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H 607

An act relating to institutional real estate investors’ purchase of single- and two-family residences

2025-2026 Regular Session Introduced by Emilie Krasnow

Imposes a 90-day listing wait before institutional buyers can purchase single-/two-family homes and removes depreciation and federal interest deductions for these properties in Ver

Read first time and referred to the Committee on General and Housing
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Bill Summary · H 607

Overview

H.607 (2025-2026, Vermont) proposed by Rep. Emilie Krasnow introduces a regulatory framework targeting institutional real estate investors in the single-family and two-family residential markets. The bill combines a mandatory 90-day waiting period on purchases with adjustments to Vermont net income calculations that disallow certain depreciation and interest deductions for properties held by covered entities. The intent is to influence the speed and financial treatment of institutional purchases of smaller residential properties.

Main purpose and intent

  • Create a 90-day waiting period before an institutional real estate investor (or related funding entity) can purchase, acquire, or bid on a single-family or two-family residence.
  • Modify state tax treatment for profits derived from “covered properties,” specifically by disallowing depreciation and federal interest deductions for these properties in Vermont net income calculations.
  • Establish enforcement mechanisms to classify violations as unfair methods of competition.

Key provisions and changes

1) 90-day purchase waiting period (Sec. 1)

  • Applies to “covered entities” (institutional real estate investors or entities receiving funding from such investors for these purchases).
  • A covered entity may not purchase, acquire, or offer to purchase a single-family or two-family residence unless it has been listed for sale to the general public for at least 90 days.
  • If the seller changes the asking price, the 90-day requirement restarts with the new price, requiring an additional 90 days listed at the new price.
  • Certain entities are excluded from the “covered entity” definition (e.g., 501(c)(3) organizations, land banks, community land trusts, and creditors/loan servicers acquiring property to satisfy a secured debt).

2) Tax treatment adjustments (Secs. 2–4)

  • Vermont net income adjustments (for corporations, combined groups, and other taxpayers subject to Vermont taxes) to exclude depreciation deductions for covered properties and to disallow the federal interest deduction under 26 U.S.C. § 163 for those properties.
  • Exceptions to the interest deduction denial:
    • Interest is allowable when the covered property is sold to an individual for use as that person’s principal residence, or sold to a nonprofit organization focused on affordable housing development/preservation.
    • Interest that would have been deductible but is treated as a capital account may be reclassified to be treated as interest under 26 U.S.C. § 163 for purposes of the calculation.
  • Similar adjustments apply to individuals (taxable income) under Vermont rules, with corresponding language to exclude depreciation and disallow the federal interest deduction for covered properties, subject to the same exceptions.

3) Enforcement (Sec. 1)

  • Violations are treated as an unfair method of competition under Vermont law (9 V.S.A. § 2453).
  • The Attorney General is empowered to restrain prohibited acts under 9 V.S.A. chapter 63.

4) Effective dates (Sec. 5)

  • Effective date: upon passage for general provisions.
  • 90-day waiting period: effective July 1, 2026.
  • Add-backs of depreciation and interest deductions: retroactive to January 1, 2026, applying to taxable years beginning on or after January 1, 2026.

Who would be affected

  • Institutional real estate investors and any entities that receive funding from them for the purchase of single- or two-family residences (the definition is specific and emphasizes ownership, management, and asset thresholds).
  • Taxpayers with Vermont net income or taxable income who own or invest in “covered properties,” including corporations, partnerships, and other entities subject to Vermont corporate or personal income tax, and their investors or affiliates.
  • Sellers of single- or two-family residences who may be subject to the 90-day listing requirement if dealing with a covered entity.

Procedural and timeline aspects

  • Bill introduced and referred to the House Committee on General and Housing; multiple committee hearings occurred in March 2026.
  • If enacted, Sec. 1’s 90-day waiting period would commence on July 1, 2026.
  • Secs. 2–4 (tax-related provisions) would apply retroactively to January 1, 2026, with taxable years beginning on or after that date affected.
  • Violations can be pursued as unfair competition by the Attorney General, indicating potential enforcement actions and preliminary injunctive relief.

Potential impacts to consider

  • Reducing rapid accumulation of single- and two-family rental portfolios by institutional buyers.
  • Increased administration and compliance costs for “covered entities” and for Vermont tax reporting related to real estate investments.
  • Possible impact on housing supply dynamics and affordability if the 90-day listing requirement slows certain purchases.
  • Tax revenue and tax base changes for Vermont due to the depreciation/interest deduction adjustments for institutions and their investors.

Note: This summary reflects the introduced text of H.607 and is intended to convey the bill’s substantive provisions and potential effects. For ongoing status, amendments, and fiscal impact analyses, consult the Vermont Legislature’s bill tracking and fiscal notes.

Compiled from official sources — confirm details with the bill’s official record.

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