Bill Summary
The "HOPE (Humans over Private Equity) for Homeownership Act" is proposed legislation aimed at imposing new taxes and restrictions on hedge fund taxpayers who acquire single-family residences.
Key components of the bill include:
1. **Excise Tax on Acquisitions**: A 15% excise tax will be levied on the purchase price of any newly acquired single-family residence by hedge fund taxpayers. This applies to properties with 1 to 4 dwelling units acquired after the enactment of the legislation.
2. **Definition of Hedge Fund Taxpayer**: The bill defines "hedge fund taxpayers" as entities managing large pools of investor funds (over $50 million) and operating as fiduciaries. Exemptions are provided for certain organizations, such as non-profits and those primarily engaged in property construction or rehabilitation.
3. **Corporate Surtax**: The legislation proposes an additional surtax for hedge fund corporations, increasing their corporate tax rate by 5 percentage points.
4. **Disallowance of Deductions**: Hedge fund taxpayers will be prohibited from deducting mortgage interest and depreciation related to single-family residences, which aims to limit the tax benefits typically available to property owners.
5. **Effective Dates**: The excise tax and certain disallowances will take effect for taxable years beginning after the act's enactment, while other provisions will be applied starting in the following years.
Overall, this bill seeks to address concerns over hedge funds contributing to the housing market's affordability issues by taxing their acquisitions and limiting their tax advantages.
Possible Impacts
The "HOPE (Humans over Private Equity) for Homeownership Act" may have several effects on individuals and the housing market. Here are three examples of how this legislation could affect people:
1. **Increased Housing Costs for Hedge Fund Investments**: The imposition of a 15% excise tax on single-family residences acquired by hedge fund taxpayers could lead to increased costs for hedge funds looking to invest in residential properties. This may result in higher prices for homes in the market as hedge funds pass on these costs to consumers, making homeownership less affordable for average buyers and potentially exacerbating the housing affordability crisis.
2. **Impact on Rental Markets**: Hedge funds often purchase single-family homes to rent them out. With the new tax and disallowance of mortgage interest deductions, hedge funds may find it less financially viable to invest in single-family rental properties. This could lead to a reduction in the number of rental units available, potentially driving up rents for tenants. As a result, individuals seeking rental housing may face increased competition and higher rental prices.
3. **Encouragement of Owner-Occupied Housing**: The legislation specifies that single-family residences not rented or leased and used as the principal residence by any person with an ownership interest in the hedge fund are exempt from the excise tax. This could incentivize hedge funds to convert some of their properties into owner-occupied homes rather than rentals. This shift might positively affect communities by increasing homeownership rates among individuals and families, fostering stability and investment in neighborhoods.
These examples illustrate the potential broad implications of the legislation on various stakeholders within the housing market.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3930 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 3930
To amend the Internal Revenue Code of 1986 to impose an excise tax on
the acquisition of single-family residences by hedge fund taxpayers,
and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 26, 2026
Mr. Merkley (for himself and Mr. Hawley) 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 acquisition of single-family residences by hedge fund taxpayers,
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 ACQUISITION OF SINGLE-FAMILY RESIDENCES BY HEDGE
FUND TAXPAYERS.
(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--SINGLE-FAMILY RESIDENCES
``Sec. 5000E. Newly acquired single-family residences.
``SEC. 5000E. NEWLY ACQUIRED SINGLE-FAMILY RESIDENCES.
``(a) In General.--There is hereby imposed the acquisition of any
newly acquired single-family residence by a hedge fund taxpayer an
amount equal to 15 percent of the purchase price thereof.
``(b) Newly Acquired Single-Family Residence.--For purposes of this
section--
``(1) In general.--The term `newly acquired single-family
residence' means any residential property which--
``(A) consists of 1-to-4 dwelling units, and
``(B) was acquired by the taxpayer in any taxable
year which begins after the date of the enactment of
this chapter.
``(2) Exception.--A residential property shall not be
treated as a newly acquired single-family residence if,
immediately after acquisition and at all times thereafter, such
property is--
``(A) not rented or leased, and
``(B) used as the principal residence (within the
meaning of section 121) of any person who has an
ownership interest in the hedge fund taxpayer acquiring
such taxpayer.
``(c) Hedge Fund Taxpayer.--For purposes of this chapter--
``(1) In general.--The term `hedge fund taxpayer' means,
with respect to any taxable year, any applicable entity which--
``(A) manages funds pooled from investors,
``(B) has $50,000,000 or more in net value or
assets under management on any day during the taxable
year, and
``(C) 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.
``(3) Aggregation rules.--
``(A) In general.--All persons which are treated as
a single employer under subsections (a) and (b) of
section 52 shall be treated as a single person.
``(B) Modifications.--For purposes of this
subsection--
``(i) section 52(a) shall be applied by
substituting `component members' for `members',
and
``(ii) 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)).
``(C) 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).
``(d) Other Definitions and Rules.--For purposes of this section--
``(1) Purchase price.--The term `purchase price' means the
adjusted basis of the newly acquired single-family residence on
the date such residence is purchased.
``(2) Acquisition.--A hedge fund taxpayer shall be treated
as acquiring a single-family residence if the taxpayer acquires
a majority ownership interest in the single-family residence,
regardless of the percentage of that ownership interest.''.
(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. CORPORATE SURTAX ON HEDGE FUND TAXPAYERS.
(a) In General.--Section 11 of the Internal Revenue Code of 1986 is
amended by adding at the end the following new subsection:
``(e) Hedge Fund Taxpayers.--In the case of a corporation which is
described in section 5000E(c), the percentage under subsection (b)
shall be increased by 5 percentage points.''.
(b) Effective Date.--The amendment made by this section shall apply
to taxable years beginning after December 31, 2035.
SEC. 4. DISALLOWANCE OF CERTAIN DEDUCTIONS TAKEN IN CONNECTION WITH
SINGLE-FAMILY RESIDENCES OF HEDGE FUND 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) No Deduction for Interest on Acquisition Indebtedness of
Single-Family Residences of Certain Taxpayers.--
``(1) In general.--In the case of a hedge fund taxpayer, no
deduction shall be allowed under this chapter with respect to
interest paid or accrued on acquisition indebtedness with
respect to any single-family residence.
``(2) Definitions.--For purposes of this subsection--
``(A) Hedge fund taxpayer.--The term `hedge fund
taxpayer' means, for any taxable year, any taxpayer--
``(i) who is described in section 5000E(c),
and
``(ii) who is in the trade or business of
renting or leasing single-family residences.
``(B) 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 subsection (n))' for
`qualified residence', and
``(ii) without regard to clause (ii)
thereof.
``(C) Single-family residence.--The term `single-
family residence' means any residential property which
consists of 1-to-4 dwelling units.''.
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2030.
(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 Single-Family Residences of Certain
Taxpayers.--
``(1) In general.--In the case of a hedge fund taxpayer, no
deduction shall be allowed under this section for any single-
family residence.
``(2) Definitions.--For purposes of this subsection--
``(A) Hedge fund taxpayer.--The term `hedge fund
taxpayer' means, for any taxable year, any taxpayer--
``(i) who is described in section 5000E(c),
and
``(ii) who is in the trade or business of
renting or leasing single-family residences.
``(B) Single-family residence.--The term `single-
family residence' means any residential property which
consists of 1-to-4 dwelling units.''.
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2030.
(c) Qualified Business Income.--
(1) In general.--Section 199A(d)(1) of the Internal Revenue
Code of 1986 is amended by striking ``or'' at the end of
subparagraph (A), by striking the period at the end of
subparagraph (B) and inserting ``, or'', and by adding at the
end the following new subparagraph:
``(C) any trade or business of hedge fund taxpayer
(as defined in section 163(n)(2)(A)).''.
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years beginning after December 31, 2035.
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