Company: BHM
Filing Date: 2025-07-08
Form Type: DRS
Source: 0001104659-25-066400
Chunk: 107

Company: Bluerock Homes Trust, Inc.
Filing Date: 2025-07-08
Form: DRS
Chunk 107
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IT to assure that the TRS is subject to an appropriate
level of corporate taxation and, in certain circumstances, other limitations on deductibility may apply. The Code also imposes a
100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. We
will monitor the value of our respective investments in any TRS for the purpose of ensuring compliance with TRS ownership
limitations and will structure our transactions with any TRS on terms that we believe are arm’s-length to avoid incurring the
100% excise tax described above. There can be no assurance, however, that we will be able to comply with the 20% limitation (25% for
2026 and future tax years) or to avoid application of the 100% excise tax.

The prohibited transactions tax may limit our ability to dispose of our properties.

A REIT’s net income
from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of property,
other than foreclosure property, held primarily for sale to customers in the ordinary course of business. We may be subject to the prohibited
transaction tax equal to 100% of net gain upon a disposition of real property. Although a safe harbor to the characterization of the sale
of real property by a REIT as a prohibited transaction is available, we cannot assure you that we can comply with the safe harbor or that
we will avoid owning property that may be characterized as held primarily for sale to customers in the ordinary course of business. Consequently,
we may choose not to engage in certain sales of our properties or may conduct such sales through a TRS, which would be subject to U.S.
federal corporate income tax.

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The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our charter provides that
our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines
that it is no longer in our best interests to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject
to U.S. federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders,
which may have adverse consequences on our total return to our stockholders.

Legislative or other actions affecting REITs