H.R. 7138 — Stop Wall Street Landlords Act of 2026

This section disallows deductions under the Internal Revenue Code for mortgage interest, insurance premiums, and depreciation on single-family homes (i.e., U.S. real property with 1-4 dwelling units, excluding federally assisted buildings such as those under Section 8, low-income housing tax credit properties under IRC §42, or qualified bond-financed projects) owned by specified large investors (i.e., taxpayers with net assets exceeding $100 million at any time during the taxable year, treating controlled groups with more than 50% common ownership as a single person but excluding governmental entities and IRC §501(c)(3) organizations). Exceptions apply (1) to any such home used as the principal residence of an individual specified large investor and (2) to homes originally constructed or substantially rehabilitated by the taxpayer (as defined in IRC §47(c)). The provision applies to amounts paid or incurred and depreciation occurring after the date that is 18 months after enactment.

This section imposes a new excise tax equal to the sale price on any sale or transfer of a single-family home by a specified large investor (as defined in section 280I of the Internal Revenue Code). The tax applies to sales and transfers occurring after the date that is 18 months after enactment.

This section (1) directs the deposit of penalties collected under section 3 into the Housing Trust Fund established under the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4568); and (2) provides that, to the extent appropriated in advance, such amounts shall be used to increase and preserve the supply of rental housing affordable to extremely low-income families (i.e., below 30% of area median income) and very low-income families (i.e., below 50%), including homeless families, in accordance with that Act. (As background, the Housing Trust Fund provides formula grants to states for affordable housing development, preservation, rehabilitation, and operations targeted to those income groups.)

This section (1) requires the Federal Housing Finance Agency (FHFA) Director, by regulation, to prohibit Fannie Mae and Freddie Mac from newly purchasing, lending on the security of, or securitizing any single-family mortgage (or interest therein) where the mortgagee is a specified large investor (as defined in IRC §280I(b)); and (2) prohibits Ginnie Mae from newly guaranteeing mortgage-backed securities backed by a pool containing such a mortgage or from purchasing or acquiring such a mortgage. (Fannie Mae and Freddie Mac are government-sponsored enterprises that purchase mortgages to provide market liquidity, while Ginnie Mae guarantees securities backed by federally insured mortgages.)