S. 788 — HOPE (Humans over Private Equity) for Homeownership Act

This section establishes a new IRC chapter imposing two excise taxes on applicable taxpayers (including hedge fund taxpayers) related to single-family residences. First, it imposes a tax on hedge fund taxpayers acquiring any single-family residence after enactment equal to the greater of 15% of the purchase price (i.e., adjusted basis) or $10,000. Second, it imposes an annual tax on applicable taxpayers owning, as of year-end, more applicable single-family residences (i.e., those acquired on or before the applicable date, generally the last day of the first full taxable year ending after enactment) than the maximum permissible units: $5,000 per excess residence (with disqualified sales during the year treated as owned at year-end). Maximum permissible units phase down over nine full taxable years beginning after the applicable date as follows: (1) for hedge fund taxpayers, from 90% of applicable residences owned on the applicable date (year 1) to 0 thereafter; (2) for other applicable taxpayers, from 50 plus 90% of applicable residences owned on the applicable date (year 1) to 50 thereafter. (Thus, the provision requires large owners to reduce holdings over time or face per-excess-unit penalties.)

This section disallows, for taxable years beginning after enactment, (1) the deduction for interest on acquisition indebtedness secured by single-family residences owned by taxpayers liable for tax under chapter 50B and (2) the depreciation deduction for single-family residences owned by such taxpayers. Terms such as "single-family residence" and ownership rules are defined by reference to section 5000G(b) and (c), and "acquisition indebtedness" follows the meaning under current law section 163(h)(3)(B) as modified for single-family residences.