American Homeownership Act

Bill Number

S. 3904

Origin Chamber

Senate

Congress

119th Congress, Session 2

Policy Area

Taxation

Status

Introduced

Latest Action

2026-02-24: Read twice and referred to the Committee on Finance.

Last Updated

2026-03-13T22:31:13Z

AI-Generated Summary

Purpose of the Legislation

The American Homeownership Act (S. 3904) seeks to promote individual homeownership and affordable housing by limiting tax benefits and federal support for large-scale investors in residential rental properties. It aims to reduce institutional dominance in the housing market, redirect tax savings to housing assistance programs, and enhance antitrust oversight to prevent market concentration that could drive up costs for renters and buyers.

Key Provisions

• Denial of Interest Deductions (Section 2): Prohibits deductions for interest on loans related to residential rental properties (including single-family homes, manufactured homes, and multi-family units) owned by "institutional investment entities" (e.g., investment funds pooling money from wealthy investors) or "large owners" (individuals or entities controlling 50 or more rental units in aggregate).
• Exceptions: Applies only after sales to individuals (for personal use) or qualified nonprofits focused on affordable housing; new construction of single-family or multi-family units (for up to 5 years or permanently); rehabilitation of previously uninhabitable properties (for 5 years); and federally assisted or low-income tax-credit housing.
• Defines terms like "applicable residential property" (rental housing) and requires IRS regulations to prevent avoidance, including through indirect ownership.

• Denial of Depreciation Deductions (Section 3): Similarly disallows depreciation deductions (a tax break for wear and tear on property) for the same types of properties and owners, with identical exceptions. Extends to related improvements on the property site.

• Restrictions on Federal Mortgage and Property Sales (Section 4): Bans federal agencies (e.g., HUD, VA, USDA, Fannie Mae, Freddie Mac) from selling or disposing of federally backed mortgages (government-insured loans) or residential properties (including foreclosed homes or nonperforming loans) to large owners or institutional entities.
• Also prohibits issuing, insuring, guaranteeing, or securitizing (bundling into investments) new loans to these entities, unless for constructing/rehabilitating affordable housing or refinancing without removing affordability rules.
• Exempts existing loans before enactment and affordable housing projects.

• Funding for Housing Supply and Homeownership (Section 5): Redirects estimated tax savings from the deduction limits:
• 80% to HUD's HOME Investment Partnerships program for acquiring, rehabilitating, preserving, or constructing affordable housing (with 60% of that for new builds, half for extremely low-income households).
• 20% to a new grant fund for "qualified homebuyers" (first-time buyers with incomes up to 120-140% of area median, including first-generation buyers or those from foster care; excludes "heir property" – inherited land held jointly – from prior ownership counts). Grants cover up to the greater of $20,000 or 10% of purchase price for down payments, closing costs, or interest rate reductions on primary residences.

• Enhanced Antitrust Monitoring (Section 6): Amends the Clayton Act to require pre-notification for acquisitions of residential properties (single-family, multi-family, etc.) if a single entity's yearly total meets antitrust thresholds.
• Removes exemptions for real estate deals, including those via real estate investment trusts (REITs).
• Treats all annual acquisitions by one entity as a single deal for reporting.
• Directs FTC and DOJ to issue rules on required disclosures.
• Establishes a presumption that acquisitions raising an entity's market share above 30% in residential property violate antitrust laws (unfair competition) or the Federal Trade Commission Act, citing Supreme Court precedent on market concentration risks.

Significant Changes to Existing Law

• Tax Code Amendments: Adds new subsections to Internal Revenue Code Sections 163 (interest deductions) and 167 (depreciation), disallowing these benefits for targeted investors – a shift from current rules allowing broad deductions for rental property owners. Also amends Sections 263A and 266 to block capitalization (treating interest as an asset cost) of disallowed amounts.
• Antitrust Law Updates: Modifies Clayton Act Section 7A to mandate reporting for housing deals (previously often exempt) and rescinds related regulatory exemptions. Introduces a specific 30% market share presumption of illegality, clarifying enforcement without limiting other antitrust tools.
• Federal Housing Policies: Imposes new prohibitions on agencies' sales and financing, diverging from prior practices of auctioning foreclosed properties to any buyer, including investors.
• Effective dates: Tax changes apply to taxable years after enactment; antitrust rules require FTC/DOJ rulemaking; funding starts in fiscal year 2026.

Potential Impacts

• On Citizens: Could increase housing supply for individual buyers by discouraging large investors from acquiring rentals, potentially lowering rents and home prices in concentrated markets. Qualified low- and moderate-income homebuyers gain direct aid (grants), aiding first-time and first-generation ownership, especially in high-cost areas. Renters may see reduced corporate dominance but face short-term market disruptions if investors sell off properties.
• On Government Agencies: IRS must enforce new deduction rules and issue anti-avoidance regulations, increasing administrative workload. HUD receives ongoing funding boosts for affordable housing without matching requirements. VA, USDA, and GSEs (Fannie/Freddie) face sales/financing limits, potentially slowing asset disposal but prioritizing individual/homeowner benefits. FTC and DOJ gain tools for housing-specific antitrust reviews, possibly leading to more merger blocks.
• On International Relations: Minimal direct impact, though it may indirectly affect foreign institutional investors (e.g., sovereign funds) by limiting U.S. tax benefits and federal loan access for residential properties.

Main Stakeholders Affected

• Large Investors and Institutional Entities: Real estate firms, hedge funds, REITs, and individuals with 50+ rental units lose key tax deductions, face federal financing bans, and trigger antitrust scrutiny – raising costs and reducing profitability in rentals.
• Individual Homebuyers and Renters: Especially first-time, first-generation, low-income (up to 140% area median), and those inheriting "heir property" – benefit from grants, increased property availability, and protections against market monopolies.
• Nonprofits and Affordable Housing Providers: Gain exceptions to tax/financing rules, plus boosted HOME program funds for construction and preservation; includes community land trusts, development corporations, and public housing subsidiaries.
• Federal Agencies and Taxpayers: Agencies like HUD (funding recipient) and IRS (enforcer) adapt operations; general taxpayers see redirected savings support housing without new taxes.
• Small-Scale Landlords: Unaffected if under 50 units, potentially gaining competitive edge over larger players.

Notable Legal, Constitutional, or Political Implications

• Legal: Introduces complex aggregation rules for ownership (treating related entities as one), requiring IRS/HUD coordination for exceptions like "substantial rehabilitation" (major repairs making unsafe properties livable). May spur litigation over deduction denials as impermissible retroactivity or overreach into private contracts; antitrust presumption could be challenged as too rigid under administrative law.
• Constitutional: Potential claims under the Takings Clause (Fifth Amendment) if denying deductions is seen as devaluing property without compensation, or Equal Protection if distinctions between small/large owners lack rational basis. No direct free speech or due process issues noted.
• Political: Targets corporate "Wall Street" investors to address housing affordability crises, aligning with progressive priorities (sponsored by Sens. Warren et al.). Could polarize debates on property rights vs. public welfare; success depends on Finance Committee approval and may influence broader tax reform or antitrust enforcement in concentrated industries like housing.

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

Sponsor

Sen. Warren, Elizabeth [D-MA]

Cosponsors (20)

Sen. Merkley, Jeff [D-OR], Sen. Klobuchar, Amy [D-MN], Sen. Smith, Tina [D-MN], Sen. Blumenthal, Richard [D-CT], Sen. Duckworth, Tammy [D-IL], Sen. Durbin, Richard J. [D-IL], Sen. Heinrich, Martin [D-NM], Sen. Hirono, Mazie K. [D-HI], Sen. Kaine, Tim [D-VA], Sen. Kim, Andy [D-NJ], Sen. Markey, Edward J. [D-MA], Sen. Murphy, Christopher [D-CT], Sen. Schatz, Brian [D-HI], Sen. Sanders, Bernard [I-VT], Sen. Schiff, Adam B. [D-CA], Sen. Van Hollen, Chris [D-MD], Sen. Welch, Peter [D-VT], Sen. Booker, Cory A. [D-NJ], Sen. Coons, Christopher A. [D-DE], Sen. Hickenlooper, John W. [D-CO]

Recent Actions

• 2026-02-24: Read twice and referred to the Committee on Finance.
• 2026-02-24: Introduced in Senate

Bill Versions

• American Homeownership Act — issued 2026-02-24 — PDF (30 pages)