California committee kills bill aiming to end tax break for corporate landlords
A California bill attempting to strip away a tax break for large owners of rental homes died Monday.
Assemblymember Matt Haney, D-San Francisco, said he authored the measure to push back against wealthy investors scooping up and then renting out homes. Critics say that practice raises prices for buyers and hurts the state’s homeownership rate.
“Why are we giving tax breaks to Wall Street landlords, to help them outbid California families who simply want to own their first home?,” Haney said during a news conference Monday morning about Assembly Bill 1611. “It makes no sense, we shouldn’t be doing it and it’s hurting our goals here to increase access to homeownership for Californians.”
The measure would have prevented owners of 50 or more single-family rental properties from using a tax break, which allows for gains from selling a property used for a trade or business to be deferred if a taxpayer acquires another property of a “like-kind.” The state Franchise Tax Board estimated that ending the break would have brought in more than $6 million a year over the next three fiscal years.
But the bill did not make it out of the Assembly Revenue and Taxation Committee. It was killed through a process called the suspense file, where measures die without a public vote or explanation. The committee’s chair Assemblymember Mike Gipson, D-Carson, declined to comment after the hearing.
The measure faced opposition from influential groups including the California Apartment Association, California Chamber of Commerce and the California Building Industry Association.
They argued the bill was “a solution in search of a problem” that “advances a compelling narrative with strong political optics,” in a letter they sent to Haney last week.
“Investors cannot be blamed for driving up the price of housing,” the letter went on to say. “Simply purchasing a home does not increase housing prices. The fundamental driver of housing costs in California is the chronic shortage of housing supply.”
There are questions about the role that large investment companies play in the affordability of housing in the state. In California, just under 3% of single-family homes are owned by holders of at least 10 properties, according to the California Research Bureau.
Even so, efforts to limit corporate investors has bipartisan support from influential leaders including President Donald Trump and Gov. Gavin Newsom. Newsom in his State of the State speech in January said he would work with legislators to combat what he called “monopolistic behavior, and strengthen accountability, level the playing field for working families” through more oversight, enforcement and potentially changing the state’s tax code.
Still, it was not enough to help Haney’s bill.
The Governor’s Office did not respond to an email requesting information about when Newsom planned to unveil more specifics about what he would like to see from the Legislature.
“My next step will be trying to have a conversation about this in the budget,” Haney said. “Otherwise, we’ll have to look at what we can do to bring it back next year.”
