Company: BHM
Filing Date: 2025-04-09
Form Type: 424B3
Source: 0001104659-25-033384
Chunk: 331

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-04-09
Form: 424B3
Chunk 331
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 it is prudent to do so.

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Taxpayers that do not use
the real property trade or business exception to the business interest deduction limits may use 39-year and 27.5-year straight line recovery
periods for nonresidential real property and residential rental property, respectively, and a general 15-year recovery period for tenant
improvements. Also, taxpayers may expense 100% of certain new or used tangible property through 2022, phasing out at 20% for each following
year.

In addition, the NOL deduction
is generally limited to 80% of taxable income (before the deduction). REITs may indefinitely carryforward (but not carryback) NOLs.

As a result of the foregoing,
we may have less cash than is necessary to distribute taxable income sufficient to avoid U.S. federal corporate income tax and the excise
tax imposed on certain undistributed income or even to meet the 90% distribution requirement. In such a situation, we may need to borrow
funds or, if possible, pay taxable dividends in the form of common stock or debt securities.

Under certain circumstances,
we may be able to correct a failure to meet the distribution requirement for a year by paying “deficiency dividends” to our
stockholders in a later year. We may include such deficiency dividends in our deduction for dividends paid for the earlier year. Although
we may be able to avoid income tax on amounts distributed as deficiency dividends, we will be required to pay interest to the IRS based
upon the amount of any deduction we take for deficiency dividends.

Prohibited Transactions

A REIT will incur a 100% tax
on the net income (including foreign currency gain) derived from any sale or other disposition of property, other than foreclosure property,
that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We believe that none of our properties
will be held primarily for sale to customers and that any sales of any of our properties have not been and will not be in the ordinary
course of our business. However, there can be no assurance that the IRS would not disagree with that belief. Whether a REIT holds a property
“primarily for sale to customers in the ordinary course of a trade or business” depends, however, on the facts and circumstances
in effect from time to time, including those related to a particular property. A safe harbor to the characterization of the sale of property