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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 788 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 788
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.
_______________________________________________________________________
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``HOPE (Humans over Private Equity)
for Homeownership Act''.
SEC. 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:
``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.
``SEC. 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.
``SEC. 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:
----------------------------------------------------------------------------------------------------------------
The maximum permissible units for a The maximum permissible units for
``In the case of-- hedge fund taxpayer is-- any other applicable taxpayer is--
----------------------------------------------------------------------------------------------------------------
the first full taxable year 90 percent of the number of 50 plus 90 percent of the number of
beginning after the applicable date applicable single-family residences applicable single-family residences
. . . owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the second taxable year beginning 80 percent of the number of 50 plus 80 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the third taxable year beginning 70 percent of the number of 50 plus 70 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the fourth taxable year beginning 60 percent of the number of 50 plus 60 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the fifth taxable year beginning 50 percent of the number of 50 plus 50 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the sixth taxable year beginning 40 percent of the number of 50 plus 40 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the seventh taxable year beginning 30 percent of the number of 50 plus 30 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the eighth taxable year beginning 20 percent of the number of 50 plus 20 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
the ninth taxable year beginning 10 percent of the number of 50 plus 10 percent of the number of
after the applicable date . . . applicable single-family residences applicable single-family residences
owned by the taxpayer on the owned by the taxpayer on the
applicable date applicable date
any taxable year beginning more than 0 50.
9 years after the applicable date .
. .
----------------------------------------------------------------------------------------------------------------
``(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.
``SEC. 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.
SEC. 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.
<all>
Introduced in Senate
Read twice and referred to the Committee on Finance.
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