H.R. 6390 — Make Housing Affordable and Defend Democracy Act

This section permanently rescinds $175,660,630,000 in unobligated balances from amounts made available by P.L. 119-21 (a reconciliation act pursuant to title II of H. Con. Res. 14) for immigration enforcement and border security activities, as follows: (1) $1 billion from Department of Defense border support and counter-drug missions; (2) $46.55 billion from border infrastructure and wall system; (3) $4.1 billion from U.S. Customs and Border Protection (CBP) personnel; (4) $2.05263 billion from CBP retention, hiring, and performance bonuses; (5) $855 million from CBP vehicles; (6) $5 billion from CBP facilities; (7) $45 billion from detention capacity; (8) $6.168 billion from border security, technology, and screening; (9) $10 billion from the State Border Security Reinforcement Fund; (10) $10 billion from Department of Homeland Security border support appropriations; (11) $2.055 billion from immigration and law enforcement activities; (12) $29.85 billion from U.S. Immigration and Customs Enforcement hiring and training; (13) $750 million from federal law enforcement training centers; (14) $3.33 billion from Department of Justice appropriations; (15) $3.5 billion from the Bridging immigration-related deficits experienced nationwide reimbursement fund; (16) $450 million from the Operation Stonegarden Grant Program (i.e., DHS grants to state and local law enforcement for border security operations); and (17) $5 billion from Bureau of Prisons appropriations. This section also repeals sections 100001 through 100018 of P.L. 119-21, which established immigration fees.

This section reinstates and revises the first-time homebuyer tax credit (IRC §36) to allow a credit of up to $25,000 against income tax for qualified principal residence purchase expenses in the United States. The credit phases out for taxpayers with modified adjusted gross income exceeding $150,000 ($225,000 for heads of household; $300,000 for joint filers or surviving spouses), fully phasing out over a $100,000 range; increases to $50,000 for first-generation homebuyers (i.e., individuals who aged out of foster care, were emancipated from a parent, or had no parent with majority residential property ownership during their lifetime); and further increases for residences in high-cost areas by 3.5% of the excess of the high-cost conforming loan limit over the standard conforming loan limit set by the Federal Housing Finance Agency. The credit is unavailable to nonresident aliens, for residences disposed of or no longer used as principal residences in the purchase year, for dependents claimed on another return, or without an attached settlement statement; allows an election for advance payment by the Secretary to a qualifying escrow account (for down payment or closing costs only, with unused amounts returned after 180 days); and requires full recapture if a recapture event occurs within five years of purchase.

This section establishes a new tax credit (IRC §45BB) equal to 15% of qualified home construction costs (i.e., labor and material costs to construct housing units of no more than 1,200 square feet placed in service during the taxable year with a sale price not exceeding 80% of the area median home price), with the credit doubling to 30% if sold to a first-time homebuyer. The aggregate credit available for allocation in each state equals $30 multiplied by state population (allocated by state housing credit agencies, as defined in IRC §42(h)(8)(A)), with provisions for reallocating unused amounts to qualified states (i.e., those that fully allocated the prior year's ceiling and request reallocation), Secretarial waivers to carry over unused amounts, and reductions of 50% for prior allocations lacking a certificate of occupancy. Separate tribal allocations are provided to Indian Tribal Governments from an aggregate ceiling equal to the greatest of (1) $30 multiplied by the total estimated number of enrolled tribal citizens, (2) the lowest state ceiling from the prior year, or (3) $30 million.

This section establishes an affordable housing conversion credit equal to 20% of qualified conversion expenditures (i.e., depreciable capital costs incurred within two years of placing the building in service, excluding acquisition costs) for converting an eligible commercial building—originally placed in service at least 20 years prior and nonresidential immediately before conversion—into a qualified affordable housing building, provided such expenditures exceed the greater of 50% of the building's pre-conversion adjusted basis or $100,000. A qualified affordable housing building is a residential building where, for 30 years after being placed in service, at least 20% of units are both rent-restricted and reserved for households at or below 80% of area median income (using rules similar to the low-income housing tax credit under section 42 of the Internal Revenue Code). (Thus, expenditures eligible for the rehabilitation credit under section 47 are reduced by 50% for this credit; brownfield cleanup costs qualify without regard to depreciability.) Credit amounts are limited to allocations by state housing credit agencies from a national pool of $12 billion (apportioned by state population share), plus up to $3 billion designated by the Secretary for buildings in economically distressed areas.

This section establishes a 150% increase in eligible basis for the portion of a low-income housing tax credit (LIHTC) building designated for extremely low-income households (i.e., those with income not exceeding the greater of 30% of area median gross income or 100% of the federal poverty line), provided at least 20% of units are so designated and the state housing credit agency certifies the boost is required for financial feasibility as part of a qualified project. (Thus, such units are exempt from any applicable basis reduction under current law and receive the full 150% eligible basis boost, increasing available tax credits to support development of deeply affordable housing.) The provision applies to buildings receiving housing credit allocations after enactment or, for tax-exempt bond-financed projects, bonds issued after December 31, 2025.

This section establishes a new renter tax credit under new IRC §36C, allowing eligible individuals a credit against income tax equal to an applicable percentage of rent paid in excess of 30% of adjusted gross income (AGI) for leasing their principal residence, with the excess capped at 100% of the Department of Housing and Urban Development's small area fair market rent (including utility allowance) for the residence. (Thus, the credit phases out from 100% of excess for AGI not over $25,000 to 0% above $100,000.) It further establishes a program under new IRC §7527B for monthly advance payments of the credit (equal to the lesser of the estimated annual credit divided by 12 or an elected amount) for a 12-month applicable period (July through June), elected on the prior year's return and reconciled against the final credit; requires IRS notification of eligibility; and makes conforming clerical amendments. The changes apply to taxable years beginning after December 31, 2023. This section also appropriates $50 million to the IRS for community outreach to increase enrollment in the credit and advance payments, available until five years after enactment.