HOPE for Homeownership Act
- Bill Number
- H.R. 1745
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-02-27: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-02-25T09:06:31Z
AI-Generated Summary
Purpose
The "Humans over Private Equity for Homeownership Act" (H.R. 1745), also known as the "HOPE for Homeownership Act," aims to discourage large investment entities like hedge funds from acquiring and holding large numbers of single-family homes. It does this by imposing financial penalties, encouraging these entities to sell properties to individual buyers and increase housing availability for everyday people.
Key Provisions
- Tax on New Acquisitions (Section 5000E): Hedge funds (defined as applicable taxpayers with $50 million or more in assets under management) must pay an excise tax on any single-family home bought after the law's enactment. The tax is the greater of 15% of the home's purchase price (its adjusted cost basis at acquisition) or $10,000. A single-family home is a property with 1 to 4 dwelling units, with exceptions for foreclosed unoccupied properties (unless bought by a hedge fund), owner-occupied homes, or low-income housing eligible for tax credits.
- Tax on Excess Ownership (Section 5000F): Entities covered by the law (called "applicable taxpayers," such as partnerships, corporations, or real estate investment trusts that manage pooled investor funds as fiduciaries) face a tax if they own too many single-family homes at year-end. The tax is $5,000 per excess home. Ownership is based on majority interest (over 50%), and related entities are aggregated as one owner.
- Reduction requirements phase in over time, based on homes owned by a set "applicable date" (generally the end of the first full tax year after enactment, or the prior year-end for new hedge funds):
- For hedge funds: Must reduce to 90% of prior holdings in year 1, decreasing by 10% annually to 0% after 9 years.
- For other applicable taxpayers: Allowed to keep 50 homes plus 90% of excess in year 1, decreasing the excess percentage to 0% after 9 years (but always at least 50 homes).
- Sales to businesses or individuals who already own another home ("disqualified sales") do not count toward reductions and are treated as if still owned.
- Disallowed Deductions (Section 3):
- No deduction for mortgage interest on single-family homes if the owner owes the excess ownership tax.
- No depreciation deduction (a tax break for wear and tear on rental properties) for such homes.
- These rules apply only to homes where the owner is liable for the new excise tax.
- Exclusions and Rules:
- Nonprofits (tax-exempt under section 501(c)(3)) and builders primarily in the business of constructing or renovating homes for sale are exempt.
- Aggregation rules treat affiliated companies as one entity for counting homes and assets.
The law applies to tax years starting after enactment.
Significant Changes to Existing Law
- Adds a new Chapter 50B to the Internal Revenue Code (Subtitle D, covering excise taxes) with sections 5000E through 5000G, introducing taxes specifically targeting institutional ownership of single-family homes—something not previously addressed in this way.
- Amends Section 163 (interest deductions) to block mortgage interest write-offs for penalized owners, redefining "qualified residence" to exclude these institutional properties.
- Amends Section 167 (depreciation) to deny depreciation for single-family homes owned by entities liable for the new tax.
These changes limit tax benefits that investment entities currently use for rental housing portfolios, without altering rules for individual homeowners or small-scale investors.
Potential Impacts
- On Government Agencies: The Internal Revenue Service (IRS) will gain revenue from the new excise taxes and enforce compliance through audits and reporting, potentially increasing administrative workload. No direct impact on other agencies.
- On Citizens: Could increase the supply of single-family homes for sale to individuals by forcing large investors to divest, potentially making homeownership more accessible and affordable in markets dominated by institutional buyers. However, it might raise rental prices if investors pass on costs or reduce rental stock.
- On Investment Entities: Hedge funds and similar groups may face significant financial pressure to sell properties, altering their real estate strategies and possibly shifting investments elsewhere. Smaller entities (under $50 million in assets) are less affected.
- On International Relations: No apparent impact, as the law focuses on domestic tax policy and U.S.-based entities.
Main Stakeholders Affected
- Investment Entities: Hedge funds, private equity firms, real estate investment trusts (REITs), and partnerships managing pooled funds—especially those with large single-family portfolios—will bear the direct costs and need to adjust holdings.
- Individual Homebuyers and Renters: Potential beneficiaries through greater access to homes for purchase and possibly stabilized rental markets.
- Builders and Nonprofits: Largely unaffected or exempt, allowing them to continue operations without penalties.
- Investors in These Entities: Indirectly impacted via reduced returns on real estate investments.
- Taxpayers Generally: May see broader housing market effects, with the government collecting new tax revenue.
Notable Legal, Constitutional, or Political Implications
- Legal: Relies on Congress's broad power to impose excise taxes under the Constitution (Article I, Section 8), but could invite lawsuits over definitions like "majority ownership" or aggregation rules, potentially requiring IRS guidance or court clarification. The phase-in period provides time for compliance, reducing abrupt disruption claims.
- Constitutional: Unlikely to violate equal protection (Fifth/Fourteenth Amendments) as it targets a specific economic activity (institutional housing investment) rather than individuals based on protected traits. Forcing sales through taxes might raise "takings" concerns under the Fifth Amendment if seen as devaluing property without compensation, though taxes generally do not qualify as takings.
- Political: Addresses housing affordability concerns by prioritizing individual over corporate ownership, which could appeal to voters facing high home prices but draw opposition from the financial industry for interfering with free markets. As an introduced bill (referred to the House Ways and Means Committee), its passage would signal a shift toward regulating Wall Street's role in residential real estate.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (8)
Rep. Sánchez, Linda T. [D-CA-38], Rep. Latimer, George [D-NY-16], Rep. Soto, Darren [D-FL-9], Rep. Lofgren, Zoe [D-CA-18], Rep. Bonamici, Suzanne [D-OR-1], Rep. Thompson, Mike [D-CA-4], Rep. Goodlander, Maggie [D-NH-2], Rep. Levin, Mike [D-CA-49]
Recent Actions
- 2025-02-27: Referred to the House Committee on Ways and Means.
- 2025-02-27: Introduced in House
- 2025-02-27: Introduced in House
Bill Versions
- Humans over Private Equity for Homeownership Act — issued 2025-02-27 — PDF (13 pages)