“To amend the Internal Revenue Code of 1986 to establish a tax credit for neighborhood revitalization, and for other purposes.”
No CRS summary available for this bill.
This section sets forth congressional findings on the U.S. housing shortage—which experts estimate could take nearly a decade to address due to rising prices and insufficient supply and which disproportionately affects low-income and distressed communities—and on related issues including the role of homeownership in wealth-building and stability, the value gap impeding construction in distressed areas, and the potential of the Neighborhood Homes Investment Act to close financing gaps. It also expresses the sense of Congress that the neighborhood homes credit be administered to revitalize distressed communities in rural and urban areas, minimize application burdens on small businesses, and comply with the Fair Housing Act of 1968.
This section establishes a new Neighborhood Homes Credit under new IRC §42A (as part of the general business credit under §38) for taxpayers selling qualified residences in affordable sales. The credit for each such residence equals the lesser of (1) the excess of reasonable development costs over the sale price (net of selling expenses), or up to 120% of that excess if determined necessary for financial feasibility by the Neighborhood Homes Credit Agency; (2) 40% of eligible development costs; or (3) 32% of the national median sale price for new homes (per most recent census data as of allocation date). Reasonable development costs include amounts for land/building acquisition, construction, substantial rehabilitation (exceeding the greater of $25,000 or 20% of acquisition costs), demolition, or remediation deemed necessary for feasibility (considering financing sources/uses, tax benefits, and cost reasonableness); eligible development costs are similar but limit land/building acquisition to 75% of total. Such costs generally are allowed only after agency allocation to the qualified project (except land/building acquisitions within prior three years, with related-party limits). A qualified residence is a single-family home (up to four units), condominium unit, or co-op unit that is (1) permanently affixed real property (on- or off-site manufactured), (2) part of a qualified project receiving an agency allocation, and (3) located in a qualified census tract. Qualified census tracts are those with median family income at or below 80% (or 100%) of area median, poverty rates at or above 130% (or city-level 150%) of area rate, and home values at or below area median (or 80%), or certain nonmetropolitan designations. (Thus, the credit subsidizes development costs for affordable housing sales in economically distressed neighborhoods.)