge funds owning excess single-family residences to dispose of such residences, and for other purposes.

1.

Short title

This Act may be cited as the Humans over Private Equity for Homeownership Act or the HOPE for Homeownership Act .

2.

Excise tax on certain taxpayers failing to sell excess single-family residences

(a)

In general

Subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new chapter:50B

Excess single-family residences

Sec. 5000E. Newly acquired single-family residences. Sec. 5000F. Excess single-family residences. Sec. 5000G. Definitions and other special rules.

5000E.

Newly acquired single-family residences

(a)

In general

In the case of a hedge fund taxpayer, there is hereby imposed a tax on the acquisition of any newly acquired single-family residence equal to the greater of—(1)15 percent of the purchase price, or(2)$10,000(b)

Newly acquired Single-Family residence

For purposes of this section, the term newly acquired single-family residence means any single-family residence which was acquired by the taxpayer in any taxable year which begins after the date of the enactment of this chapter.(c)

Purchase price

For purposes of this section, the term purchase price means the adjusted basis of the newly acquired single-family residence on the date such residence is purchased.

5000F.

Excess single-family residences

(a)

In general

In the case of an applicable taxpayer who fails to meet the requirements of subsection (b), there is hereby imposed a tax equal to the product of—(1)$5,000, and(2)the excess of—(A)the number of applicable single-family residences owned by the taxpayer as of the last day of the taxable year, over(B)the maximum permissible units for the taxable year.(b)

Requirement

(1)

In general

An applicable taxpayer meets the requirement of this subsection for any taxable year if the number of applicable single-family residences owned by the taxpayer as of the last day of the taxable year is equal to or less than the maximum permissible units determined with respect to such taxpayer for such taxable year.(2)

Special rule for certain sales

For purposes of applying paragraph (1), a single-family residence which is sold or transferred in a disqualified sale during the taxable year shall be treated as a single-family residence which is owned by the applicable taxpayer as of the last day of such taxable year. (c)

Maximum permissible units

The maximum permissible units with respect to any applicable taxpayer for any taxable year shall be determined as follows: In the case of—The maximum permissible units for a hedge fund taxpayer is—The maximum permissible units for any other applicable taxpayer is—the first full taxable year beginning after the applicable date . . .90 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 90 percent of the number of applicable single-family residences owned by the taxpayer on the applicable datethe second taxable year beginning after the applicable date . . .80 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 80 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date the third taxable year beginning after the applicable date . . .70 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 70 percent of the number of applicable single-family residences owned by the taxpayer on the applicable datethe fourth taxable year beginning after the applicable date . . .60 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 60 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date the fifth taxable year beginning after the applicable date . . .50 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 50 percent of the number of applicable single-family residences owned by the taxpayer on the applicable datethe sixth taxable year beginning after the applicable date . . .40 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 40 percent of the number of applicable single-family residences owned by the taxpayer on the applicable datethe seventh taxable year beginning after the applicable date . . .30 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 30 percent of the number of applicable single-family residences owned by the taxpayer on the applicable datethe eighth taxable year beginning after the applicable date . . .20 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 20 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date the ninth taxable year beginning after the applicable date . . .10 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date50 plus 10 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date any taxable year beginning more than 9 years after the applicable date . . .0 50.(d)

Definitions

For purposes of this section—(1)

Applicable single-family residence

The term applicable single-family residence means any single-family residence which was acquired on or before the applicable date.(2)

Applicable date

(A)

In general

The term applicable date means—(i)the last day of the first full taxable year ending on or after the date of the enactment of this chapter, or(ii)in the case of any taxpayer described in subparagraph (B), the date provided in such subparagraph.(B)

Taxpayers changing status

(i)

In general

In the case of any applicable taxpayer described in clause (ii), the applicable date means the last day of the taxable year immediately preceding the taxable year in which the taxpayer is described in such clause.(ii)

Applicable taxpayer described

An applicable taxpayer is described in this clause with respect to any taxable year if—(I)such taxpayer was not a hedge fund taxpayer for the preceding taxable year, and(II)such taxpayer is a hedge fund taxpayer for such taxable year.(3)

Disqualified sale

The term disqualified sale means any sale or transfer to—(A)a corporation or other entity engaged in a trade or business, or(B)an individual who owns any other single-family residence at the time of such sale or transfer.

5000G.

Definitions and other special rules

(a)

Applicable taxpayer

For purposes of this chapter—(1)

In general

The term applicable taxpayer means any applicable entity which—(A)manages funds pooled from investors, and(B)is a fiduciary with respect to such investors.(2)

Applicable entity

(A)

In general

The term applicable entity means—(i)any partnership,(ii)any corporation, or(iii)any real estate investment trust.(B)

Exceptions

The term applicable entity shall not include—(i)an organization which is described in section 501(c)(3) and exempt from tax under section 501(a), or(ii)an organization which is primarily engaged in the construction or rehabilitation of single-family residences and which offers such residences for sale in the ordinary course of business.(b)

Hedge fund taxpayer

For purposes of this section, the term hedge fund taxpayer means, with respect to any taxable year, any applicable taxpayer which has $50,000,000 or more in net value or assets under management on any day during the taxable year. (c)

Single-Family residence

For purposes of this chapter—(1)

In general

The term single-family residence means a residential property consisting of 1-to-4 dwelling units.(2)

Exceptions

A residential property shall not be treated as a residential property described in clause (i) if—(A)such property is unoccupied and acquired through foreclosure (other than such a residence acquired through foreclosure by a hedge fund taxpayer, as defined in section 5000F((d)(3)),(B)such property is—(i)not rented or leased, and(ii)used as the principal residence (within the meaning of section 121) of any person who has an ownership interest in the applicable taxpayer, or(C)such property—(i)was a building with respect to which a credit was allowed under section 42 (relating to the low-income housing credit), and(ii)is not owned by a hedge fund taxpayer (as defined in section 5000F(d)(3)). (d)

Acquisition; ownership

For purposes of this chapter, an applicable taxpayer shall be treated—(1)as acquiring a single-family residence if the applicable taxpayer acquires a majority ownership interest in the single-family residence, regardless of the percentage of that ownership interest, and(2)as owning a single-family residence if the applicable taxpayer owns a majority ownership interest in the single-family residence, regardless of the percentage of that ownership interest.(e)

Aggregation rules

(1)

In general

For purposes of this chapter, all persons which are treated as a single employer under subsections (a) and (b) of section 52 shall be treated as a single person.(2)

Modifications

For purposes of this subsection—(A)section 52(a) shall be applied by substituting component members for members, and(B)for purposes of applying section 52(b), the term trade or business shall include any activity treated as a trade or business under paragraph (5) or (6) of section 469(c) (determined without regard to the phrase To the extent provided in regulations in such paragraph (6)). (3)

Component member

For purposes of this paragraph, the term component member has the meaning given such term by section 1563(b), except that the determination shall be made without regard to section 1563(b)(2).

.(b)

Clerical amendment

The table of chapters for subtitle D of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:Chapter 50B—Excess single-family residences.(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.

3.

Disallowance of mortgage interest and depreciation in connection with single family residences owned by covered taxpayers

(a)

Mortgage interest

(1)

In general

Section 163 of the Internal Revenue Code of 1986 is amended by redesignating subsection (n) as subsection (o) and by inserting after subsection (m) the following new subsection:(n)

Certain interest paid by covered taxpayers

(1)

In general

No deduction shall be allowed under this chapter for a taxable year with respect to interest paid or accrued on acquisition indebtedness with respect to any single-family residence if the owner of such single-family residence is liable for tax under chapter 50B for such taxable year.(2)

Definitions

For purposes of this subsection—(A)

Acquisition indebtedness

The term acquisition indebtedness has the meaning given such term under subsection (h)(3)(B), determined—(i)by substituting single-family residence (as defined in section 5000G(b)) for qualified residence, and(ii)without regard to clause (ii) thereof.(B)

Single-family residence

The term single-family residence has the meaning given such term under section 5000G(b)(C)

Ownership

The rules of section 5000G(c) shall apply for purposes of determining ownership..(2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.(b)

Depreciation

(1)

In general

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 new subsection: (i)

Deduction disallowed for disqualified single family property owners

(1)

In general

No deduction shall be allowed under this section for a taxable year with respect to a single-family residence if the owner of such single-family residence is liable for tax under chapter 50B for such taxable year.(2)

Definitions

For purposes of this subsection—(A)

Single-family residence

The term single-family residence has the meaning given such term under section 5000G(b).(B)

Ownership

The rules of section 5000G(c) shall apply for purposes of determining ownership..(2)

Effective date

The amendments made by this subsection shall apply to taxable years beginning after the date of the enactment of this Act.