What This Bill Does
This bill tries to reduce the rising prices of homes in the United States caused by foreign buyers. It creates new reporting requirements for foreign people buying residential property and increases taxes on those sales.
Who It Affects
Foreign persons (anyone who is not a U.S. citizen or permanent resident) buying homes in major U.S. cities. The U.S. Treasury Department. States administering housing tax credits. People and businesses developing low-income housing projects.
Key Provisions
- Foreign buyers must report to the Treasury Department when they buy residential property in the 15 largest U.S. metropolitan areas. Reports must include the buyer's name, source of funds, transaction date and nature, and any other information the Treasury Secretary requires. (Sec. 2(b))
- The tax withholding rate on sales of residential real property by foreign sellers increases from 15 percent to 30 percent. (Sec. 3(a))
- States get additional tax credits to help build single-family homes in low-income neighborhoods, equal to 10 percent of their regular housing credit amount plus any unused credits from prior years. (Sec. 4(b))
- The Treasury Department must create regulations to carry out the reporting requirement within 180 days of the law taking effect. (Sec. 2(c))
- The Office of Management and Budget must update the list of the 15 largest metropolitan areas every 5 years. (Sec. 2(c))
What Changes
If this becomes law, foreign buyers will need to file reports with the Treasury when purchasing homes in major U.S. cities. The tax withholding rate on residential property sales by foreign sellers doubles from 15 percent to 30 percent. States will have additional money available to build affordable single-family housing in low-income areas.
Important Definitions
Applicable residential property: Property located in any of the 15 largest U.S. metropolitan areas by population. (Sec. 2(a)(1))
Foreign person: Any person who is not a citizen or permanent resident of the United States. (Sec. 2(a)(2))
Sale of applicable residential property: The sale of an interest in applicable residential property. (Sec. 2(a)(3))
Effective Date
The reporting requirement regulations must be completed within 180 days after the law takes effect. The increased tax withholding applies to sales occurring 60 days after the law takes effect. The housing credit changes apply to allocations made in calendar years after the law takes effect.
II
118TH CONGRESS
1ST SESSION
S. 551
To reduce the excessive appreciation of United States residential real estate
due to foreign purchases.
IN THE SENATE OF THE UNITED STATES
FEBRUARY 28, 2023
Mr. RUBIO introduced the following bill; which was read twice and referred
to the Committee on Finance
A BILL
To reduce the excessive appreciation of United States
residential real estate due to foreign purchases.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Home Advantage for
4
American Families Act of 2023’’.
5
SEC. 2. EXPANSION OF TOOLS TO COMBAT MONEY LAUN-
6
DERING.
7
(a) IN GENERAL.—Subchapter II of chapter 53 of
8
title 31, United States Code, is amended by adding at the
9
end the following:
10
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•S 551 IS
‘‘§ 5337. Reports on applicable residential property
1
‘‘(a) DEFINITIONS.—In this section:
2
‘‘(1) APPLICABLE
RESIDENTIAL
PROPERTY.—
3
The term ‘applicable residential property’ means
4
property described in section 1445(f) of the Internal
5
Revenue Code of 1986 and which is located in any
6
of the 15 largest metropolitan statistical areas by
7
population (as determined by the Office of Manage-
8
ment and Budget).
9
‘‘(2) FOREIGN PERSON.—The term ‘foreign per-
10
son’ means any person that is not a citizen or per-
11
manent resident of the United States.
12
‘‘(3) SALE OF APPLICABLE RESIDENTIAL PROP-
13
ERTY.—The term ‘sale of applicable residential prop-
14
erty’ means the sale of an interest in applicable resi-
15
dential property.
16
‘‘(b) REPORTS.—Any foreign person involved in a
17
transaction related to the sale of applicable residential
18
property shall submit to the Secretary of the Treasury a
19
report with respect to the transaction or any related trans-
20
action that contains—
21
‘‘(1) the name and any other identification in-
22
formation that the Secretary determines is necessary
23
of the individual purchasing the applicable residen-
24
tial property;
25
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•S 551 IS
‘‘(2) the amount and source of the funds re-
1
ceived by the seller, as determined by the Secretary;
2
‘‘(3) the date and nature of the transaction;
3
and
4
‘‘(4) any other information, including the iden-
5
tification of the person filing the report, that the
6
Secretary determines is necessary.
7
‘‘(c) REGULATIONS.—Not later than 180 days after
8
the date of enactment of this section, the Secretary shall
9
promulgate regulations carrying out this section.’’.
10
(b) TECHNICAL AND CONFORMING AMENDMENT.—
11
The table of sections for chapter 53 of title 31, United
12
States Code, is amended by adding at the end the fol-
13
lowing:
14
‘‘5337. Reports on applicable residential property.’’.
(c) LIST OF TOP 15 LARGEST METROPOLITAN STA-
15
TISTICAL AREAS.—Not less than every 5 years, the Direc-
16
tor of the Office of Management and Budget shall update
17
the list of the 15 largest metropolitan statistical areas by
18
population.
19
SEC. 3. INCREASED WITHHOLDING ON SALE DISPOSITION
20
OF CERTAIN UNITED STATES REAL PROP-
21
ERTY INTERESTS.
22
(a) IN GENERAL.—Section 1445 of the Internal Rev-
23
enue Code of 1986 is amended by redesignating subsection
24
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•S 551 IS
(f) as subsection (g) and by inserting after subsection (e)
1
the following new subsection:
2
‘‘(f) SPECIAL RULE FOR CERTAIN DISPOSITIONS OF
3
RESIDENTIAL REAL PROPERTY.—
4
‘‘(1) IN GENERAL.—In the case of the disposi-
5
tion of any applicable residential property, sub-
6
section (a) shall be applied by substituting ‘30 per-
7
cent’ for ‘15 percent’.
8
‘‘(2) APPLICABLE
RESIDENTIAL
PROPERTY.—
9
For purposes of this subsection, the term ‘applicable
10
residential property’ means any interest which—
11
‘‘(A) is an interest described in section
12
897(c)(1)(A)(i), and
13
‘‘(B) is an interest in residential real prop-
14
erty.’’.
15
(b) EFFECTIVE DATE.—The amendments made by
16
subsection (a) shall apply to dispositions after the date
17
which is 60 days after the date of the enactment of this
18
Act.
19
SEC. 4. INCREASE IN LOW-INCOME HOUSING TAX CREDIT
20
STATE CEILING.
21
(a) IN GENERAL.—Section 42(h)(3)(C) of the Inter-
22
nal Revenue Code of 1986 is amended by striking ‘‘plus’’
23
at the end of clause (iii), by striking the period at the
24
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•S 551 IS
end of clause (iv) and inserting ‘‘, plus’’, and by inserting
1
after clause (iv) the following:
2
‘‘(v) the qualified single-family hous-
3
ing amount determined under subpara-
4
graph (J).’’.
5
(b)
QUALIFIED
SINGLE-FAMILY
HOUSING
6
AMOUNT.—
7
(1) IN GENERAL.—Section 42(h)(3) of the In-
8
ternal Revenue Code of 1986 is amended by adding
9
at the end the following new subparagraph:
10
‘‘(J) QUALIFIED SINGLE-FAMILY HOUSING
11
AMOUNT.—The qualified single-family housing
12
amount determined under this subparagraph
13
for any calendar year is an amount equal to the
14
sum of—
15
‘‘(i) 10 percent of the amount deter-
16
mined under subparagraph (C)(ii) for such
17
calendar year (determined after application
18
of subparagraph (H)),
19
‘‘(ii) the excess (if any) of the amount
20
described in clause (i) for the preceding
21
calendar year over the amounts allocated
22
to projects described in paragraph (9) for
23
such preceding calendar year,
24
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•S 551 IS
‘‘(iii) the amount allocated within the
1
State (not in excess of the amount deter-
2
mined under this subparagraph for the
3
preceding calendar year reduced by the
4
amount described in clause (ii) for the sec-
5
ond preceding calendar year) for any
6
project—
7
‘‘(I) which is described in para-
8
graph (9) and which fails to meet the
9
10 percent test under paragraph
10
(1)(E)(ii) on a date after the close of
11
the calendar year in which the alloca-
12
tion was made,
13
‘‘(II) which does not become a
14
qualified low-income housing project
15
described in paragraph (9) within the
16
period required by this section or the
17
terms of the allocation, or
18
‘‘(III) which is described in para-
19
graph (9) and with respect to which
20
an allocation is cancelled by mutual
21
consent of the housing credit agency
22
and the allocation recipient, plus
23
‘‘(iv) the amount, if any, determined
24
under subparagraph (D), applied—
25
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•S 551 IS
‘‘(I)
by
substituting
‘unused
1
qualified single-family housing carry-
2
over’ for ‘unused housing credit carry-
3
over’ in clause (i) thereof,
4
‘‘(II) without regard to clause (ii)
5
thereof,
6
‘‘(III) by substituting ‘unused
7
qualified
single-family
housing
8
carryovers’ for ‘unused housing credit
9
carryovers’ in clause (iii) thereof, and
10
‘‘(IV) by substituting ‘an amount
11
equal to its entire qualified single-
12
family housing amount to projects de-
13
scribed in paragraph (9)’ for ‘entire
14
State housing credit ceiling (deter-
15
mined without regard to amounts de-
16
scribed in subparagraph (C)(v))’ in
17
clause (iv)(I) thereof.’’.
18
(2) CONFORMING AMENDMENTS.—
19
(A) Section 42(h)(3)(C) of such Code is
20
amended by inserting ‘‘(other than amounts al-
21
located from the qualified single-family housing
22
amount)’’ after ‘‘the housing credit dollar
23
amount previously allocated within the State’’.
24
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•S 551 IS
(B) Section 42(h)(3)(D) of such Code is
1
amended by inserting ‘‘(determined without re-
2
gard to amounts described in subparagraph
3
(C)(v))’’ after ‘‘entire State housing credit ceil-
4
ing’’.
5
(c) SET ASIDE OF INCREASED AMOUNTS.—Section
6
42(h) of the Internal Revenue Code of 1986 is amended
7
by adding at the end the following new paragraph:
8
‘‘(9) SET ASIDE OF QUALIFIED SINGLE-FAMILY
9
HOUSING AMOUNT.—The portion of the State hous-
10
ing credit ceiling which is equal to the qualified sin-
11
gle-family housing amount for any calendar year
12
shall be allocated to projects consisting of 1 to 4
13
dwelling units that are located in qualified census
14
tracts (as defined in subsection (d)(5)(B)(i)).’’.
15
(d) EFFECTIVE DATE.—The amendments made by
16
this section shall apply to allocations made for calendar
17
years beginning after the date of the enactment of this
18
Act.
19
Æ
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