Overview
Title
To prohibit individuals and entities from owning more than 75 single-family residences, and for other purposes.
ELI5 AI
This bill says people or companies can own up to 75 houses, but if they own more, they have to pay a big fee for each extra house. This fee will be used to help families buy their first home.
Summary AI
H.R. 6630, also known as the "American Neighborhoods Protection Act of 2023," aims to limit the ownership of single-family residences by any individual or entity to no more than 75 of such properties. It introduces an excise tax of $10,000 for each residence owned beyond this limit, with certain exceptions for organizations like charities and mortgage holders. The funds from this tax will be used to establish a Housing Trust Fund, which will provide grants for down payment assistance to families through state housing finance agencies. The bill's goal is to make housing more accessible by encouraging the sale of excess properties to individual homebuyers.
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AnalysisAI
General Summary of the Bill
The proposed legislation, titled the "American Neighborhoods Protection Act of 2023," seeks to limit property ownership by prohibiting individuals and entities from owning more than 75 single-family residences. This cap is designed to address concerns about the concentration of property ownership and its effects on housing markets and communities.
A key provision of the bill is the imposition of a substantial excise tax on those who exceed the ownership cap. This tax amounts to $10,000 for each property owned above the 75-residence threshold. To support broader housing access, the bill also establishes a Housing Trust Fund, financed through the collected tax revenues, aimed at providing grants for down payment assistance to families.
Summary of Significant Issues
Several issues arise from the bill’s provisions. Firstly, the significant tax amount could place financial pressure on smaller property owners who do not meet the exemption criteria laid out in the bill. These include mortgage note holders, non-profits, and those involved in construction, rehabilitation, or owning federally subsidized housing.
The structure of the bill could also result in inequities. Businesses may be able to restructure themselves to fit the tax exemptions, thereby circumventing the intended tax. Additionally, the language within the bill is complex, particularly the aggregation rules regarding "covered taxpayers," which could lead to confusion and difficulty adhering to the law.
The penalties associated with reporting errors, at $50,000, are notably steep and may disproportionately impact smaller entities. Moreover, there is a lack of detail on how the Housing Trust Fund will equitably distribute funds across states or regions, potentially leading to imbalanced support. Finally, there is a concerning absence of oversight and accountability measures for managing the Trust Fund's allocations.
Impact on the Public
This legislative proposal could have broad implications for housing markets. By limiting property ownership, the bill aims to lower property prices and increase availability for individual buyers. This measure may improve access to homeownership for first-time buyers and contribute to stabilizing communities that have seen institutional investors holding multiple properties.
However, the potential for smaller landlords to face financial difficulties due to the tax could lead to a reduction in available rental properties, particularly affecting tenants in rental housing. Additionally, potential confusion over the complex language used to define taxpayer coverage and penalties may result in unintended non-compliance and financial burdens.
Impact on Specific Stakeholders
Property Owners: Smaller landlords who own numerous properties may bear the brunt of the financial burden if they exceed the 75-properties threshold and do not qualify for exemptions. Conversely, larger entities may find ways to restructure legally to avoid these taxes, potentially maintaining the status quo regarding property ownership concentration.
Non-Profit Organizations and Construction Sectors: These stakeholders benefit from specific exemptions provided in the bill, potentially encouraging more investment in housing construction and rehabilitation efforts.
Government Agencies and State Housing Finance Agencies: Agencies involved in the distribution and oversight of the Housing Trust Fund need clear guidelines to ensure funds are effectively used. Absent such guidelines, there is a risk of inefficiency or inequitable distribution of grants.
Tenants and Potential Homebuyers: Tenants may face decreased rental options if small property owners are compelled to sell due to the tax burden. In contrast, potential homebuyers might benefit from an increase in homes available for purchase and the financial support from down payment assistance programs funded by the new tax revenues.
In conclusion, while the "American Neighborhoods Protection Act of 2023" sets noble goals of mitigating housing monopolization and enhancing homeownership opportunities, its implementation raises substantial challenges. Addressing these issues is crucial for ensuring that the legislation fulfills its intended objectives without undue negative consequences on the housing market and its various stakeholders.
Financial Assessment
The proposed bill, H.R. 6630, known as the "American Neighborhoods Protection Act of 2023," introduces significant financial measures aimed at regulating the ownership of single-family residences. The financial implications of the bill are centered around the imposition of an excise tax, the establishment of a Housing Trust Fund, and the allocation of tax revenues for housing assistance.
Excise Tax on Excess Single-Family Residences
The bill envisions an excise tax of $10,000 per excess property for any individual or entity owning more than 75 single-family residences at the end of a taxable year. This tax serves as a financial deterrent to discourage the accumulation of large quantities of residential properties by single owners. However, the tax could have a substantial financial impact, particularly on smaller property owners who may not be exempt under the 'covered taxpayer' criteria. The significant amount of $10,000 per excess property could impose financial strain, especially in cases where property owners fall just above the threshold, potentially affecting their liquidity and financial planning.
Exemptions and Inequities
Exemptions are provided for specific categories such as charities, mortgage note holders, construction, and rehabilitation businesses, and owners of federally subsidized housing. These exemptions might inadvertently create inequities, as organizations could potentially restructure themselves to fall within these exempt categories, thereby avoiding the tax. This restructuring could result in some entities being favored due to their organizational setups, rather than their core activities or social contributions, which may not align with the bill's intention to make housing more accessible.
Reporting Requirements and Penalties
The bill imposes a penalty of $50,000 for failures in reporting or inaccuracies, creating a stringent financial implication for affected parties. While this measure aims to ensure compliance, it might be excessively punitive, especially for minor errors. The harsh penalty could disproportionately affect small businesses or individuals lacking specialized tax expertise, leading to unintended financial burdens.
Use of Tax Revenues for Housing Assistance
The revenues collected from this excise tax are earmarked for the establishment of a Housing Trust Fund, which is aimed at providing down payment assistance to families through state housing finance agencies. However, the bill lacks specific details on how these funds will be distributed among various states or regions, potentially leading to geographical disparities in assistance. Without a clear distribution plan, there is a risk that the financial benefits might not be equitably spread, and certain areas with greater housing needs might receive less aid than necessary.
Oversight and Accountability
There is a financial focus on utilizing tax revenues for housing assistance, yet the bill does not address oversight and accountability measures for the funds allocated to the Housing Trust Fund. This absence raises concerns about potential misuse or inefficient allocation, which could undermine the fund's purpose of facilitating homeownership for more individuals.
In conclusion, while H.R. 6630 contains substantial financial mechanisms designed to promote the accessibility and affordability of housing, the implications of these financial measures and the details surrounding their execution pose potential challenges. Balancing the bill's financial deterrents with fair and effective implementation remains critical to achieving its intended housing market reforms.
Issues
The excise tax on excess single-family residences imposed by Section 5000E, particularly the significant tax amount of $10,000 per excess property, could disproportionately impact smaller property owners who are not exempt under the 'covered taxpayer' definition, potentially creating financial strain (Section 2, SEC. 5000E(a)(1) and (2)).
The exemption criteria for 'covered taxpayers' (such as mortgage note holders, non-profits, and others involved in construction, rehabilitation, or federally subsidized housing) may inadvertently favor organizations that can restructure to fit these categories, resulting in potential inequity (Section 2, SEC. 5000E(b)(1)).
The reporting requirements and penalties for inaccuracies or omissions are stringent, with a $50,000 penalty, which might be excessively punitive, especially for minor errors or misunderstandings, potentially affecting small businesses disproportionately (Section 2, SEC. 5000E(d)(2)(A)).
The lack of specificity on how the Housing Trust Fund's revenues will be distributed among states or regions could result in geographical disparities in assistance, affecting the equitable distribution of down payment assistance grants (Section 3.).
The aggregation rules and terminology in defining 'covered taxpayer' are complex, which could lead to confusion and difficulty in compliance for individuals without specific tax law knowledge (Section 2, SEC. 5000E(b)(2)).
The special rule for certain sales, which allows properties sold to certain entities to still be counted as owned by the covered taxpayer, might encourage structuring transactions to evade taxes without real changes in ownership, thus affecting the efficacy of the tax measure (Section 2, SEC. 5000E(c)(2)(B)).
The absence of oversight and accountability measures for the use of tax revenues in the Housing Trust Fund raises concerns about the potential for misuse or inefficient allocation of funds (Section 3, SEC. 9512(c)).
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the Act gives its official name, stating that it can be referred to as the "American Neighborhoods Protection Act of 2023."
2. Excise tax on certain taxpayers failing to sell excess single-family residences Read Opens in new tab
Summary AI
Under the proposed bill, a new excise tax would be imposed on certain taxpayers who own more than 75 single-family homes as of the last day of the taxable year. The tax would equal $10,000 for each home exceeding that threshold, and there are specified exemptions, such as for non-profit organizations and those who own homes due to foreclosure or federally subsidized housing.
Money References
- “(a) In general.—There is hereby imposed on each covered taxpayer for each taxable year a tax in an amount equal to the product of— “(1) $10,000, and “(2) the excess of— “(A) the number of single-family residences owned by the taxpayer as of the last day of the taxable year, over “(B) 75. “(b) Covered taxpayer.—For purposes of this section— “(1) IN GENERAL.—The term ‘covered taxpayer’ means a taxpayer that is not— “(A) a mortgage note holder that owns a single-family residence through foreclosure, “(B) a organization which is described in subsection 501(c)(3) and exempt from tax under section 501(a), “(C) a person primarily engaged in the construction or rehabilitation of single-family residences, or “(D) a person who owns federally subsidized housing. “
- — “(A) IN GENERAL.—Any person who fails to report information required under paragraph (1) or who fails to include correct information in such report shall pay a penalty of $50,000.
5000E. Excess single-family residences Read Opens in new tab
Summary AI
This section establishes a tax for certain taxpayers who own more than 75 single-family residences, calculated by multiplying $10,000 by the number of houses owned beyond 75. It defines a "covered taxpayer" as one who is not exempt due to specific circumstances like foreclosure, tax-exempt organization status, construction, or owning subsidized housing and includes rules for calculating ownership and reporting sales, with penalties for non-compliance.
Money References
- (a) In general.—There is hereby imposed on each covered taxpayer for each taxable year a tax in an amount equal to the product of— (1) $10,000, and (2) the excess of— (A) the number of single-family residences owned by the taxpayer as of the last day of the taxable year, over (B) 75. (b) Covered taxpayer.—For purposes of this section— (1) IN GENERAL.—The term “covered taxpayer” means a taxpayer that is not— (A) a mortgage note holder that owns a single-family residence through foreclosure, (B) a organization which is described in subsection 501(c)(3) and exempt from tax under section 501(a), (C) a person primarily engaged in the construction or rehabilitation of single-family residences, or (D) a person who owns federally subsidized housing. (2) AGGREGATION RULES.
- (A) IN GENERAL.—Any person who fails to report information required under paragraph (1) or who fails to include correct information in such report shall pay a penalty of $50,000.
3. Use of tax revenues for down payment assistance grants Read Opens in new tab
Summary AI
The bill proposes the creation of a Housing Trust Fund in the U.S. Treasury to support down payment assistance grants. Tax revenues will finance this fund, and the Secretary of Housing and Urban Development will provide grants to state housing agencies, prioritizing families buying homes from certain taxpayers.
9512. Housing Trust Fund Read Opens in new tab
Summary AI
The Housing Trust Fund is a financial resource established in the U.S. Treasury, funded by revenues from a specific tax, and designated exclusively for grants under a particular act to support American communities.