A BILL FOR AN ACT to amend the Indiana Code concerning taxation.
HB1135 creates a new state framework aimed at discouraging large-scale investor ownership of single-family homes and using the resulting revenue to help first-time or otherwise eligible homebuyers with down payments. The bill establishes a Housing Down Payment Assistance Fund, administered by the Indiana Housing and Community Development Authority, and directs money from new taxes and penalties into that fund. The authority would set guidelines, publicize the program, and process applications, with priority given to families buying homes sold or transferred by an “applicable taxpayer.”
The bill also adds a new chapter imposing taxes on certain entities that hold single-family residences. It defines covered owners broadly to include partnerships, corporations, and real estate investment trusts that manage pooled investor funds and act as fiduciaries, while excluding some nonprofits and builders/rehabilitators. Beginning July 1, 2026, an applicable taxpayer would owe a transfer tax equal to 50% of the fair market value of each single-family residence acquired after the applicable date, and could also owe an annual excise tax if it exceeds a declining cap on the number of homes it may own. The cap tightens over time, eventually limiting hedge fund taxpayers to zero applicable single-family residences and other applicable taxpayers to 50 homes after more than nine years.
The bill would also require reporting to the Department of State Revenue, including acquisition dates and certifications from purchasers that a sale is not a disqualified sale. Penalties of $20,000 could be assessed for failure to report or for incorrect reporting, absent reasonable cause. The Department would be required to publish a tax-calculation form by January 31, 2027. The bill amends Indiana’s listed-taxes statute so these new taxes are treated as listed taxes subject to the state’s tax administration provisions.
Overall sentiment in the available record is limited because there are no committee transcripts or recorded votes, but the bill’s structure suggests a policy intent to curb institutional or investor accumulation of starter homes and redirect funds toward homeownership assistance. The measure appears likely to appeal to supporters of housing affordability and anti-speculation policies, while raising concerns for real estate investors, REITs, and other entities that own rental housing. Potential contention centers on the very high 50% transfer tax, the broad definition of covered taxpayers, and whether the ownership caps and annual excise tax could reduce rental housing supply or create administrative and constitutional challenges.
HB1135 would add two new chapters to the Indiana Code and amend the state’s listed-taxes provisions. It would create a new housing down payment assistance fund and a new tax regime on excess single-family residential property holdings by certain entities, with revenues deposited into the new fund. The bill would directly affect partnerships, corporations, REITs, hedge funds, and other investor-backed entities that acquire or hold single-family residences, while excluding some nonprofits, owner-occupied interests, foreclosure acquisitions, and federally funded housing. It would also expand the Department of State Revenue’s reporting and enforcement responsibilities and give the Indiana Housing and Community Development Authority new program-administration duties.
There is no recorded committee testimony or vote history in the provided material, so the formal sentiment cannot be measured from debate or roll call. Based on the bill text, the policy direction is strongly pro-homebuyer and anti-investor concentration in the single-family housing market. The bill appears designed to generate support among advocates for housing affordability and first-time buyers, while likely drawing opposition from real estate investors, property managers, and business groups concerned about tax burden and market effects.
The main points of contention are likely to be the bill’s aggressive tax design and its broad reach. A 50% transfer tax on each post-effective-date acquisition is unusually steep and could be criticized as punitive or as interfering with legitimate investment and rental housing operations. The annual excise tax and declining ownership caps, especially the eventual zero-home cap for hedge fund taxpayers, may be viewed as an attempt to force divestiture rather than merely regulate speculation. Opponents may also object to the bill’s definitions of “applicable taxpayer” and “disqualified sale,” the reporting and certification requirements imposed on sellers and buyers, and the possibility that the measure could reduce rental inventory or create compliance burdens. Supporters would likely emphasize that the revenues are dedicated to down payment assistance and that the bill prioritizes families buying homes from investor owners.