S. 788

119 S788 IS: HOPE (Humans over Private Equity) for Homeownership Act
 U.S. Senate
 2025-02-27
 text/xml
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 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.
 II
 119th CONGRESS  1st Session
 S. 788
 IN THE SENATE OF THE UNITED STATES
 February 27, 2025
  Mr. Merkley  (for himself,  Mr. King ,  Mr. Van Hollen ,  Mr. Gallego ,  Mr. Sanders , and  Mr. Kelly ) introduced the following bill; which was read twice and referred to the  Committee on Finance
 A BILL
To 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   HOPE (Humans over Private Equity) 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 date  50 plus 90 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date     the 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 date  50 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 date  50 plus 70 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date     the 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 date  50 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 date  50 plus 50 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date     the 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 date  50 plus 40 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date     the 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 date  50 plus 30 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date     the 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 date  50 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 date  50 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.