Introduced Version
HOUSE BILL No. 1176
_____
DIGEST OF INTRODUCED BILL
Citations Affected: IC 5-20-11; IC 6-1.1-51.
Synopsis: Investor ownership of single family residences. Establishes
the housing down payment assistance fund. Establishes a tax of 50%
of the fair market value of a single family residence for each single
family residence acquired by an applicable taxpayer after the
applicable date. Establishes a maximum number of single family
residences that may be owned by an applicable taxpayer after the
applicable date for purposes of calculating an annual tax on any excess
single family residences.
Effective: July 1, 2024.
Harris
January 9, 2024, read first time and referred to Committee on Ways and Means.
2024 IN 1176—LS 6668/DI 137 Introduced
Second Regular Session of the 123rd General Assembly (2024)
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana
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Conflict reconciliation: Text in a statute in this style type or this style type reconciles conflicts
between statutes enacted by the 2023 Regular Session of the General Assembly.
HOUSE BILL No. 1176
A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
Be it enacted by the General Assembly of the State of Indiana:
1 SECTION 1. IC 5-20-11 IS ADDED TO THE INDIANA CODE AS
2 A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY
3 1, 2024]:
4 Chapter 11. Housing Down Payment Assistance Fund
5 Sec. 1. As used in this chapter, "authority" refers to the Indiana
6 housing and community development authority created by
7 IC 5-20-1-3.
8 Sec. 2. As used in this chapter, "fund" refers to the housing
9 down payment assistance fund established by section 3 of this
10 chapter.
11 Sec. 3. (a) The housing down payment assistance fund is
12 established for the purpose of providing down payment assistance
13 to buyers purchasing single family residences. The fund shall be
14 administered by the authority.
15 (b) The fund consists of:
16 (1) payments received for taxes assessed under IC 6-1.1-51-10
17 and IC 6-1.1-51-11;
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1 (2) payments received for penalties assessed under
2 IC 6-1.1-51-15; and
3 (3) any federal funds received for the purpose of providing
4 down payment assistance to buyers purchasing single family
5 residences.
6 (c) The expenses of administering the fund shall be paid from
7 money in the fund.
8 (d) The treasurer of state shall invest the money in the fund not
9 currently needed to meet the obligations of the fund in the same
10 manner as other public money may be invested. Interest that
11 accrues from these investments shall be deposited in the fund.
12 (e) Money in the fund at the end of a state fiscal year does not
13 revert to the state general fund.
14 Sec. 4. The authority shall give priority in awarding assistance
15 from the fund to families seeking assistance to purchase a single
16 family residence that is sold or transferred by an applicable
17 taxpayer (as defined in IC 6-1.1-51-4).
18 Sec. 5. The authority shall adopt rules under IC 4-22-2 to
19 implement this chapter.
20 SECTION 2. IC 6-1.1-51 IS ADDED TO THE INDIANA CODE
21 AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE
22 JULY 1, 2024]:
23 Chapter 51. Taxes on Single Family Residences Owned by
24 Hedge Funds
25 Sec. 1. As used in this chapter, "applicable date" means either:
26 (1) December 31, 2024; or
27 (2) for a taxpayer who was not a hedge fund taxpayer in the
28 preceding taxable year, the last day of the taxable year in the
29 taxable year immediately preceding the taxable year in which
30 the taxpayer qualifies as a hedge fund taxpayer.
31 Sec. 2. (a) As used in this chapter, "applicable entity" means a
32 partnership, corporation, or real estate investment trust.
33 (b) The term does not include:
34 (1) an organization that is exempt from federal income
35 taxation under Section 501(c)(3) of the Internal Revenue
36 Code; or
37 (2) an organization primarily engaged in the construction or
38 rehabilitation of single family residences.
39 Sec. 3. As used in this chapter, "applicable single family
40 residence" means a single family residence that is acquired on or
41 before the applicable date.
42 Sec. 4. As used in this chapter, "applicable taxpayer" means an
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1 applicable entity that:
2 (1) manages funds pooled from investors; and
3 (2) is a fiduciary with respect to the investors described in
4 subdivision (1).
5 Sec. 5. As used in this chapter, "department" means the
6 department of state revenue.
7 Sec. 6. As used in this chapter, "disqualified sale" means any
8 sale or transfer to:
9 (1) a corporation or other entity engaged in a trade or
10 business; or
11 (2) an individual who owns any other single family residence
12 at the time of such sale or transfer.
13 Sec. 7. As used in this chapter, "hedge fund taxpayer" means,
14 with respect to any taxable year, an applicable taxpayer that has
15 fifty million dollars ($50,000,000) or more in net value or assets
16 under its management on any day during the taxable year.
17 Sec. 8. (a) As used in this chapter, "single family residence"
18 means a residential property consisting of one (1) to four (4)
19 dwelling units.
20 (b) The term does not include:
21 (1) an unoccupied single family residence acquired through
22 foreclosure;
23 (2) a single family residence that is:
24 (A) not rented or leased; and
25 (B) used as the principal residence of a person who has an
26 ownership interest in the applicable taxpayer; or
27 (3) a single family residence constructed, acquired, or
28 operated with federally appropriated funding sources.
29 Sec. 9. (a) For purposes of this chapter, an applicable taxpayer
30 shall be treated as acquiring a single family residence if the
31 applicable taxpayer acquires a majority ownership interest in the
32 single family residence, regardless of the percentage of the
33 ownership interest.
34 (b) For purposes of this chapter, an applicable taxpayer shall be
35 treated as owning a single family residence if the applicable
36 taxpayer owns a majority interest in the single family residence,
37 regardless of the percentage of the ownership interest.
38 Sec. 10. Each single family residence acquired by an applicable
39 taxpayer after the applicable date is subject to a tax equal to fifty
40 percent (50%) of the fair market value of the single family
41 residence.
42 Sec. 11. (a) If the number of applicable single family residences
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1 owned by an applicable taxpayer as of the last day of the taxable
2 year is more than the maximum permissible units under section 12
3 of this chapter, the applicable taxpayer is subject to a tax equal to
4 the amount determined in STEP FOUR of the following formula:
5 STEP ONE: Determine the number of applicable single family
6 residences owned by the taxpayer as of the last day of the
7 taxable year.
8 STEP TWO: Determine the sum of:
9 (A) zero (0), in the case of a hedge fund taxpayer; or
10 (B) fifty (50), in the case of any other applicable taxpayer;
11 plus the maximum permissible units for the taxable year.
12 STEP THREE: Divide the number determined in STEP ONE
13 by the number determined in STEP TWO.
14 STEP FOUR: Determine the product of:
15 (A) the number determined in STEP THREE; multiplied
16 by
17 (B) fifty thousand dollars ($50,000).
18 (b) A single family residence that is sold or transferred in a
19 disqualified sale during a taxable year shall be treated as a single
20 family residence that is owned by the applicable taxpayer as of the
21 last day of the taxable year.
22 (c) All persons which are treated as a single employer under
23 Section 52(a) or Section 52(b) of the Internal Revenue Code shall
24 be treated as a single applicable taxpayer.
25 Sec. 12. The maximum permissible units for a taxable year is
26 calculated as follows:
27 (1) For the first full taxable year beginning after the
28 applicable date, the following:
29 (A) For a hedge fund taxpayer, ninety percent (90%) of the
30 number of applicable single family residences owned by
31 the hedge fund taxpayer on the applicable date.
32 (B) For any other applicable taxpayer, fifty (50) plus ninety
33 percent (90%) of the number of applicable single family
34 residences owned by the applicable taxpayer on the
35 applicable date.
36 (2) For the second taxable year beginning after the applicable
37 date, the following:
38 (A) For a hedge fund taxpayer, eighty percent (80%) of the
39 number of applicable single family residences owned by
40 the hedge fund taxpayer on the applicable date.
41 (B) For any other applicable taxpayer, fifty (50) plus eighty
42 percent (80%) of the number of applicable single family
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1 residences owned by the applicable taxpayer on the
2 applicable date.
3 (3) For the third taxable year beginning after the applicable
4 date, the following:
5 (A) For a hedge fund taxpayer, seventy percent (70%) of
6 the number of applicable single family residences owned
7 by the hedge fund taxpayer on the applicable date.
8 (B) For any other applicable taxpayer, fifty (50) plus
9 seventy percent (70%) of the number of applicable single
10 family residences owned by the applicable taxpayer on the
11 applicable date.
12 (4) For the fourth taxable year beginning after the applicable
13 date, the following:
14 (A) For a hedge fund taxpayer, sixty percent (60%) of the
15 number of applicable single family residences owned by
16 the hedge fund taxpayer on the applicable date.
17 (B) For any other applicable taxpayer, fifty (50) plus sixty
18 percent (60%) of the number of applicable single family
19 residences owned by the applicable taxpayer on the
20 applicable date.
21 (5) For the fifth taxable year beginning after the applicable
22 date, the following:
23 (A) For a hedge fund taxpayer, fifty percent (50%) of the
24 number of applicable single family residences owned by
25 the hedge fund taxpayer on the applicable date.
26 (B) For any other applicable taxpayer, fifty (50) plus fifty
27 percent (50%) of the number of applicable single family
28 residences owned by the applicable taxpayer on the
29 applicable date.
30 (6) For the sixth taxable year beginning after the applicable
31 date, the following:
32 (A) For a hedge fund taxpayer, forty percent (40%) of the
33 number of applicable single family residences owned by
34 the hedge fund taxpayer on the applicable date.
35 (B) For any other applicable taxpayer, fifty (50) plus forty
36 percent (40%) of the number of applicable single family
37 residences owned by the applicable taxpayer on the
38 applicable date.
39 (7) For the seventh taxable year beginning after the applicable
40 date, the following:
41 (A) For a hedge fund taxpayer, thirty percent (30%) of the
42 number of applicable single family residences owned by
2024 IN 1176—LS 6668/DI 137 6
1 the hedge fund taxpayer on the applicable date.
2 (B) For any other applicable taxpayer, fifty (50) plus thirty
3 percent (30%) of the number of applicable single family
4 residences owned by the applicable taxpayer on the
5 applicable date.
6 (8) For the eighth taxable year beginning after the applicable
7 date, the following:
8 (A) For a hedge fund taxpayer, twenty percent (20%) of
9 the number of applicable single family residences owned
10 by the hedge fund taxpayer on the applicable date.
11 (B) For any other applicable taxpayer, fifty (50) plus
12 twenty percent (20%) of the number of applicable single
13 family residences owned by the applicable taxpayer on the
14 applicable date.
15 (9) For the ninth taxable year beginning after the applicable
16 date, the following:
17 (A) For a hedge fund taxpayer, ten percent (10%) of the
18 number of applicable single family residences owned by
19 the hedge fund taxpayer on the applicable date.
20 (B) For any other applicable taxpayer, fifty (50) plus ten
21 percent (10%) of the number of applicable single family
22 residences owned by the applicable taxpayer on the
23 applicable date.
24 (10) For a taxable year beginning more than nine (9) years
25 after the applicable date, the following:
26 (A) For a hedge fund taxpayer, zero (0) applicable single
27 family residences.
28 (B) For any other applicable taxpayer, fifty (50) applicable
29 single family residences.
30 Sec. 13. The amounts collected for:
31 (1) a tax assessed under sections 10 and 11 of this chapter;
32 and
33 (2) a penalty assessed under section 15 of this chapter;
34 must be transferred to the housing down payment assistance fund
35 established by IC 5-20-11-3.
36 Sec. 14. (a) The department shall require such reporting as the
37 department deems necessary or appropriate to carry out the
38 purposes of this chapter, which must include:
39 (1) the dates on which single family residences owned by an
40 applicable taxpayer were acquired by the applicable
41 taxpayer; and
42 (2) whether a person acquiring a single family residence from
2024 IN 1176—LS 6668/DI 137 7
1 an applicable taxpayer owns any other single family
2 residences at the time of the acquisition.
3 (b) The reporting required under subsection (a)(2) must include
4 a certification from each person to whom a single family residence
5 is sold or transferred from an applicable taxpayer. The
6 certification must be signed by the purchaser or transferee and
7 state:
8 (1) the name and address of the purchaser or transferee;
9 (2) that the sale is not a disqualified sale; and
10 (3) that the purchaser or transferee will be subject to the
11 penalty imposed under section 15 of this chapter for any false
12 certification.
13 Sec. 15. (a) An applicable taxpayer that fails to report the
14 information required under section 14 of this chapter or fails to
15 include correct information in a report shall pay a penalty of
16 twenty thousand dollars ($20,000) to the department.
17 (b) A penalty may not be assessed under subsection (a) if it is
18 shown that an applicable taxpayer's failure to report the
19 information required under section 14 of this chapter is due to
20 reasonable cause and not to willful neglect.
21 (c) Not later than January 31, 2025, the department shall
22 publish a form on its website to be used for calculating the amount
23 of tax owed under this chapter.
2024 IN 1176—LS 6668/DI 137