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SB 582

Sale of Residential Property - Taxes and Offers to Purchase (End Hedge Fund Control of Maryland Homes Act of 2025)

2025 Regular Session Introduced by Shaneka Henson

The bill restricts large investors from buying single-family homes in Maryland by limiting offers to individuals first, raises taxes on large real estate buyers, and imposes penalt

Hearing 2/26 at 2:00 p.m. (Budget and Taxation) and Hearing canceled (Judicial Proceedings)
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Bill Summary · SB 582

SB 582 — Sale of Residential Property; Taxes and Offers to Purchase

(“End Hedge Fund Control of Maryland Homes Act of 2025”)

Status: Introduced Jan 23, 2025; effective date provided in fiscal note: July 1, 2025.
Primary sponsor: Senator Henson.

Purpose / Intent

To limit large investment‐entity accumulation of single‑family residences (SFRs) in Maryland by: (1) restricting who a seller may accept offers from during an initial listing period; (2) raising transaction taxes on purchases by large real‑estate enterprises; and (3) imposing a new excise tax and per‑unit penalty on excess ownership by pooled‑fund investors (e.g., certain hedge funds/private equity managers). Proceeds are dedicated to a Down Payment and Settlement Expense Loan Program (DSELP).

Key provisions

  • Offer‑acceptance restriction (third‑party sales): during the first 30 days after a SFR is offered for sale, the seller may accept an offer only from:

    • an individual (natural person),
    • a community development organization,
    • a nonprofit organization, or
    • a real‑estate enterprise that owns < 3.0% of all residential real property in the county.
    • Exception: sales in foreclosure actions are excluded.

  • Increased State transfer tax (for certain buyers): the State transfer tax rate (currently 0.5%) is raised to 15% on the sale of a SFR when the buyer is a “real estate enterprise” that either:

    • owns > 120 single‑family residences, or
    • owns residential property in Maryland with total assessed value > $12 million.

  • Excess‑ownership excise tax and penalty (for “applicable taxpayers”): a 50% excise tax is imposed on acquisitions of SFRs by entities defined as managing pooled investor funds and acting as fiduciaries (e.g., certain fund managers). In addition:

    • a $10,000 per‑unit penalty is imposed on “excess ownership” beyond allowed thresholds;
    • when fully phased in, an applicable taxpayer may own up to 25 SFRs before penalties apply; for entities classified as hedge funds the penalty can apply starting with the first property.
    • The excise tax and penalties are calculated on fair market value and paid to the State.

  • Reporting, administration and enforcement:

    • Applicable taxpayers must file specified returns/reports with the Comptroller.
    • Willful failure to file required returns is a misdemeanor: up to $5,000 fine and/or up to 5 years imprisonment.
    • The Comptroller administers the excise tax; administrative costs to the Comptroller are anticipated.

  • Down Payment and Settlement Expense Loan Program (DSELP) Fund:

    • A new special, nonlapsing fund administered by Department of Housing and Community Development.
    • Receives net excise and penalty revenue (after administrative distribution) and may be used only for down payment and settlement expense loans to eligible homebuyers.

Who is affected

  • Directly affected: large real‑estate enterprises, pooled‑fund managers, hedge funds and other investor entities buying SFRs in Maryland.
  • Indirectly affected: sellers of SFRs, real‑estate brokers, title companies, mortgage lenders, and prospective homebuyers (who could benefit from DSELP funding).
  • Local governments: transfer tax allocations (and thus some local programs tied to transfer tax revenues) could be affected by changed tax receipts.

Fiscal and administrative impact

  • State revenues: potentially significant revenue increases from the higher transfer tax and new excise tax/penalties; no precise revenue estimate provided.
  • State expenditures: Comptroller administrative costs estimated at ~$435,000 in FY2026 and rising to about $581,000 by FY2030 for staffing and administration.
  • Local effect: increased State transfer tax receipts would alter distributions (the bill directs a portion to the DSELP fund), with some positive impact for State housing assistance and land‑preservation allocations that depend on transfer tax receipts.
  • Small businesses in the real‑estate transaction chain may incur compliance costs.

Timeline / Implementation notes

  • Effective date in fiscal analysis: July 1, 2025.
  • New DSELP Fund created; revenues from excise/penalty flow to that fund after administrative allocation.
  • Tax administration and filing rules to be implemented by the Comptroller; enforcement includes criminal penalties for willful noncompliance.

Bottom line

SB 582 is a package of market‑access and tax measures designed to discourage large pooled‑fund acquisition and concentration of single‑family homes in Maryland and to redirect new tax revenues to a state program assisting homebuyers with down payments and settlement costs. The bill could generate substantial state revenue while imposing new compliance and enforcement responsibilities on the Comptroller and increased costs on institutional buyers and some participants in home sales.

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

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