SB510 creates a new excise tax on the acquisition and excess ownership of certain single-family residences in Maryland by specified entities. The bill is aimed at “applicable taxpayers,” generally entities such as corporations, LLCs, partnerships, and REITs that manage pooled investor funds and act as fiduciaries, with a special category for “hedge fund taxpayers” holding at least $50 million in net value or assets under management. It imposes a 50% excise tax on the fair market value of a single-family residence acquired by an applicable taxpayer, and it also imposes a separate tax penalty if an applicable taxpayer exceeds the bill’s ownership limits for single-family residences in a taxable year.
The bill phases down the number of single-family residences these entities may own over time. For most applicable taxpayers, the ownership cap declines over four years after the applicable date until it reaches 25 residences; for hedge fund taxpayers, the cap declines to zero after four years. The bill defines single-family residence broadly as one- to four-unit residential property in the State, but excludes certain foreclosed properties, owner-occupied properties tied to an ownership interest, and properties built, acquired, or operated with federal or State funds. It also requires annual returns, reports, certifications from transferees, recordkeeping, and payment with the return, and it authorizes the Comptroller to adopt implementing regulations.
SB510 also creates a dedicated revenue structure. The Comptroller must first use revenue from the new tax to cover administrative costs, and then distribute the remaining revenue to a new special, nonlapsing Down Payment and Settlement Expense Loan Program Fund. That fund is intended to support financing for down payment and settlement expenses to help eligible homebuyers purchase homes, linking the tax directly to homeownership assistance.
The bill amends several provisions of the Tax-General Article to incorporate the new tax into Maryland’s tax administration framework, including assessment, refund, confidentiality, and penalty provisions. It also makes willful failure to file the new return a misdemeanor and applies perjury-related penalties to false filings involving the new excise tax. The act is set to take effect July 1, 2025.
Because there were no recorded votes or committee transcripts provided, the overall sentiment cannot be measured from legislative debate. Based on the bill’s title and structure, it appears to be framed as a housing affordability measure intended to curb large-scale investor ownership of single-family homes and redirect revenue to first-time homebuyer assistance. The main likely point of contention is the scope and severity of the tax, especially the 50% acquisition tax and the restrictions on institutional ownership, which could draw criticism from real estate investors, landlords, and business groups while being supported by housing advocates and proponents of limiting hedge fund influence in the housing market.
SB510 would add a new tax regime to the Tax-General Article and create a new special fund in the Housing and Community Development Article. It would expand the Comptroller’s duties to administer the excess ownership excise tax, establish reporting and enforcement requirements for covered entities, and create new penalties for noncompliance. The bill would also direct tax revenue, after administrative costs, to the Down Payment and Settlement Expense Loan Program Fund to support homebuyer assistance, thereby affecting both state tax administration and housing finance policy.
No committee transcripts or vote history were provided, so there is no direct record of debate or legislative support/opposition in the materials. The bill’s caption and structure suggest a generally pro-housing-affordability and anti-institutional-investor sentiment, with the policy goal of limiting hedge fund and other entity ownership of single-family homes. At the same time, the bill’s high tax rate and ownership caps suggest it could be controversial among real estate, investment, and business stakeholders.
The most notable points of contention are likely the bill’s 50% excise tax on acquisitions, the phased ownership caps that eventually reduce hedge fund ownership to zero, and the broad definition of covered entities. Supporters are likely to view the bill as a tool to reduce investor competition in the housing market and generate funding for down payment assistance. Opponents are likely to argue that it could discourage investment, complicate property transactions, and create administrative and compliance burdens for entities that own or manage residential properties.