Protecting American Homes from Hedge Funds Act

Key Points

• The bill creates a new 50 percent excise tax on the value of any single-family home newly purchased by large pooled-investment funds like hedge funds after the law takes effect.
• Hedge funds (those with $50 million or more in assets) must sell off all their existing single-family homes over roughly nine years, while other large investment funds are capped at 50 homes.
• Firms that keep more homes than allowed owe a $50,000 tax per extra home each year, and a sale only counts toward compliance if it's not made to another business or to someone who already owns a home.
• Tax revenue collected under the new rules is funneled into a Housing Downpayment Trust Fund that HUD uses to give states grants for down payment help, closing cost assistance, and interest rate buydowns for buyers earning up to 120 percent of area median income.
• These large investors also lose the ability to deduct mortgage interest and depreciation on homes that put them over the ownership limit, and Fannie Mae, Freddie Mac, and Ginnie Mae would be barred from financing or backing mortgages for these large investors.