H.R. 1745

119th CONGRESS 1st Session

To amend the Internal Revenue Code of 1986 to impose an excise tax on the failure of certain hedge funds owning excess single-family residences to dispose of such residences, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES · February 27, 2025 · Sponsor: Mr. Smith of Washington · Committee: Committee on Ways and Means

Table of contents

• H.R. 1745
  • 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 residences.

• (a) In general
  • In the case of a hedge fund taxpayer, there is hereby imposed a tax on the acquisition of any newly acquired single-family residence equal to the greater of—
    • 15 percent of the purchase price, or
    • $10,000
• (b) Newly acquired Single-Family residence
  • For purposes of this section, the term newly acquired single-family residence means any single-family residence which was acquired by the taxpayer in any taxable year which begins after the date of the enactment of this chapter.
• (c) Purchase price
  • For purposes of this section, the term purchase price means the adjusted basis of the newly acquired single-family residence on the date such residence is purchased.

Sec. 5000F. Excess single-family residences.

• (a) In general
  • In the case of an applicable taxpayer who fails to meet the requirements of subsection (b), there is hereby imposed a tax equal to the product of—
    • $5,000, and
    • the excess of—
      • the number of applicable single-family residences owned by the taxpayer as of the last day of the taxable year, over
      • the maximum permissible units for the taxable year.
• (b) Requirement
  • (1) In general
    • An applicable taxpayer meets the requirement of this subsection for any taxable year if the number of applicable single-family residences owned by the taxpayer as of the last day of the taxable year is equal to or less than the maximum permissible units determined with respect to such taxpayer for such taxable year.
  • (2) Special rule for certain sales
    • For purposes of applying paragraph (1), a single-family residence which is sold or transferred in a disqualified sale during the taxable year shall be treated as a single-family residence which is owned by the applicable taxpayer as of the last day of such taxable year.
• (c) Maximum permissible units
  • The maximum permissible units with respect to any applicable taxpayer for any taxable year shall be determined as follows:
• (d) Definitions
  • For purposes of this section—
    • The term applicable single-family residence means any single-family residence which was acquired on or before the applicable date.
    • The term disqualified sale means any sale or transfer to—

Sec. 5000G. Definitions and other special rules.

• (a) Applicable taxpayer
  • For purposes of this chapter—
  • (1) In general
    • The term applicable taxpayer means any applicable entity which—
      • manages funds pooled from investors, and
      • is a fiduciary with respect to such investors.
  • (2) Applicable entity
    • (A) In general
      • The term applicable entity means—
        • (i) any partnership,
        • (ii) any corporation, or
        • (iii) any real estate investment trust.
    • (B) Exceptions
      • The term shall not include— applicable entity
        • (i) an organization which is described in section 501(c)(3) and exempt from tax under section 501(a), or
        • (ii) an organization which is primarily engaged in the construction or rehabilitation of single-family residences and which offers such residences for sale in the ordinary course of business.
• (b) Hedge fund taxpayer
  • For purposes of this section, the term hedge fund taxpayer means, with respect to any taxable year, any applicable taxpayer which has $50,000,000 or more in net value or assets under management on any day during the taxable year.
• (c) Single-Family residence
  • For purposes of this chapter—
  • (1) In general
    • The term single-family residence means a residential property consisting of 1-to-4 dwelling units.
  • (2) Exceptions
    • A residential property shall not be treated as a residential property described in clause (i) if—
      • such property is unoccupied and acquired through foreclosure (other than such a residence acquired through foreclosure by a hedge fund taxpayer, as defined in section 5000F((d)(3)),
      • such property is—
        • (i) not rented or leased, and
        • (ii) used as the principal residence (within the meaning of section 121) of any person who has an ownership interest in the applicable taxpayer, or
      • such property—
        • (i) was a building with respect to which a credit was allowed under section 42 (relating to the low-income housing credit), and
        • (ii) is not owned by a hedge fund taxpayer (as defined in section 5000F(d)(3)).
• (d) Acquisition; ownership
  • For purposes of this chapter, an applicable taxpayer shall be treated—
    • as acquiring a single-family residence if the applicable taxpayer acquires a majority ownership interest in the single-family residence, regardless of the percentage of that ownership interest, and
    • as owning a single-family residence if the applicable taxpayer owns a majority ownership interest in the single-family residence, regardless of the percentage of that ownership interest.
• (e) Aggregation rules
  • (1) In general
    • For purposes of this chapter, all persons which are treated as a single employer under subsections (a) and (b) of section 52 shall be treated as a single person.
    • In general
  • (2) Modifications
    • For purposes of this subsection—
      • section 52(a) shall be applied by substituting for , and component members``
      • for purposes of applying section 52(b), the term shall include any activity treated as a trade or business under paragraph (5) or (6) of section 469(c) (determined without regard to the phrase in such paragraph (6)). To the extent provided in regulations trade or business
  • (3) Component member
    • For purposes of this paragraph, the term component member has the meaning given such term by section 1563(b), except that the determination shall be made without regard to section 1563(b)(2).