California Bill Ending Tax Break for Corporate Landlords Fails to Advance

A bill that would have ended tax breaks for owners of 50 or more single-family homes has stalled in the state legislature, despite an earlier promise from the governor to curb corporate overreach.

“It’s hard to explain how a bill like this doesn’t move forward,” said Assemblymember Matt Haney, D-San Francisco, who introduced the bill. “Cracking down on corporations buying up homes and gaming the tax code is not a fringe idea; it’s overwhelmingly popular and deeply bipartisan.”

Right now, if an individual or company sells a home and then buys another soon after, they can defer paying taxes on the profits from that sale. AB 1611 would have eliminated that benefit for owners of 50 or more single-family homes — whether they own the homes directly or indirectly. The Assembly Revenue and Taxation Committee voted to hold the bill on Monday, essentially killing it.

In a unique moment of alignment, both President Donald Trump and California Gov. Gavin Newsom in recent months have expressed support for reining in corporate purchases of single-family homes.

In January, Trump signed an executive order directing agencies to promote home sales to individual owner-occupants and the Treasury Secretary to review rules related to large investors acquiring single-family homes.

Newsom, that same week in his State of the State speech, criticized institutional investors “snatching up homes by the hundreds and thousands at a time, crushing the dream of home ownership, and forcing rents too damn high for everyone else.”

“Over the next few weeks, we will work with the Legislature to combat this monopolistic behavior, strengthen accountability, and level the playing field for working families,” Newsom said. “That means more oversight and enforcement and potentially changing the state tax code to make this work.”

Newsom’s office declined to comment on the bill’s failure, saying the office doesn’t typically comment on pending legislation.

“The governor called on the Legislature to act in his State of the State. This bill was us doing exactly that,” Haney said.

A coalition of business and real estate associations led by the California Apartment Association had opposed it. Debra Carlton, a lobbyist and spokesperson for the association, said her organization shares “the goal of improving housing affordability” with the author, but warned about the bill’s “unintended consequences.”

“AB 1611 would have impacted not just investment activity in housing, but also public pension systems and millions of Californians who rely on them,” she said. “Preserving stable, long-term investment in housing is essential to both affordability and economic security.”

In a March 25 letter, the coalition — which includes the California Chamber of Commerce, the California Business Properties Association, the California Mortgage Bankers Association and the California Building Industry Association — wrote that many public pension systems, including CalPERS and CalSTRS, pool their retirement savings in Real Estate Investment Trusts (REITs). Eliminating the tax benefit would remove “a tool that these retirement systems use to provide safe returns for individuals and families,” they said.

In an interview on Monday before AB 1611 was held in committee, Carlton told KQED that Haney’s bill would do nothing to promote affordable housing.

“And if Mr. Haney claims that it’s going to help our budget, this is budget dust,” she said. “This is nothing. It’s really going to, I think, harm the shareholders overall.”

A spokesperson for the National Rental Home Council, a lobbying group for large landlords of single-family homes, said before the bill stalled that it would have chilled housing investment at a time when the state urgently needs more options.

“Single-family rentals provide hardworking Americans with access to quality homes in good neighborhoods. We look forward to working with lawmakers to advance proposals that increase housing investment, promote responsible development, and support pathways to homeownership,” the spokesperson told KQED.

Assemblymember Alex Lee, D-Milpitas, last year introduced a separate bill, AB 1240, which would ban investors who own more than 1,000 single-family homes from purchasing additional properties and turning them into rentals.

The bill narrowly cleared the Assembly and is now in the Senate Judiciary Committee, Lee said.

“I think there is way too much protection of the Wall Street landlord class,” Lee said in a phone interview on Tuesday. “This is an issue that has incredible bipartisan support of all Americans and of regular Americans and Californians alike who do not want to see Wall Street and private equity move in and swoop in and take over the housing market in that way.”

Referring to AB 1611, Lee said, “I think it’s an incredible travesty, and it’s a big disappointment.”