HR1745-119

What This Bill Does

The HOPE for Homeownership Act is a tax penalty aimed at large pooled investment ownership of single-family homes. It creates a new Internal Revenue Code chapter imposing, for hedge fund taxpayers with at least $50 million in assets under management, a tax on each newly acquired single-family residence equal to the greater of 15 percent of purchase price or $10,000. It also imposes a $5,000-per-unit tax on applicable taxpayers that own more single-family residences than their maximum permissible units, counting certain disqualified sales as still owned if the property is sold to a business entity or to an individual who already owns another single-family residence. The bill defines covered taxpayers as partnerships, corporations, and REITs managing pooled investor funds, excluding 501(c)(3) organizations and builders or rehabilitators selling homes in the ordinary course. It treats majority ownership as acquisition or ownership, aggregates related persons, and disallows mortgage interest and depreciation deductions for single-family residences owned by taxpayers liable for the new chapter 50B taxes.

Who Benefits and How

First-time homebuyers benefit if tax penalties reduce competition from hedge funds and pooled investors for single-family homes. Owner-occupant buyers benefit because disqualified-sale rules discourage covered taxpayers from selling only to other business entities or existing owners. Housing affordability advocates benefit from a tax structure designed to push large investors out of single-family home accumulation. Federal taxpayers benefit from new excise tax revenue on covered hedge fund acquisitions and excess holdings.

Who Bears the Burden and How

Hedge fund taxpayers face a tax of at least 15 percent of purchase price or $10,000 on newly acquired single-family residences. Pooled-investor real estate entities face $5,000-per-unit taxes for excess single-family residence holdings. Covered taxpayers lose mortgage-interest and depreciation deductions on single-family residences when liable for the new taxes. Internal Revenue Service administrators must define, aggregate, audit, and collect the new chapter 50B taxes.

Key Provisions

• Creates a tax on hedge fund taxpayer acquisitions of newly acquired single-family residences.
• Requires the acquisition tax to equal the greater of 15 percent of purchase price or $10,000.
• Creates a $5,000-per-unit tax on excess single-family residence holdings.
• Limits avoidance by treating disqualified sales as still owned for excess-unit calculations.
• Bars mortgage-interest and depreciation deductions for covered taxpayers liable for the new taxes.