II
119THCONGRESS
1
STSESSION 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 resi-
dences to dispose of such residences, and for other purposes.
IN THE SENATE OF THE UNITED STATES
FEBRUARY27, 2025
Mr. M
ERKLEY(for himself, Mr. KING, Mr. VANHOLLEN, Mr. GALLEGO, Mr.
S
ANDERS, 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 own-
ing excess single-family residences to dispose of such
residences, and for other purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘HOPE (Humans over 4
Private Equity) for Homeownership Act’’. 5
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SEC. 2. EXCISE TAX ON CERTAIN TAXPAYERS FAILING TO 1
SELL EXCESS SINGLE-FAMILY RESIDENCES. 2
(a) I
NGENERAL.—Subtitle D of the Internal Rev-3
enue Code of 1986 is amended by adding at the end the 4
following new chapter: 5
‘‘CHAPTER 50B—EXCESS SINGLE-FAMILY 6
RESIDENCES 7
‘‘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 RESI-
8
DENCES. 9
‘‘(a) I
NGENERAL.—In the case of a hedge fund tax-10
payer, there is hereby imposed a tax on the acquisition 11
of any newly acquired single-family residence equal to the 12
greater of— 13
‘‘(1) 15 percent of the purchase price, or 14
‘‘(2) $10,000. 15
‘‘(b) N
EWLYACQUIREDSINGLE-FAMILYRESI-16
DENCE.—For purposes of this section, the term ‘newly ac-17
quired single-family residence’ means any single-family 18
residence which was acquired by the taxpayer in any tax-19
able year which begins after the date of the enactment 20
of this chapter. 21
‘‘(c) P
URCHASEPRICE.—For purposes of this sec-22
tion, the term ‘purchase price’ means the adjusted basis 23
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of the newly acquired single-family residence on the date 1
such residence is purchased. 2
‘‘SEC. 5000F. EXCESS SINGLE-FAMILY RESIDENCES. 3
‘‘(a) I
NGENERAL.—In the case of an applicable tax-4
payer who fails to meet the requirements of subsection (b), 5
there is hereby imposed a tax equal to the product of— 6
‘‘(1) $5,000, and 7
‘‘(2) the excess of— 8
‘‘(A) the number of applicable single-family 9
residences owned by the taxpayer as of the last 10
day of the taxable year, over 11
‘‘(B) the maximum permissible units for 12
the taxable year. 13
‘‘(b) R
EQUIREMENT.— 14
‘‘(1) I
N GENERAL.—An applicable taxpayer 15
meets the requirement of this subsection for any tax-16
able year if the number of applicable single-family 17
residences owned by the taxpayer as of the last day 18
of the taxable year is equal to or less than the max-19
imum permissible units determined with respect to 20
such taxpayer for such taxable year. 21
‘‘(2) S
PECIAL RULE FOR CERTAIN SALES .—For 22
purposes of applying paragraph (1), a single-family 23
residence which is sold or transferred in a disquali-24
fied sale during the taxable year shall be treated as 25
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a single-family residence which is owned by the ap-1
plicable taxpayer as of the last day of such taxable 2
year. 3
‘‘(c) M
AXIMUMPERMISSIBLEUNITS.—The max-4
imum permissible units with respect to any applicable tax-5
payer for any taxable year shall be determined as follows: 6
‘‘In the case of—
The maximum permis-
sible units for a hedge
fund taxpayer is—
The maximum permis-
sible units for any other
applicable taxpayer is—
the first full taxable year
beginning after the ap-
plicable date . . .
90 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 90 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the second taxable year
beginning after the ap-
plicable date . . .
80 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 80 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the third taxable year be-
ginning after the ap-
plicable date . . .
70 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 70 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the fourth taxable year
beginning after the ap-
plicable date . . .
60 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 60 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the fifth taxable year be-
ginning after the ap-
plicable date . . .
50 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 50 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the sixth taxable year be-
ginning after the ap-
plicable date . . .
40 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 40 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the seventh taxable year
beginning after the ap-
plicable date . . .
30 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 30 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
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‘‘In the case of—
The maximum permis-
sible units for a hedge
fund taxpayer is—
The maximum permis-
sible units for any other
applicable taxpayer is—
the eighth taxable year
beginning after the ap-
plicable date . . .
20 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 20 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
the ninth taxable year
beginning after the ap-
plicable date . . .
10 percent of the num-
ber of applicable sin-
gle-family residences
owned by the taxpayer
on the applicable date
50 plus 10 percent of the
number of applicable
single-family resi-
dences owned by the
taxpayer on the appli-
cable date
any taxable year begin-
ning more than 9
years after the applica-
ble date . . .
0 50.
‘‘(d) DEFINITIONS.—For purposes of this section— 1
‘‘(1) A
PPLICABLE SINGLE -FAMILY RESI -2
DENCE.—The term ‘applicable single-family resi-3
dence’ means any single-family residence which was 4
acquired on or before the applicable date. 5
‘‘(2) A
PPLICABLE DATE.— 6
‘‘(A) I
N GENERAL.—The term ‘applicable 7
date’ means— 8
‘‘(i) the last day of the first full tax-9
able year ending on or after the date of the 10
enactment of this chapter, or 11
‘‘(ii) in the case of any taxpayer de-12
scribed in subparagraph (B), the date pro-13
vided in such subparagraph. 14
‘‘(B) T
AXPAYERS CHANGING STATUS .— 15
‘‘(i) I
N GENERAL.—In the case of any 16
applicable taxpayer described in clause (ii), 17
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the applicable date means the last day of 1
the taxable year immediately preceding the 2
taxable year in which the taxpayer is de-3
scribed in such clause. 4
‘‘(ii) A
PPLICABLE TAXPAYER DE -5
SCRIBED.—An applicable taxpayer is de-6
scribed in this clause with respect to any 7
taxable year if— 8
‘‘(I) such taxpayer was not a 9
hedge fund taxpayer for the preceding 10
taxable year, and 11
‘‘(II) such taxpayer is a hedge 12
fund taxpayer for such taxable year. 13
‘‘(3) D
ISQUALIFIED SALE.—The term ‘disquali-14
fied sale’ means any sale or transfer to— 15
‘‘(A) a corporation or other entity engaged 16
in a trade or business, or 17
‘‘(B) an individual who owns any other sin-18
gle-family residence at the time of such sale or 19
transfer. 20
‘‘SEC. 5000G. DEFINITIONS AND OTHER SPECIAL RULES. 21
‘‘(a) A
PPLICABLETAXPAYER.—For purposes of this 22
chapter— 23
‘‘(1) I
N GENERAL.—The term ‘applicable tax-24
payer’ means any applicable entity which— 25
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‘‘(A) manages funds pooled from investors, 1
and 2
‘‘(B) is a fiduciary with respect to such in-3
vestors. 4
‘‘(2) A
PPLICABLE ENTITY.— 5
‘‘(A) I
N GENERAL.—The term ‘applicable 6
entity’ means— 7
‘‘(i) any partnership, 8
‘‘(ii) any corporation, or 9
‘‘(iii) any real estate investment trust. 10
‘‘(B) E
XCEPTIONS.—The term ‘applicable 11
entity’ shall not include— 12
‘‘(i) an organization which is de-13
scribed in section 501(c)(3) and exempt 14
from tax under section 501(a), or 15
‘‘(ii) an organization which is pri-16
marily engaged in the construction or reha-17
bilitation of single-family residences and 18
which offers such residences for sale in the 19
ordinary course of business. 20
‘‘(b) H
EDGEFUNDTAXPAYER.—For purposes of 21
this section, the term ‘hedge fund taxpayer’ means, with 22
respect to any taxable year, any applicable taxpayer which 23
has $50,000,000 or more in net value or assets under 24
management on any day during the taxable year. 25
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‘‘(c) SINGLE-FAMILYRESIDENCE.—For purposes of 1
this chapter— 2
‘‘(1) I
N GENERAL.—The term ‘single-family 3
residence’ means a residential property consisting of 4
1- to 4 dwelling units. 5
‘‘(2) E
XCEPTIONS.—A residential property shall 6
not be treated as a residential property described in 7
clause (i) if— 8
‘‘(A) such property is unoccupied and ac-9
quired through foreclosure (other than such a 10
residence acquired through foreclosure by a 11
hedge fund taxpayer, as defined in section 12
5000F(d)(3)), 13
‘‘(B) such property is— 14
‘‘(i) not rented or leased, and 15
‘‘(ii) used as the principal residence 16
(within the meaning of section 121) of any 17
person who has an ownership interest in 18
the applicable taxpayer, or 19
‘‘(C) such property— 20
‘‘(i) was a building with respect to 21
which a credit was allowed under section 22
42 (relating to the low-income housing 23
credit), and 24
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‘‘(ii) is not owned by a hedge fund 1
taxpayer (as defined in section 2
5000F(d)(3)). 3
‘‘(d) A
CQUISITION; OWNERSHIP.—For purposes of 4
this chapter, an applicable taxpayer shall be treated— 5
‘‘(1) as acquiring a single-family residence if 6
the applicable taxpayer acquires a majority owner-7
ship interest in the single-family residence, regard-8
less of the percentage of that ownership interest, 9
and 10
‘‘(2) as owning a single-family residence if the 11
applicable taxpayer owns a majority ownership inter-12
est in the single-family residence, regardless of the 13
percentage of that ownership interest. 14
‘‘(e) A
GGREGATIONRULES.— 15
‘‘(1) I
N GENERAL.—For purposes of this chap-16
ter, all persons which are treated as a single em-17
ployer under subsections (a) and (b) of section 52 18
shall be treated as a single person. 19
‘‘(2) M
ODIFICATIONS.—For purposes of this 20
subsection— 21
‘‘(A) section 52(a) shall be applied by sub-22
stituting ‘component members’ for ‘members’, 23
and 24
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‘‘(B) for purposes of applying section 1
52(b), the term ‘trade or business’ shall include 2
any activity treated as a trade or business 3
under paragraph (5) or (6) of section 469(c) 4
(determined without regard to the phrase ‘To 5
the extent provided in regulations’ in such para-6
graph (6)). 7
‘‘(3) C
OMPONENT MEMBER .—For purposes of 8
this paragraph, the term ‘component member’ has 9
the meaning given such term by section 1563(b), ex-10
cept that the determination shall be made without 11
regard to section 1563(b)(2).’’. 12
(b) C
LERICALAMENDMENT.—The table of chapters 13
for subtitle D of the Internal Revenue Code of 1986 is 14
amended by adding at the end the following new item: 15
‘‘CHAPTER50B—EXCESSSINGLE-FAMILYRESIDENCES’’.
(c) EFFECTIVEDATE.—The amendments made by 16
this section shall apply to taxable years beginning after 17
the date of enactment of this Act. 18
SEC. 3. DISALLOWANCE OF MORTGAGE INTEREST AND DE-19
PRECIATION IN CONNECTION WITH SINGLE- 20
FAMILY RESIDENCES OWNED BY COVERED 21
TAXPAYERS. 22
(a) M
ORTGAGEINTEREST.— 23
(1) I
N GENERAL.—Section 163 of the Internal 24
Revenue Code of 1986 is amended by redesignating 25
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subsection (n) as subsection (o) and by inserting 1
after subsection (m) the following new subsection: 2
‘‘(n) C
ERTAININTERESTPAID BYCOVEREDTAX-3
PAYERS.— 4
‘‘(1) I
N GENERAL.—No deduction shall be al-5
lowed under this chapter for a taxable year with re-6
spect to interest paid or accrued on acquisition in-7
debtedness with respect to any single-family resi-8
dence if the owner of such single-family residence is 9
liable for tax under chapter 50B for such taxable 10
year. 11
‘‘(2) D
EFINITIONS.—For purposes of this sub-12
section— 13
‘‘(A) A
CQUISITION INDEBTEDNESS .—The 14
term ‘acquisition indebtedness’ has the meaning 15
given such term under subsection (h)(3)(B), de-16
termined— 17
‘‘(i) by substituting ‘single-family resi-18
dence (as defined in section 5000G(b))’ for 19
‘qualified residence’, and 20
‘‘(ii) without regard to clause (ii) 21
thereof. 22
‘‘(B) S
INGLE-FAMILY RESIDENCE .—The 23
term ‘single-family residence’ has the meaning 24
given such term under section 5000G(b). 25
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‘‘(C) OWNERSHIP.—The rules of section 1
5000G(c) shall apply for purposes of deter-2
mining ownership.’’. 3
(2) E
FFECTIVE DATE.—The amendments made 4
by this subsection shall apply to taxable years begin-5
ning after the date of the enactment of this Act. 6
(b) D
EPRECIATION.— 7
(1) I
N GENERAL.—Section 167 of the Internal 8
Revenue Code of 1986 is amended by redesignating 9
subsection (i) as subsection (j) and by inserting after 10
subsection (h) the following new subsection: 11
‘‘(i) D
EDUCTIONDISALLOWED FOR DISQUALIFIED 12
S
INGLEFAMILYPROPERTYOWNERS.— 13
‘‘(1) I
N GENERAL.—No deduction shall be al-14
lowed under this section for a taxable year with re-15
spect to a single-family residence if the owner of 16
such single-family residence is liable for tax under 17
chapter 50B for such taxable year. 18
‘‘(2) D
EFINITIONS.—For purposes of this sub-19
section— 20
‘‘(A) S
INGLE-FAMILY RESIDENCE .—The 21
term ‘single-family residence’ has the meaning 22
given such term under section 5000G(b). 23
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‘‘(B) OWNERSHIP.—The rules of section 1
5000G(c) shall apply for purposes of deter-2
mining ownership.’’. 3
(2) E
FFECTIVE DATE.—The amendments made 4
by this subsection shall apply to taxable years begin-5
ning after the date of the enactment of this Act. 6
Æ
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