Affordable Housing and Homeownership Protection Act of 2026

Bill Number

S. 3754

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-01-30: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S420-421)

Last Updated

2026-02-23T16:29:28Z

AI-Generated Summary

Purpose

The Affordable Housing and Homeownership Protection Act of 2026 aims to discourage large-scale investors from purchasing single-family homes by imposing a tax on such transactions. This is intended to promote affordable housing and protect opportunities for individual homeownership, with tax revenues directed toward housing assistance programs.

Key Provisions

• Imposition of Tax: Adds a new section (SEC. 4499) to the Internal Revenue Code (IRC) under Chapter 36, Subchapter G, levying a tax on "covered investors" for buying single-family homes. The tax rate is based on the investor's size:
• 1% of the purchase price for "medium-sized investors" (owning 16–25 single-family homes at year-end).
• 3% for "large investors" (owning 26–100 homes).
• 5% for "giant investors" (owning more than 100 homes).
• Definitions:
• A "single-family home" refers to a structure designed for one family, as defined in federal housing regulations (24 CFR 81.2).
• "Own" means having a majority interest in the property, directly or indirectly.
• "Purchase price" includes the total amount paid, plus any debt assumed to acquire the home.
• New home construction by the investor is generally not counted as a purchase or ownership, except if it replaces a previously bought home on the same site.
• Exceptions: The tax does not apply to:
• Tax-exempt organizations focused on affordable housing, counseling, or neighborhood stabilization.
• State or local governments, public housing authorities, land banks, or community land trusts.
• Aggregation Rules: Related entities (e.g., controlled groups or affiliates under IRC sections 52 and 414) are treated as one person for counting homes owned. Purchases by family members or related parties may also be attributed to the investor, except for an individual's principal residence.
• Reporting Requirements: Covered investors must report the number of homes owned and purchased each year on their tax return.
• Revenue Allocation: Tax proceeds are split as follows:
• 65% to the Housing Trust Fund (for affordable housing development).
• 35% to the Capital Magnet Fund (for financing affordable housing and community development).
• Effective Date: Applies to tax years starting after December 31, 2025.

Significant Changes to Existing Law

• Introduces a novel tax specifically targeting institutional investors' purchases of existing single-family homes, which does not previously exist in the IRC.
• Modifies the Housing Trust Fund under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 by replacing the fixed $3 million minimum allocation for small states with a dynamic 1.1% of total funds available each fiscal year, potentially increasing support for smaller states.

Potential Impacts

• On Government Agencies: Increases funding for the Department of Housing and Urban Development (HUD) through the Housing Trust Fund and Capital Magnet Fund, enabling more grants for affordable housing projects, rental assistance, and community development.
• On Citizens: May reduce competition from large investors in the housing market, potentially lowering home prices and improving access for first-time buyers and middle-income families, though effects depend on investor responses.
• On Investors and Real Estate: Raises costs for medium-to-giant investors (e.g., real estate investment trusts or funds), possibly discouraging bulk purchases of existing homes and shifting focus to new construction or other investments.
• On International Relations: Minimal direct impact, as the law focuses on domestic tax and housing policy.

Main Stakeholders Affected

• Large Investors: Real estate firms, hedge funds, and institutional buyers who own multiple single-family homes, facing higher acquisition costs.
• Individual Homebuyers: Potential beneficiaries through reduced market dominance by investors, aiding homeownership.
• Affordable Housing Organizations: Nonprofits, community land trusts, and housing authorities gain exemptions and benefit from increased fund allocations.
• Government Entities: U.S. Treasury (for tax collection), HUD (for fund distribution), and state/local governments (via exemptions and enhanced housing support).
• Small States: Receive a more proportional share of Housing Trust Fund resources under the amended minimum allocation.

Notable Legal, Constitutional, or Political Implications

• Legal: Relies on Congress's constitutional power to levy taxes (Article I, Section 8), with clear definitions to avoid ambiguity in enforcement. Aggregation rules draw from existing IRC provisions on controlled groups, ensuring consistency, but may invite challenges over family attribution or valuation of "majority interest."
• Constitutional: No apparent conflicts with due process or equal protection, as the tax is uniformly applied to defined investor classes with exemptions for public-interest entities; however, it could face scrutiny if deemed to excessively burden interstate commerce.
• Political: Addresses housing affordability—a bipartisan concern amid rising prices—but may spark debate over government intervention in private markets, with support from housing advocates and opposition from business groups favoring free-market investments. The revenue dedication to housing funds ties fiscal policy to social welfare goals.

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

Sponsor

Sen. Reed, Jack [D-RI]

Cosponsors (9)

Sen. Smith, Tina [D-MN], Sen. Blumenthal, Richard [D-CT], Sen. Klobuchar, Amy [D-MN], Sen. Baldwin, Tammy [D-WI], Sen. Whitehouse, Sheldon [D-RI], Sen. Kim, Andy [D-NJ], Sen. Gallego, Ruben [D-AZ], Sen. Murphy, Christopher [D-CT], Sen. Slotkin, Elissa [D-MI]

Recent Actions

• 2026-01-30: Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S420-421)
• 2026-01-30: Introduced in Senate

Bill Versions

• Affordable Housing and Homeownership Protection Act of 2026 — issued 2026-01-30 — PDF (8 pages)