Add Art 20-E §§500 - 500-g, Tax L; add §80-b, St Fin L
Imposes an excise tax on the failure of certain hedge funds owning excess single-family residences to dispose of such residences; establishes the housing down payment trust fund to provide funds to state housing finance agencies to establish new or supplement existing programs that provide down payment assistance to families purchasing homes within the state.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8829
SPONSOR: Solages TITLE OF BILL:
An act to amend the tax law, in relation to impose an excise tax on the
failure of certain hedge funds owning excess single-family residences to
dispose of such residences; and to amend the state finance law, in
relation to establishing the housing down payment trust fund and direct-
ing the commissioner of the state division of housing and community
renewal to establish a grant program
PURPOSE:
The purpose of the "End Hedge Fund Control of New York Homes Act" is to
prohibit large hedge funds from buying up swaths of homes across New
York state.
SUMMARY OF PROVISIONS:
Section 1. Short title.
Section 2. Amends the tax law by adding a new article 20-E.
Section 3. Amends the state finance law by adding a new section 80-b.
Section 4. Sets the effective date.
JUSTIFICATION:
Across the nation and in New York state, there has been a rise in
private equity buying up single-family housing stock. These entities
are then able to set higher rents.
According to the Urban Institute, during the first three months of 2023,
hedge funds purchased 27% of single-family homes for sale in the United
States
1.
This bill, modeled off of federal legislation, will establish fines for
large financial entities such as a hedge fund when they purchase or fail
to dispose of a single-family home. Revenue raised will be deposited
into a housing down payment trust fund.
RACIAL JUSTICE IMPACT:
These predatory practices disproportionately impact historically
redlined communities. A US House of Representatives Financial Services
Committee report found that hedge funds targeted homes in neighborhoods
with large Black populations and 30% more single mothers than the
national average
2.
GENDER JUSTICE IMPACT:
TBD.
LEGISLATIVE HISTORY:
New bill.
FISCAL IMPLICATIONS:
TBD.
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to taxable years
beginning on and after the effective date of this act.
1 https://nationalmortgageprofessional.com/news/ democratic-legisla-
tion-aims-curb-hedge-fund-ownership- single-family-homes
2 https://www.google.com/url?sa=t&rct=j&q
=&esrc=s&source=web&cd=&cad=rja&uact=8&ved
=2ahUKEwjziPD3qdaDAxWIa4kEHeB-B-g0FnoECBcCIA
(Murl=httus%3A%2F%2Fwww.merkley.senate.gov%/
Fwp-content%2Fuploads%2Fimo%1Fmedia%2Fdoc%2Fend_
hedge_fund_control_of_american_homes_act_bill_summary.pdf
&usg,--A0vVaw0ZqwkIPsp5Lp9UmZp71pm&opi=89978449
STATE OF NEW YORK
________________________________________________________________________
8829
IN ASSEMBLY
January 18, 2024
___________
Introduced by M. of A. SOLAGES -- read once and referred to the Commit-
tee on Ways and Means
AN ACT to amend the tax law, in relation to impose an excise tax on the
failure of certain hedge funds owning excess single-family residences
to dispose of such residences; and to amend the state finance law, in
relation to establishing the housing down payment trust fund and
directing the commissioner of the state division of housing and commu-
nity renewal to establish a grant program
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Short title. This act shall be known and may be cited as
2 the "End Hedge Fund Control of New York Homes Act".
3 § 2. The tax law is amended by adding a new article 20-E to read as
4 follows:
5 ARTICLE 20-E
6 EXCISE TAX ON CERTAIN TAXPAYERS FAILING
7 TO SELL EXCESS SINGLE-FAMILY RESIDENCES
8 Section 500. Definitions.
9 500-a. Imposition of tax.
10 500-b. Maximum permissible units.
11 500-c. Construction.
12 500-d. Reporting.
13 500-e. Tax form.
14 500-f. Certification.
15 500-g. Use of tax revenues.
16 § 500. Definitions. For purposes of this article, the following defi-
17 nitions shall apply:
18 1. "Applicable date" means:
19 (a) the last day of the first full taxable year ending on or after the
20 effective date of this article; or
21 (b) in the case of any taxpayer that changes its status during a taxa-
22 ble year, the last day of the taxable year immediately preceding the
23 taxable year in which the taxpayer changed its status.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD13893-01-3
A. 8829 2
1 2."Applicable single-family residence" means any single-family resi-
2 dence which was acquired on or before the applicable date.
3 3. (a) "Applicable taxpayer" means a taxpayer, including a partner-
4 ship, corporation, trust or other legal entity, that:
5 (i) manages funds pooled from investors and is a fiduciary with
6 respect to such investors; and
7 (ii) is an asset manager in any of the following asset classes:
8 (A) public equity or fixed income securities;
9 (B) a hedge fund;
10 (C) a fund of hedge funds;
11 (D) private equity (including venture capital);
12 (E) a fund of private equity funds;
13 (F) a real estate investment fund;
14 (G) a fund of real estate funds; or
15 (H) any other asset class for which an applicable fiduciary-controlled
16 entity engages external asset managers; and
17 (iii) that has fifty million dollars or more in net value or assets
18 under management on any day during the taxable year.
19 (b) "Applicable taxpayer" shall not include:
20 (i) an organization which is described in section 501(c)(3) and exempt
21 from tax under section 501(a) of the Internal Revenue Code; or
22 (ii) an organization primarily engaged in the construction or rehabil-
23 itation of single-family residences.
24 4. "Disqualified sale" means any sale or transfer of a single-family
25 residence to:
26 (a) a corporation or other entity engaged in a trade or business; or
27 (b) an individual who owns any other single-family residence at the
28 time of such sale or transfer.
29 5. "Newly acquired single-family residence" means any single-family
30 residence which was acquired by the taxpayer in any taxable year which
31 begins after the effective date of this article.
32 6. "Single-family residence" means a residential property consisting
33 of one to four dwelling units; provided that such term shall not
34 include:
35 (a) any unoccupied single-family residence acquired through foreclo-
36 sure;
37 (b) any single-family residence that is:
38 (i) not rented or leased, and
39 (ii) used as the principal residence of any person who has an owner-
40 ship interest in the applicable taxpayer; or
41 (c) any single-family residence constructed, acquired, or operated
42 with Federal appropriated funding sources.
43 7. "Trade or business" shall include any activity treated as a trade
44 or business under paragraph (5) or (6) of section 469(c) of the Internal
45 Revenue Code (determined without regard to the phrase 'To the extent
46 provided in regulations' in such paragraph (6)).
47 § 500-a. Imposition of tax. 1. In the case of an applicable taxpayer,
48 there is hereby imposed a tax on the acquisition of any newly acquired
49 single-family residence equal to fifty percent of the fair market value
50 of such residence.
51 2. (a) In the case of an applicable taxpayer who fails to meet the
52 requirements of subdivision (b) of this section there is hereby imposed
53 a tax equal to the product of:
54 (i) fifty thousand dollars, and
55 (ii) the excess of:
A. 8829 3
1 (A) the number of applicable single-family residences owned by the
2 taxpayer as of the last day of the taxable year, over
3 (B) the maximum permissible units for the taxable year.
4 (b) An applicable taxpayer meets the requirement of this subdivision
5 for any taxable year if the number of applicable single-family resi-
6 dences owned by the taxpayer as of the last day of the taxable year is
7 equal to or less than the maximum permissible units determined with
8 respect to such taxpayer for such taxable year. For purposes of this
9 paragraph, a single-family residence which is sold or transferred in a
10 disqualified sale during the taxable year shall be treated as a single-
11 family residence which is owned by the applicable taxpayer as of the
12 last day of such taxable year.
13 § 500-b. Maximum permissible units. The maximum permissible units with
14 respect to any applicable taxpayer for any taxable year shall be deter-
15 mined as follows:
16 In the case of:The maximum permissible units
17 for an applicable taxpayer is:
18 the first full taxableninety percent of the number of applicable
19 year beginning after thesingle-family residences owned by
20 applicable datethe taxpayer on the applicable date
21 the second taxable yeareighty percent of the number of applicable
22 beginning after thesingle-family residences owned by
23 applicable datethe taxpayer on the applicable date
24 the third taxable yearseventy percent of the number of applicable
25 beginning after thesingle-family residences owned by
26 applicable datethe taxpayer on the applicable date
27 the fourth taxable yearsixty percent of the number of applicable
28 beginning after thesingle-family residences owned by
29 applicable datethe taxpayer on the applicable date
30 the fifth taxable yearfifty percent of the number of applicable
31 beginning after thesingle-family residences owned by
32 applicable datethe taxpayer on the applicable date
33 the sixth taxable yearforty percent of the number of applicable
34 beginning after thesingle-family residences owned by
35 applicable datethe taxpayer on the applicable date
36 the seventh taxable yearthirty percent of the number of applicable
37 beginning after thesingle-family residences owned by
38 applicable datethe taxpayer on the applicable date
39 the eighth taxable yeartwenty percent of the number of applicable
40 beginning after thesingle-family residences owned by
41 applicable datethe taxpayer on the applicable date
42 the ninth taxable yearten percent of the number of applicable
43 beginning after thesingle-family residences owned by
44 applicable datethe taxpayer on the applicable date
A. 8829 4
1 any taxable year beginning0
2 more than nine years after
3 the applicable date
4 § 500-c. Construction. 1. For purposes of this article, an applicable
5 taxpayer shall be treated:
6 (a) as acquiring a single-family residence if the applicable taxpayer
7 acquires a majority ownership interest in the single-family residence,
8 regardless of the percentage of that ownership interest; and
9 (b) as owning a single-family residence if the applicable taxpayer
10 owns a majority ownership interest in the single-family residence,
11 regardless of the percentage of that ownership interest.
12 2. For purposes of this article, all persons or entities that are
13 treated as a single employer under subsections (a) and (b) of section 52
14 of the Internal Revenue Code shall be treated as a single person or
15 entity.
16 § 500-d. Reporting. 1. The commissioner shall require such reporting
17 as the commissioner determines necessary or appropriate to carry out the
18 purposes of this section, including reporting with respect to:
19 (a) the dates on which single-family residences owned by an applicable
20 taxpayer were acquired by such taxpayer; and
21 (b) whether any person acquiring a single-family residence from an
22 applicable taxpayer owns any other single-family residences at the time
23 of the acquisition.
24 2. Any person who fails to report information required under subdivi-
25 sion one of this section or who fails to include correct information in
26 such report shall pay a penalty of twenty thousand dollars; provided,
27 however, that no such penalty shall be imposed with respect to any fail-
28 ure if it is shown that such failure is due to reasonable cause and not
29 to willful neglect. The penalty under this subdivision shall be paid
30 upon notice and demand by the commissioner.
31 § 500-e. Tax form. Not later than one hundred eighty days after the
32 effective date of this article, the commissioner, or the commissioner's
33 delegate, shall publish a form to be used for calculating the amount of
34 tax owed under this article.
35 § 500-f. Certification. 1. The reporting required under subparagraph
36 (b) of subdivision one of section five hundred-d of this article, shall
37 include a certification from each individual to whom a single-family
38 residence is sold or transferred from an applicable taxpayer.
39 2. The certification required under this section shall be signed by
40 the purchaser or transferee and state the following:
41 (a) the name and address of the purchaser or transferee;
42 (b) that the sale is not a disqualified sale; and
43 (c) that the purchaser or transferee will be subject to the penalty
44 imposed under subdivision two of section five hundred-d of this article
45 for any false certification.
46 § 500-g. Use of tax revenues. All revenues from taxes collected under
47 this article shall be deposited into the housing down payment trust fund
48 established by section eighty-b of the state finance law and shall be
49 used only for the purposes specified in such section.
50 § 3. The state finance law is amended by adding a new section 80-b to
51 read as follows:
52 § 80-b. Housing down payment trust fund. 1. There is established in
53 custody of the state comptroller a special fund to be known as "the
54 housing down payment trust fund" (hereinafter in this section referred
55 to as the 'trust fund').
A. 8829 5
1 2. The trust fund shall consist of moneys appropriated thereto, moneys
2 transferred from any other fund or sources, and all excise tax, penal-
3 ties and forfeitures collected pursuant to article twenty-E of the tax
4 law. Nothing contained in this section shall prevent the state from
5 receiving grants, gifts or bequests for the purposes of the trust fund
6 as defined in this section and depositing them into the trust fund
7 according to law.
8 3. The moneys in the trust fund shall be kept separate from and shall
9 not be commingled with any other moneys in the custody of the state
10 comptroller. Such moneys shall be made available to the commissioner of
11 the state division of housing and community renewal for the grants
12 program for down payment assistance programs as provided in subdivision
13 four of this section.
14 4. The commissioner of the state division of housing and community
15 renewal shall establish a program under which said commissioner makes
16 grants to state housing finance agencies to establish new or supplement
17 existing programs that provide down payment assistance to families
18 purchasing homes within the state. A state housing finance agency that
19 receives a grant under this section shall give priority to families
20 seeking assistance to purchase any single-family residence that is sold
21 or transferred by an applicable taxpayer as defined in article twenty-E
22 of the tax law. The commissioner of the state division of housing and
23 community renewal shall establish the application criteria and quali-
24 fications for the state housing finance agencies for the purposes of the
25 trust fund as defined in this section. The commissioner of the state
26 division of housing and community renewal may enter into contracts with
27 such qualified state housing finance agencies which may thereafter be
28 renewed, extended or succeeded by new contracts from year to year in the
29 discretion of the commissioner of the state division of housing and
30 community renewal.
31 5. The monies shall be payable from the trust fund on the audit and
32 warrant of the comptroller on vouchers approved and certified by the
33 commissioner of the state division of housing and community renewal.
34 6. No later than the fifteenth day of January of each year the commis-
35 sioner of the state division of housing and community renewal shall
36 report to the governor, the temporary president of the senate and the
37 speaker of the assembly on activities undertaken by the commissioner of
38 the state division of housing and community renewal and any grantee
39 pursuant to this section in the preceding year. The report shall
40 include, but not be limited to, the current amount of funds available as
41 well as the amount of money granted to any state housing finance agen-
42 cies for the purposes identified in this section.
43 § 4. This act shall take effect immediately and shall apply to taxable
44 years beginning on and after the effective date of this act.
