S. 3930: HOPE (Humans over Private Equity) for Homeownership Act

This bill, known as the HOPE (Humans over Private Equity) for Homeownership Act, proposes several measures aimed primarily at the real estate holdings of hedge funds. The main features of the bill are as follows:

1. Excise Tax on Acquisitions

The bill introduces a 15% excise tax on the acquisition price of newly acquired single-family residences by "hedge fund taxpayers." A "newly acquired single-family residence" is defined as any residential property that consists of 1 to 4 dwelling units purchased by hedge fund entities after the bill is enacted.

2. Definition of Hedge Fund Taxpayer

A "hedge fund taxpayer" is defined as any applicable entity managing pooled funds from investors, is a fiduciary to those investors, and has $50 million or more in net assets under management. This applies to partnerships, corporations, or real estate investment trusts that meet these criteria, but excludes certain tax-exempt organizations and entities primarily engaged in constructing or selling single-family residences.

3. Corporate Surtax

Additionally, there is a provision for increasing the corporate tax rate on hedge fund taxpayers by 5 percentage points. This applies to corporations that fit the definition of hedge fund taxpayers as outlined above.

4. Deductions Related to Single-Family Residences

The bill specifies that hedge fund taxpayers will not be allowed to deduct:

• Mortgage Interest: No deductions for mortgage interest on single-family residences will be allowed.
• Depreciation: Deductions for depreciation of single-family residences will also be prohibited for hedge fund taxpayers.

5. Other Provisions

There are additional definitions and rules specified in the bill, including how acquisitions are counted and what constitutes acquisition indebtedness.

6. Effective Dates

The bill's provisions will take effect for taxable years beginning after the date of enactment for most sections; however, some provisions have specific effective dates ranging from December 31, 2030, to December 31, 2035.

Relevant Companies

• KKR & Co. Inc. (KKR) - A major private equity firm that could face increased costs due to the proposed excise tax on acquisitions of single-family residences and changes in tax deductions.
• Blackstone Inc. (BX) - As one of the largest hedge fund managers, it may be significantly affected by the new excise tax and the inability to deduct mortgage interest or depreciation on single-family residences.
• Columbia Property Trust, Inc. (CXP) - A real estate investment trust that could see changes in its investment strategies based on the provisions of this bill.