Company: BHM
Filing Date: 2025-03-28
Form Type: POS AM
Source: 0001104659-25-029225
Chunk: 317

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-03-28
Form: POS AM
Chunk 317
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 as holding the assets of a
TRS or as receiving any income that the TRS earns. Rather, the stock issued by a TRS to us will be an asset in our hands, and we will
treat the distributions paid to us from such TRS, if any, as income to the extent of the TRS’s earnings and profits. This treatment
may affect our compliance with the gross income and asset tests. Because we will not include the assets and income of TRSs in determining
our compliance with the REIT requirements, we may use such entities to undertake activities indirectly, such as earning fee income, that
the REIT rules might otherwise preclude us from doing directly or through pass-through subsidiaries. Overall, no more than 20% of
the value of a REIT’s assets may consist of stock or securities of one or more TRSs.

A TRS pays income tax at regular
corporate rates on any income that it earns. In addition, the TRS rules limit the deductibility of interest paid or accrued by a
TRS to its parent REIT to assure that the TRS is subject to an appropriate level of U.S. federal income taxation. For example, deductions
are disallowed for business interest expense (even if paid to third parties) in excess of the sum of a taxpayer’s business interest
income and 30% of the adjusted taxable income of the business, which is its taxable income computed without regard to business interest
income or expense, net operating losses (“NOLs”) or the pass-through income deduction. Such limitations may also impact the
amount of U.S. federal income tax paid by a TRS. Further, the TRS rules impose a 100% excise tax on certain transactions between
a TRS and its parent REIT, such as intercompany loans, or the REIT’s tenants that are not conducted on an arm’s-length basis.

A TRS may not directly or
indirectly operate or manage any healthcare facilities or lodging facilities or provide rights to any brand name under which any healthcare
facility or lodging facility is operated. A TRS is not considered to operate or manage a “qualified healthcare property” or
“qualified lodging facility” solely because the TRS directly or indirectly possesses a license, permit, or similar instrument
enabling it to do so.

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Rent that we receive from
a TRS will qualify as “rents from real property” as long as (1)