H.R. 9657

119 HR 9657 IH: Protecting American Homes from Hedge Funds Act
 U.S. House of Representatives
 2026-07-13
 text/xml
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 I  119th CONGRESS  2d Session  H. R. 9657  IN THE HOUSE OF REPRESENTATIVES   July 13, 2026   Mr. Smith of Washington  (for himself,  Mr. Khanna ,  Ms. Williams of Georgia , and  Ms. Sánchez ) introduced the following bill; which was referred to the  Committee on Ways and Means , and in addition to the Committee on  Financial Services , for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned   A BILL
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   Protecting American Homes from Hedge Funds 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 an applicable taxpayer, there is hereby imposed a tax on the acquisition of any newly acquired single-family residence equal to 50 percent of the fair market value of such residence.
(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.
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)
$50,000, 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 sum of—
(i)
50 (zero in the case of any hedge fund taxpayer), plus
(ii)
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)
Hedge fund taxpayer
For purposes of this subsection, 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.
5000G.
Definitions and other special rules
(a)
Applicable taxpayer
For purposes of this chapter—
(1)
In general
The term  applicable taxpayer  means any person which—
(A)
manages funds pooled from investors, and
(B)
is a fiduciary with respect to such investors.
(2)
Exceptions
The term  applicable taxpayer  shall not include any organization primarily engaged in the construction or rehabilitation of single-family residences.
(b)
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
Such term shall not include—
(A)
any single-family residence that 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
(B)
any single-family residence constructed, acquired, or operated with Federal appropriated funding sources.
(c)
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.
(d)
Disqualified sale
For purposes of this chapter, the term  disqualified sale  means any sale or transfer to—
(1)
a corporation or other entity engaged in a trade or business, or
(2)
an individual who owns any other single-family residence at the time of such sale or transfer.
(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).
(f)
Reporting
(1)
In general
The Secretary shall require such reporting as the Secretary determines necessary or appropriate to carry out the purposes of this section, including reporting with respect to—
(A)
the dates on which single-family residences owned by an applicable taxpayer were acquired by such taxpayer, and
(B)
whether any person acquiring a single-family residence from an applicable taxpayer owns any other single-family residences at the time of the acquisition.
(2)
Failure to report
(A)
In general
Any person who fails to report information required under paragraph (1) or who fails to include correct information in such report shall pay a penalty of $50,000.
(B)
Reasonable cause waiver
No penalty shall be imposed under this paragraph with respect to any failure if it is shown that such failure is due to reasonable cause and not to willful neglect.
(C)
Treatment of penalty
The penalty under this paragraph shall be paid upon notice and demand by the Secretary, and shall be assessed and collected in the same manner as an assessable penalty under subchapter B of chapter 68.
  .
(b)
Tax form
Not later than 180 days after the date of the enactment of this Act, the Secretary of the Treasury (or the Secretary's delegate) shall publish a form to be used for calculating the amount of tax owned under  chapter 50B  of the Internal Revenue Code of 1986 (as added by subsection (a)).
(c)
Certification
(1)
In general
The reporting required under  section 5000G(f)(1)(B)  of the Internal Revenue Code of 1986, as added by subsection (a), shall include a certification from each individual to whom a single-family residence is sold or transferred from an applicable taxpayer.
(2)
Form of certification
The certification required under this subsection shall be signed by the purchaser or transferee and state the following:
(A)
The name and address of the purchaser or transferee.
(B)
The sale is not a disqualified sale (as defined in  section 5000G(d)  of the Internal Revenue Code of 1986, as added by this section).
(C)
The purchaser or transferee will be subject to the penalty imposed under section 5000G(f)(2) of such Code for any false certification.
(3)
Definitions
Any term used in this subsection which is used in  chapter 50B  of the Internal Revenue Code of 1986 (as added by this section) shall have the meaning given such term under such chapter.
(d)
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
  .
(e)
Effective date
The amendments made by this section shall apply to taxable years beginning after the date of enactment of this Act.
3.
Use of tax revenues for down payment assistance grants
(a)
Establishment of housing downpayment trust fund
(1)
In general
Subchapter A of  chapter 98  of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:
9512.
Housing Downpayment Trust Fund
(a)
Creation of trust fund
There is established in the Treasury of the United States a trust fund to be known as the Housing Downpayment Trust Fund (hereinafter in this section referred to as the  Trust Fund ), consisting of such amounts as may be appropriated or credited to such Trust Fund as provided in this section and section 9602(b).
(b)
Transfers to Trust Fund
There are hereby appropriated to the Trust Fund amounts equivalent to revenues received in the Treasury from the tax imposed by sections 5000E and 5000F.
(c)
Expenditures from Trust Fund
Amounts in the Trust Fund shall be available, as provided in appropriations Acts, only for grants under section 3(b) of the  Protecting American Homes from Hedge Funds Act .
 .
(2)
Clerical amendment
The table of sections for subchapter A of  chapter 98  of the Internal Revenue Code of 1986 is amended by adding at the end the following new item:
Sec. 9512. Housing Downpayment Trust Fund.
  .
(b)
Grants program for down payment assistance programs
(1)
Establishment
The Secretary of Housing and Urban Development shall establish a program under which the Secretary makes grants to State housing finance agencies to establish new or supplement existing programs that provide down payment assistance, closing costs, and interest rate buydowns, to individuals and families whose incomes do not exceed 120 percent of area median income, in connection with the purchase of a single-family home (including condominiums, homes through community land trusts, and shared-equity home ownership) within the State.
(2)
Priority
A State housing finance agency that receives a grant under this section shall give priority to individuals and families seeking assistance to purchase any single-family residence that is sold or transferred by an applicable taxpayer (as defined in  section 5000G  of the Internal Revenue Code of 1986, as added by section 2).
4.
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 5000E(d))  for  qualified residence , and
(ii)
without regard to clause (ii) thereof.
(B)
Single-family resident
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 indebtedness incurred in 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 resident
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 property placed in service in taxable years beginning after the date of the enactment of this Act.
5.
Prohibitions on Federal mortgage assistance
(a)
Fannie Mae and Freddie Mac
Subpart A of part 2 of subtitle A of title XIII of the Housing and Community Development Act of 1992 ( 12 U.S.C. 4541 et seq. ) is amended by adding at the end the following new section:
1329.
Prohibition relating to specified large investors
The Director shall, by regulation, prohibit the enterprises from newly purchasing any mortgage on a single family housing or any portion thereof (or any interest in such a mortgage), and from newly lending on the security of or securitizing any such mortgage under which the mortgagee is a specified large investor (as such term is defined in of the Internal Revenue Code of 1986).
 .
(b)
Ginnie Mae
Section 302(c) of the National Housing Act ( 12 U.S.C. 1717(c) ) is amended by adding at the end the following new paragraph:
(6)
The Association may not newly guarantee the payment of principal of or interest on any trust certificate or other security based or backed by a trust or pool that contains, or purchase or acquire, any mortgage under which the mortgagee is a specified large investor (as such term is defined in  section 280I(b)  of the Internal Revenue Code of 1986).
 .