Sponsors (2)
The bill aims to curb institutional purchases of starter homes and raise revenue by taxing and restricting tax benefits for targeted hedge-fund property owners—potentially improving housing access and tax progressivity—but it raises taxes and cuts deductions that will likely be passed on to investors, employees, and renters while increasing administrative burdens and creating planning uncertainty.
Middle-class homebuyers, renters, and first-time buyers will likely face less competition from institutional investors for single-family homes, increasing availability for owner-occupancy and potentially stabilizing rents.
Federal taxpayers will see increased federal revenue from a new excise tax on certain property acquisitions and a higher corporate rate on targeted financial firms, revenues that could fund housing programs or reduce deficits.
High-income financial firms (targeted hedge-fund corporations) will face higher effective taxation, increasing tax progressivity by making wealthier, high-profit entities contribute more.
Investors, employees, and tenants linked to targeted hedge funds will face higher costs because excise taxes and higher corporate rates raise firms' tax burdens, which are likely to reduce returns and compensation and be passed through as higher rents or fees.
Hedge-fund-owned 1–4 unit rental properties will lose interest, depreciation, and §199A deductions, increasing taxable income for those owners and likely causing higher rents, reduced maintenance, or sales that shrink rental supply.
The Treasury/IRS and taxpayers will face added compliance, administrative, and enforcement costs to implement the new excise tax and rule changes, requiring agency resources and potentially increasing administrative burdens.
Based on analysis of 8 sections of legislative text.
Imposes an excise tax on single-family home acquisitions by hedge-fund taxpayers, raises their corporate rate, and disallows interest, depreciation, and §199A benefits for targeted single-family rental activity.
Official title: Amend the Internal Revenue Code of 1986 to impose an excise tax on the acquisition of single-family residences by hedge fund taxpayers, and for other purposes.
Introduced February 26, 2026 by Jeff Merkley · Last progress February 26, 2026
Imposes new taxes and removes common tax benefits for hedge funds and related corporate entities that buy or rent single-family homes. The bill adds a new excise tax on acquisitions of single-family residences by designated “hedge fund taxpayers,” raises the corporate tax rate by 5 percentage points for those entities, disallows interest and depreciation deductions for single-family rental activity by those taxpayers, and excludes that activity from the §199A qualified business income deduction. Different provisions phase in on enactment and on taxable years beginning after Dec. 31, 2030 or Dec. 31, 2035.