[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 788 Introduced in Senate (IS)]

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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:


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                                       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.
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