Stop Wall Street Landlords Act of 2026

Bill Number

H.R. 7138

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-01-16: Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.

Last Updated

2026-02-10T00:31:40Z

AI-Generated Summary

Purpose of the Legislation

The "Stop Wall Street Landlords Act of 2026" aims to reduce the influence of large institutional investors in the single-family housing market. It seeks to discourage these investors from owning and selling single-family homes by limiting tax benefits, imposing financial penalties, and restricting access to federal mortgage support. The goal is to promote housing affordability for individuals and families, particularly low-income renters, by directing related revenues toward affordable rental housing programs.

Key Provisions

• Tax Deduction Restrictions (Section 2): Adds a new section to the Internal Revenue Code (IRC) disallowing deductions for mortgage interest payments, homeowners' insurance premiums, and depreciation on single-family homes owned by "specified large investors."
• A specified large investor is defined as any person or controlled group (e.g., corporations under common control) with net assets exceeding $100 million at any point in the tax year. Government entities and certain nonprofits (e.g., 501(c)(3) organizations) are exempt.
• A single-family home includes properties with 1 to 4 dwelling units in the U.S., but excludes federally assisted housing (e.g., buildings supported by HUD programs, low-income housing tax credits, or certain bonds).
• Exceptions apply to an investor's principal residence (if the investor is an individual) or homes that the investor newly constructs or substantially rehabilitates (rehabilitation means major renovations qualifying for tax credits under existing law).
• Applies to expenses paid or depreciation occurring 18 months after enactment.

• Excise Tax on Sales (Section 3): Imposes a new 100% tax on the sale price of single-family homes sold or transferred by specified large investors. Uses the same definitions and exceptions as the deduction restrictions.
• Applies to sales and transfers occurring 18 months after enactment.

• Revenue Allocation (Section 4): Directs all excise tax collections into the Housing Trust Fund (established under federal housing law). These funds, subject to congressional appropriations, must support the creation and preservation of rental housing affordable to extremely low- and very low-income families, including homeless families.

• Federal Mortgage Restrictions (Section 5): Prohibits government-sponsored enterprises (Fannie Mae and Freddie Mac) from purchasing, lending on, or securitizing (bundling into securities) new mortgages for single-family homes if the borrower is a specified large investor. Similarly, the Government National Mortgage Association (Ginnie Mae) cannot guarantee or acquire such mortgages. The term "specified large investor" cross-references the IRC definition.

Significant Changes to Existing Law

• Internal Revenue Code Amendments: Introduces Section 280I to block specific deductions previously available to large investors for single-family home ownership, and adds a new subchapter (E) under Chapter 36 for the excise tax—effectively a full tax on sales proceeds, which is unprecedented in scale for this type of transaction.
• Housing Finance Reforms: Modifies the Housing and Community Development Act of 1992 and the National Housing Act to bar federal entities (Fannie Mae, Freddie Mac, Ginnie Mae) from supporting mortgages to large investors, shifting away from current practices that allow such financing. This creates a regulatory prohibition enforced by the Federal Housing Finance Agency (for Fannie/Freddie) and Ginnie Mae.
• No changes to existing deductions or taxes for smaller investors or individuals; the rules target only those meeting the $100 million net asset threshold.

Potential Impacts

• On Citizens: Could increase availability of single-family homes for purchase by individuals and small buyers by making it costlier for large investors to acquire, hold, or sell properties. Low-income renters may benefit indirectly through expanded affordable housing funded by the excise tax revenues.
• On Government Agencies: The Treasury Department will administer new tax rules, potentially increasing enforcement workload. Housing agencies like HUD and the Rural Housing Service will see boosted funding for affordable programs via the Housing Trust Fund. Fannie Mae, Freddie Mac, and Ginnie Mae must implement new restrictions, possibly reducing their portfolios of investor-backed mortgages.
• On International Relations: No direct impacts, as the bill focuses on U.S. domestic housing and tax policy without referencing foreign entities or cross-border activities.

Main Stakeholders Affected

• Large Investors: Primarily Wall Street firms, hedge funds, private equity groups, and other entities with over $100 million in net assets that own portfolios of single-family homes; they face higher costs and reduced federal support, potentially forcing divestment.
• Individual Homebuyers and Homeowners: Benefit from a less competitive market dominated by institutions, though some (e.g., those using investor financing) may face indirect effects on mortgage availability.
• Low-Income Families and Renters: Gain from increased funding for affordable rental housing, targeting extremely low- and very low-income households, including the homeless.
• Federal Agencies and Nonprofits: HUD, Treasury, Fannie Mae, Freddie Mac, Ginnie Mae, and tax-exempt housing organizations must adapt to new rules; nonprofits are exempt from investor restrictions.
• Real Estate Market Participants: Builders, realtors, and lenders dealing with single-family properties may see shifts in demand and financing options.

Notable Legal, Constitutional, or Political Implications

• Legal Implications: The bill's definitions (e.g., controlled groups, net assets) rely on existing IRC rules but introduce novel applications, which could lead to disputes over asset valuation or group attribution. Enforcement may require new IRS regulations, and the 100% excise tax could face challenges as a potential "penalty" rather than a true tax, affecting its constitutionality.
• Constitutional Implications: May raise questions under the Fifth Amendment's Takings Clause if viewed as devaluing existing investor property without compensation, or under equal protection principles for distinguishing large investors from others. However, Congress has broad authority over taxation and housing finance, so these hurdles may be surmountable with clear definitions.
• Political Implications: Targets "Wall Street landlords" to address housing affordability crises, aligning with debates on corporate influence in residential markets. Referred to House committees on Ways and Means (tax) and Financial Services (housing), it signals bipartisan potential but could spark opposition from business interests advocating for investment in housing supply.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Khanna, Ro [D-CA-17]

Cosponsors (15)

Rep. Watson Coleman, Bonnie [D-NJ-12], Rep. Deluzio, Christopher R. [D-PA-17], Rep. García, Jesús G. "Chuy" [D-IL-4], Rep. Jackson, Jonathan L. [D-IL-1], Rep. Simon, Lateefah [D-CA-12], Rep. Takano, Mark [D-CA-39], Rep. Frost, Maxwell [D-FL-10], Rep. Tlaib, Rashida [D-MI-12], Rep. Tokuda, Jill N. [D-HI-2], Rep. Lee, Summer L. [D-PA-12], Rep. Kelly, Robin L. [D-IL-2], Rep. Cherfilus-McCormick, Sheila [D-FL-20], Rep. Thanedar, Shri [D-MI-13], Rep. Vasquez, Gabe [D-NM-2], Rep. Grijalva, Adelita S. [D-AZ-7]

Recent Actions

• 2026-01-16: Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2026-01-16: Referred to the Committee on Ways and Means, and in addition to the Committee on Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
• 2026-01-16: Introduced in House
• 2026-01-16: Introduced in House

Bill Versions

• Stop Wall Street Landlords Act of 2026 — issued 2026-01-16 — PDF (8 pages)