H.R. 3964 — Affordable Housing Equity Act of 2025

This section establishes an increase in the eligible basis to 150% (from 100%) for the portion of a low-income housing tax credit (LIHTC) building comprised of units designated for extremely low-income households—defined as those with aggregate income not exceeding the greater of 30% of area median gross income or 100% of the federal poverty line—if (1) at least 20% of the building's residential units are so designated (using a 30% imputed income limitation), and (2) the state housing credit agency designates the project as requiring the increase for financial feasibility as part of a qualified LIHTC project. (Thus, the basis reduction under current law for non-low-income portions does not apply to such units.) The LIHTC, under IRC §42, provides federal tax credits to developers for producing rental housing affordable to lower-income households. This provision applies to buildings receiving credit allocations after enactment or, for tax-exempt bond-financed buildings, bonds issued after December 31, 2025.