HR4352

What happened: On July 10, 2025, Representative Sykes (D-OH) introduced the HOMES Act (HR4352) in the 119th Congress. The bill targets single-family rental operators with 50+ owned properties by disallowing both interest expense and depreciation deductions under the Internal Revenue Code. The bill has been referred to the House Ways and Means Committee, with one cosponsor (Rep. Lee of Pennsylvania). A related Senate bill, S969 (Stop Predatory Investing Act), has also been introduced, indicating a broader legislative coalition forming around this issue. Status is early-stage with no committee action, meaning the path to passage is long but the structural risk to the SFR REIT model is fundamental. The money trail: This bill does not authorize or appropriate any government spending. It is a revenue-raising measure that would increase tax collections by eliminating two major deductions for large SFR operators. The Joint Committee on Taxation has not yet scored the bill, but the revenue impact would be substantial—interest and depreciation are the two largest expense lines for these highly leveraged, asset-heavy companies. The mechanism is a direct penalty on scale: owning 50+ properties triggers the deduction disallowance, while operators below that threshold remain unaffected. This creates a structural disincentive to hold large portfolios. Structural winners and losers: Clear losers are $AMH (59,000+ homes) and $INVH (80,000+ homes). Their entire business models depend on tax-advantaged leverage and depreciation shields. If enacted, both would face material FFO compression and potentially forced asset sales. Smaller landlords and newly-formed SFR operators below the 50-property threshold are relative beneficiaries as the scale advantage of large REITs is eroded. Blackstone ($BX) has exposure through its non-traded BREIT fund; the impact there is less direct, as BREIT holds a diversified mix of asset types and the fund feeds management fees to $BX, not direct deduction disallowance. $KKR similarly has SFR exposure through its real estate arm but at a smaller scale relative to total AUM. Real market data context: As of April 30, 2026, $AMH trades at $31.87, up 14.15% over 30 days despite this headline risk. $INVH is at $28.86, up 16.1% over the same period. Both stocks remain well below their 52-week highs ($39.49 for AMH, $35.80 for INVH), indicating the market has already discounted some structural headwinds—possibly rising home prices or Fed rate expectations—but has not yet priced in this specific legislative risk. The disconnect between the rally and a concrete negative catalyst suggests limited investor awareness of this bill's specific implications. Any committee hearing or cosponsor additions would be a near-term catalyst to reprice this risk. Timeline: The bill is in its earliest phase—referred to Ways & Means. For it to become law: (1) committee markup and vote, (2) full House vote, (3) Senate companion bill (S969) passage, (4) conference committee, (5) presidential signature. In a divided Congress with unified Republican control of House and Senate (119th Congress is GOP-controlled), the probability of passage in this session is low but not zero—the related Senate bill with bipartisan cosponsors signals broader appeal than party-line tax policy. The real risk timeline is 2027 and beyond if the bill gains traction in the 120th Congress.