Preserving Rural Housing Investments Act
The Preserving Rural Housing Investments Act would amend the Internal Revenue Code to clarify how tax-exempt controlled entity rules apply to stock in government-sponsored enterprises (GSEs), specifically Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation). The core change adds a sentence stating that for purposes of applying the relevant tax-exempt entity rules to these GSEs, the United States or any of its agencies or instrumentalities shall not be treated as a tax-exempt entity. In short, the bill says the U.S. government itself cannot be counted as a tax-exempt entity when evaluating ownership or control of GSE stock under these rules. The amendment is slated to apply to taxable years ending after July 30, 2008, a retroactive effective date. This change is framed under the bill’s title as the “Preserving Rural Housing Investments Act,” suggesting a policy goal of maintaining or clarifying the tax framework around entities involved in housing finance, particularly as it relates to rural housing investments and the role of GSEs.
Key Points
- 1Amends IRC 168(h)(6)(F)(iii)(I) by adding a sentence that excludes the United States and its agencies/instrumentalities from being treated as a tax-exempt entity for purposes of applying the preceding rule to the GSEs.
- 2Targeted application to the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae).
- 3Clarifies how “tax-exempt entity” is defined in the context of tax rules governing control and ownership of GSE stock.
- 4Retroactive effective date: applies to taxable years ending after July 30, 2008.
- 5Short title of the bill: Preserving Rural Housing Investments Act.