HOUSE DOCKET, NO. 5167        FILED ON: 6/5/2024

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 4830

The Commonwealth of Massachusetts

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PRESENTED BY:

James K. Hawkins

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To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act ending hedge fund control of homes in Massachusetts.

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PETITION OF:

HOUSE DOCKET, NO. 5167        FILED ON: 6/5/2024

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 4830

The Commonwealth of Massachusetts

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In the One Hundred and Ninety-Third General Court
(2023-2024)

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An Act ending hedge fund control of homes in Massachusetts.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. The General Laws is hereby amended by inserting after chapter 64N the following chapter:-

Chapter 64O. ENDING HEDGE FUND CONTROL OF SINGLE-FAMILY HOMES.

Section 1. For the purposes of this chapter, the following terms shall, unless the context clearly requires otherwise, have the following meanings:

“Applicable date”, the last day of the first full taxable year: (i) after the date of the enactment of this chapter; or (ii) preceding the taxable year in which the taxpayer became a hedge fund taxpayer.

“Applicable single-family residence”, any single-family residence that was acquired on or before the applicable date.

“Applicable taxpayer”, any person or entity that manages funds pooled from investors and is a fiduciary with respect to such investors. The term “applicable taxpayer” shall not include an organization that is described in section 501(c)(3) and exempt from tax under section 501(a) of the Internal Revenue Code, or an organization primarily engaged in the construction or rehabilitation of single-family residences.

“Commissioner”, the commissioner of revenue.

“Disqualified sale”, any sale or transfer to: (i) a corporation or other entity engaged in the conduct of any trade or commerce; or (ii) an individual who does not intend to occupy the single-family residence.

“Hedge fund taxpayer”, any applicable taxpayer that has $50,000,000 or more in net value or assets under management on any day during the taxable year.

“Single-family residence”, a residential property located in the commonwealth consisting of 1 to 4 dwelling units. The term shall not include any single-family residence that: (i) is unoccupied and was acquired through foreclosure; (ii) is used as the principal residence of any person who has an ownership interest in the applicable taxpayer; or (iii) was constructed, acquired or operated with federally appropriated funding sources.

Section 2. (a) There shall be levied on an applicable taxpayer that fails to meet the requirements of section 3 an excise tax equal to the product of: (i) $50,000; and (ii) the number of applicable family homes owned by an applicable taxpayer in excess of the maximum permissible single-family residences, as determined in section 3.

(b) The commissioner shall deposit any money collected pursuant to this chapter in the Housing Down Payment Trust Fund, established in section 5.

Section 3. (a) As of the last day of a taxable year, an applicable taxpayer shall own equal to or less than the maximum permissible single-family residences, as determined in subsection (b), or be subject to the excise tax established in section 2. A single-family residence that is sold or transferred in a disqualified sale during the taxable year shall be treated as a single-family residence that is owned by the applicable taxpayer as of the last day of such taxable year for the purposes of this chapter.

(b) The maximum permissible single-family residences with respect to any applicable taxpayer for any taxable year shall be determined as follows:

In the case of— the maximum permissible single-family residences for a hedge fund taxpayer is— the maximum permissible single-family residences for any other applicable taxpayer is—

the first taxable year beginning after the applicable date . . . 90 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 90 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the second taxable year beginning after the applicable date . . . 80 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 80 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the third taxable year beginning after the applicable date . . . 70 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 70 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the fourth taxable year beginning after the applicable date . . . 60 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 60 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the fifth taxable year beginning after the applicable date . . . 50 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 50 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the sixth taxable year beginning after the applicable date . . . 40 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 40 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the seventh taxable year beginning after the applicable date . . . 30 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 30 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the eighth taxable year beginning after the applicable date . . . 20 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 20 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

the ninth taxable year beginning after the applicable date . . . 10 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date 50 plus 10 percent of the number of applicable single-family residences owned by the taxpayer on the applicable date

any taxable year beginning more than 9 years after the applicable date . . . 0 50.

Section 4. (a) For the purposes of this chapter, an applicable taxpayer shall be considered as having acquired a single-family residence if it acquires 10 per cent or greater ownership interest in the single-family residence.

(b) For the purposes of this chapter, an applicable taxpayer shall be considered as owning a single-family residence if it owns a 10 per cent or greater ownership interest in the single-family residence.

Section 5. (a) There shall be established and set up on the books of the commonwealth a fund known as the Housing Down Payment Trust Fund, to be administered by the executive office of Housing and Livable Communities, in coordination with the Massachusetts Housing Finance Agency. The fund shall be credited with: (i) funds transferred pursuant to section 2; (ii) appropriations or other money authorized or transferred by the general court and specifically designated to be credited to the fund; (iii) funds from public and private sources, including, but not limited to, gifts, grants and donations; and (iv) any interest earned on the assets of the fund.

(b) The executive office, in coordination with the Massachusetts Housing Finance Agency, shall use the fund to provide grants for down payment assistance to first-time homebuyers purchasing single-family residences.

(c) Annually, the executive office shall submit to the clerks of the House of Representatives and the Senate and the joint committee on housing a report including: (i) the amount and source of the deposits to the trust fund; (ii) the number of grants provided from the trust fund pursuant to subsection (b); and (iii) demographic and financial information about grant applicants and recipients.

Section 6. For each sale or transfer of an applicable single-family residence by an applicable taxpayer, the commissioner shall require a certification signed by the purchaser or transferee that states: (i) the name and address of the purchaser or transferee; (ii) whether the sale is a disqualified sale; and (iii) whether the purchaser or transferee owns any other single-family residences at the time of the sale or transfer.

Section 7. Annually, the commissioner shall submit to the clerks of the House of Representatives and the Senate and the joint committee on housing a report including: (i) the number of single-family residences owned by each applicable taxpayer in the preceding taxable year; (ii) the number of single-family residences acquired by each applicable taxpayer in the preceding taxable year; and (iii) the number of transfers or sales of single-family residences by each applicable taxpayer in the preceding taxable year, and whether the purchaser or transferee owned any other single-family residences at the time of the transfer or sale.

SECTION 2. Not later than 180 days following the passage of this act, the commissioner of revenue shall publish: (i) a form to be used for calculating the tax owed under chapter 64O of the General Laws, as added by section 1; and (ii) a form to be used for the certification of the sale or transfer of a single-family residence by an applicable taxpayer, as required by section 6 of said chapter 64O.

SECTION 3. The commissioner of revenue shall promulgate any rules or regulations necessary to implement this act within 90 days following the passage of this act.