I
119THCONGRESS
1
STSESSION H. R. 2854
To amend the Internal Revenue Code of 1986 to establish a tax credit
for neighborhood revitalization, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
APRIL10, 2025
Mr. K
ELLYof Pennsylvania (for himself, Mr. LARSONof Connecticut, Mr.
C
AREY, Ms. SEWELL, Mr. BUCHANAN, Mr. DAVISof Illinois, Mrs. MIL-
LERof West Virginia, Mr. PANETTA, Mr. FEENSTRA, Mr. KUSTOFF, Ms.
M
ALLIOTAKIS, and Mr. MORAN) introduced the following bill; which was
referred to the Committee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to establish
a tax credit for neighborhood revitalization, and for other
purposes.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Neighborhood Homes 4
Investment Act’’. 5
SEC. 2. FINDINGS AND SENSE OF CONGRESS. 6
(a) F
INDINGS.—Congress finds the following: 7
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(1) Experts have determined that it could take 1
nearly a decade to address the housing shortage in 2
the United States, in large part due to increasing 3
housing prices and insufficient supply. 4
(2) The housing supply shortage disproportion-5
ately impacts low-income and distressed commu-6
nities. 7
(3) Homeownership is a primary source of 8
household wealth and neighborhood stability. Many 9
distressed communities have low rates of homeown-10
ership and lack quality, affordable starter homes, 11
while many individuals who own their homes have 12
difficulty securing financing for home repairs and 13
improvements. 14
(4) Housing construction in distressed commu-15
nities is prevented by the value gap, the difference 16
between the cost to develop a home and the sale 17
price of the home. 18
(5) The Neighborhood Homes Investment Act 19
can close these financing gaps to increase housing 20
development and rehabilitation in distressed commu-21
nities. 22
(b) S
ENSE OFCONGRESS.—It is the sense of Con-23
gress that the neighborhood homes credit (as added under 24
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section 3 of this Act) should be an activity administered 1
in a manner which— 2
(1) revitalizes distressed communities in rural 3
and urban geographies; 4
(2) minimizes application burdens on small 5
businesses applying for such credit; and 6
(3) is consistent with the Fair Housing Act of 7
1968 (42 U.S.C. 3601 et seq.). 8
SEC. 3. NEIGHBORHOOD HOMES CREDIT. 9
(a) I
NGENERAL.—Subpart D of part IV of sub-10
chapter A of chapter 1 of the Internal Revenue Code of 11
1986 is amended by inserting after section 42 the fol-12
lowing new section: 13
‘‘SEC. 42A. NEIGHBORHOOD HOMES CREDIT. 14
‘‘(a) A
LLOWANCE OFCREDIT.—For purposes of sec-15
tion 38, the neighborhood homes credit determined under 16
this section for the taxable year is, with respect to each 17
qualified residence sold by the taxpayer during such tax-18
able year in an affordable sale, the lesser of— 19
‘‘(1) an amount equal to— 20
‘‘(A) the excess (if any) of— 21
‘‘(i) the reasonable development costs 22
paid or incurred by the taxpayer with re-23
spect to such qualified residence, over 24
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‘‘(ii) the sale price of such qualified 1
residence (reduced by any reasonable ex-2
penses paid or incurred by the taxpayer in 3
connection with such sale), or 4
‘‘(B) if the neighborhood homes credit 5
agency determines it is necessary to ensure fi-6
nancial feasibility, an amount not to exceed 120 7
percent of the amount under subparagraph (A), 8
‘‘(2) 40 percent of the eligible development 9
costs paid or incurred by the taxpayer with respect 10
to such qualified residence, or 11
‘‘(3) 32 percent of the national median sale 12
price for new homes (as determined pursuant to the 13
most recent census data available as of the date on 14
which the neighborhood homes credit agency makes 15
an allocation for the qualified project). 16
‘‘(b) D
EVELOPMENT COSTS.—For purposes of this 17
section— 18
‘‘(1) R
EASONABLE DEVELOPMENT COSTS .— 19
‘‘(A) I
N GENERAL.—The term ‘reasonable 20
development costs’ means amounts paid or in-21
curred for the acquisition of buildings and land, 22
construction, substantial rehabilitation, demoli-23
tion of structures, or environmental remedi-24
ation, to the extent that the neighborhood 25
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homes credit agency determines that such 1
amounts meet the standards specified pursuant 2
to subsection (f)(1)(D) (as of the date on which 3
construction or substantial rehabilitation is sub-4
stantially complete, as determined by such 5
agency) and are necessary to ensure the finan-6
cial feasibility of such qualified residence. 7
‘‘(B) C
ONSIDERATIONS IN MAKING DETER -8
MINATION.—In making the determination under 9
subparagraph (A), the neighborhood homes 10
credit agency shall consider— 11
‘‘(i) the sources and uses of funds and 12
the total financing, 13
‘‘(ii) any proceeds or receipts gen-14
erated or expected to be generated by rea-15
son of tax benefits, and 16
‘‘(iii) the reasonableness of the devel-17
opmental costs and fees. 18
‘‘(2) E
LIGIBLE DEVELOPMENT COSTS .—The 19
term ‘eligible development costs’ means the amount 20
which would be reasonable development costs if the 21
amounts taken into account as paid or incurred for 22
the acquisition of buildings and land did not exceed 23
75 percent of such costs determined without regard 24
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to any amount paid or incurred for the acquisition 1
of buildings and land. 2
‘‘(3) S
UBSTANTIAL REHABILITATION .—The 3
term ‘substantial rehabilitation’ means amounts paid 4
or incurred for rehabilitation of a qualified residence 5
if such amounts exceed the greater of— 6
‘‘(A) $25,000, or 7
‘‘(B) 20 percent of the amounts paid or in-8
curred by the taxpayer for the acquisition of 9
buildings and land with respect to such quali-10
fied residence. 11
‘‘(4) C
ONSTRUCTION AND REHABILITATION 12
ONLY AFTER ALLOCATION TAKEN INTO ACCOUNT .— 13
‘‘(A) I
N GENERAL.—The terms ‘reasonable 14
development costs’ and ‘eligible development 15
costs’ shall not include any amount paid or in-16
curred before the date on which an allocation is 17
made to the taxpayer under subsection (e) with 18
respect to the qualified project of which the 19
qualified residence is part unless such amount 20
is paid or incurred for the acquisition of build-21
ings or land. 22
‘‘(B) L
AND AND BUILDING ACQUISITION 23
COSTS.—Amounts paid or incurred for the ac-24
quisition of buildings or land shall be included 25
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under paragraph (A) only if paid or incurred 1
not more than 3 years before the date on which 2
the allocation referred to in subparagraph (A) 3
is made. If the taxpayer acquired any building 4
or land from an entity (or any related party to 5
such entity) that holds an ownership interest in 6
the taxpayer, then such entity must also have 7
acquired such property within such 3-year pe-8
riod, and the acquisition cost included under 9
subparagraph (A) with respect to the taxpayer 10
shall not exceed the amount such entity paid or 11
incurred to acquire such property. 12
‘‘(c) Q
UALIFIEDRESIDENCE.—For purposes of this 13
section— 14
‘‘(1) I
N GENERAL.—The term ‘qualified resi-15
dence’ means a residence that— 16
‘‘(A) is real property (constructed on-site 17
or manufactured off-site) affixed on a perma-18
nent foundation, 19
‘‘(B) is— 20
‘‘(i) a house which is comprised of 4 21
or fewer residential units, 22
‘‘(ii) a condominium unit, or 23
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‘‘(iii) a house or an apartment owned 1
by a cooperative housing corporation (as 2
defined in section 216(b)), 3
‘‘(C) is part of a qualified project with re-4
spect to which the neighborhood homes credit 5
agency has made an allocation under subsection 6
(e), and 7
‘‘(D) is located in a qualified census tract 8
(determined as of the date of such allocation). 9
‘‘(2) Q
UALIFIED CENSUS TRACT .— 10
‘‘(A) I
N GENERAL.—The term ‘qualified 11
census tract’ means a census tract— 12
‘‘(i) which— 13
‘‘(I) has a median family income 14
which does not exceed 80 percent of 15
the median family income for the ap-16
plicable area, 17
‘‘(II) has a poverty rate that is 18
not less than 130 percent of the pov-19
erty rate of the applicable area, and 20
‘‘(III) has a median value for 21
owner-occupied homes that does not 22
exceed the median value for owner-oc-23
cupied homes in the applicable area, 24
‘‘(ii) which— 25
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‘‘(I) is located in a city which has 1
a population of not less than 50,000 2
and such city has a poverty rate that 3
is not less than 150 percent of the 4
poverty rate of the applicable area, 5
‘‘(II) has a median family income 6
which does not exceed the median 7
family income for the applicable area, 8
and 9
‘‘(III) has a median value for 10
owner-occupied homes that does not 11
exceed 80 percent of the median value 12
for owner-occupied homes in the ap-13
plicable area, 14
‘‘(iii) which— 15
‘‘(I) is located in a nonmetropoli-16
tan county, 17
‘‘(II) has a median family income 18
which does not exceed the median 19
family income for the applicable area, 20
and 21
‘‘(III) has been designated by a 22
neighborhood homes credit agency 23
under this clause, 24
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‘‘(iv) which is not otherwise a quali-1
fied census tract and is located in a dis-2
aster area (as defined in section 3
7508A(d)(3)), but only with respect to 4
credits allocated in any period during 5
which the President of the United States 6
has determined that such area warrants in-7
dividual or individual and public assistance 8
by the Federal Government under the Rob-9
ert T. Stafford Disaster Relief and Emer-10
gency Assistance Act, or 11
‘‘(v) which is not otherwise a qualified 12
census tract and is identified by the neigh-13
borhood homes credit agency, through 14
methodologies detailed in the qualified allo-15
cation plan, as having a shortage of afford-16
able owner-occupied homes. 17
‘‘(B) A
PPLICABLE AREA.—The term ‘appli-18
cable area’ means— 19
‘‘(i) in the case of a metropolitan cen-20
sus tract, the metropolitan area in which 21
such census tract is located, and 22
‘‘(ii) in the case of a census tract 23
other than a census tract described in 24
clause (i), the State. 25
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‘‘(d) AFFORDABLESALE.—For purposes of this sec-1
tion— 2
‘‘(1) I
N GENERAL.—The term ‘affordable sale’ 3
means a sale to a qualified homeowner of a qualified 4
residence that the neighborhood homes credit agency 5
certifies as meeting the standards promulgated 6
under subsection (f)(1)(D) for a price that does not 7
exceed— 8
‘‘(A) in the case of any qualified residence 9
not described in subparagraph (B), (C), or (D), 10
the amount equal to the product of 4 multiplied 11
by the median family income for the applicable 12
area (as determined pursuant to the most re-13
cent census data available as of the date of the 14
contract for such sale), 15
‘‘(B) in the case of a house comprised of 16
2 residential units, 125 percent of the amount 17
described in subparagraph (A), 18
‘‘(C) in the case of a house comprised of 19
3 residential units, 150 percent of the amount 20
described in subparagraph (A), or 21
‘‘(D) in the case of a house comprised of 22
4 residential units, 175 percent of the amount 23
described in subparagraph (A). 24
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‘‘(2) QUALIFIED HOMEOWNER .—The term 1
‘qualified homeowner’ means, with respect to a 2
qualified residence, an individual— 3
‘‘(A) who owns and uses such qualified res-4
idence as the principal residence of such indi-5
vidual, and 6
‘‘(B) whose family income (determined as 7
of the date that a binding contract for the af-8
fordable sale of such residence is entered into) 9
is 140 percent or less of the median family in-10
come for the applicable area in which the quali-11
fied residence is located. 12
‘‘(e) C
REDITCEILING ANDALLOCATIONS.— 13
‘‘(1) C
REDIT LIMITED BASED ON ALLOCATIONS 14
TO QUALIFIED PROJECTS.— 15
‘‘(A) I
N GENERAL.—The credit allowed 16
under subsection (a) to any taxpayer for any 17
taxable year with respect to one or more quali-18
fied residences which are part of the same 19
qualified project shall not exceed the excess (if 20
any) of— 21
‘‘(i) the amount allocated by the 22
neighborhood homes credit agency under 23
this paragraph to such taxpayer with re-24
spect to such qualified project, over 25
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‘‘(ii) the aggregate amount of credit 1
allowed under subsection (a) to such tax-2
payer with respect to qualified residences 3
which are a part of such qualified project 4
for all prior taxable years. 5
‘‘(B) D
EADLINE FOR COMPLETION .—No 6
credit shall be allowed under subsection (a) 7
with respect to any qualified residence unless 8
the affordable sale of such residence is during 9
the 5-year period beginning on the date of the 10
allocation to the qualified project of which such 11
residence is a part (or, in the case of a qualified 12
residence to which subsection (i) applies, the re-13
habilitation of such residence is completed dur-14
ing such 5-year period). 15
‘‘(2) L
IMITATIONS ON ALLOCATIONS TO QUALI -16
FIED PROJECTS.— 17
‘‘(A) A
LLOCATIONS LIMITED BY STATE 18
NEIGHBORHOOD HOMES CREDIT CEILING .—The 19
aggregate amount allocated to taxpayers with 20
respect to qualified projects by the neighbor-21
hood homes credit agency of any State for any 22
calendar year shall not exceed the State neigh-23
borhood homes credit amount of such State for 24
such calendar year. 25
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‘‘(B) SET-ASIDE FOR CERTAIN PROJECTS 1
INVOLVING QUALIFIED NONPROFIT ORGANIZA -2
TIONS.—Rules similar to the rules of section 3
42(h)(5) shall apply for purposes of this sec-4
tion. 5
‘‘(3) D
ETERMINATION OF STATE NEIGHBOR -6
HOOD HOMES CREDIT CEILING .— 7
‘‘(A) I
N GENERAL.—The State neighbor-8
hood homes credit amount for a State for a cal-9
endar year is an amount equal to the sum of— 10
‘‘(i) the greater of— 11
‘‘(I) the product of $9, multiplied 12
by the State population (determined 13
in accordance with section 146(j)), or 14
‘‘(II) $12,000,000, and 15
‘‘(ii) any amount previously allocated 16
to any taxpayer with respect to any quali-17
fied project by the neighborhood homes 18
credit agency of such State which can no 19
longer be allocated to any qualified resi-20
dence because the 5-year period described 21
in paragraph (1)(B) expires during cal-22
endar year. 23
‘‘(B) 3-
YEAR CARRYFORWARD OF UNUSED 24
LIMITATION.—The State neighborhood homes 25
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credit amount for a State for a calendar year 1
shall be increased by the excess (if any) of the 2
State neighborhood homes credit amount for 3
such State for the preceding calendar year over 4
the aggregate amount allocated by the neigh-5
borhood homes credit agency of such State dur-6
ing such preceding calendar year. Any amount 7
carried forward under the preceding sentence 8
shall not be carried past the third calendar year 9
after the calendar year in which such credit 10
amount originally arose, determined on a first- 11
in, first-out basis. 12
‘‘(f) R
ESPONSIBILITIES OFNEIGHBORHOOD HOMES 13
C
REDITAGENCIES.— 14
‘‘(1) I
N GENERAL.—Notwithstanding subsection 15
(e), the State neighborhood homes credit dollar 16
amount shall be zero for a calendar year unless the 17
neighborhood homes credit agency of the State— 18
‘‘(A) allocates such amount pursuant to a 19
qualified allocation plan of the neighborhood 20
homes credit agency, 21
‘‘(B) subject to paragraph (2), allocates 22
not more than 20 percent of amounts allocated 23
in the previous year (or for allocations made in 24
the first allocation year under this section, not 25
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more than 20 percent of the neighborhood 1
homes credit ceiling for such year) to projects 2
with respect to qualified residences which— 3
‘‘(i) are located in census tracts de-4
scribed in subsection (c)(2)(A)(iii), 5
(c)(2)(A)(iv), (i)(5), or 6
‘‘(ii) are not located in a qualified 7
census tract but meet the requirements of 8
subsection (i)(8), 9
‘‘(C) subject to paragraph (2), in addition 10
to any allocation described in subparagraph 11
(B), allocates not more than 20 percent of 12
amounts allocated in the previous year (or for 13
allocations made in the first allocation year 14
under this section, not more than 20 percent of 15
the neighborhood homes credit ceiling for such 16
year) to projects with respect to qualified resi-17
dences which are located in any census tract de-18
scribed in subsection (c)(2)(A)(v), except that, 19
with respect to any qualified residence located 20
within such census tract which is sold to a 21
qualified homeowner, subsection (d)(2) shall be 22
applied by substituting ‘120 percent’ for ‘140 23
percent’, 24
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‘‘(D) promulgates standards with respect 1
to reasonable qualified development costs and 2
fees, 3
‘‘(E) promulgates standards with respect 4
to construction quality which are consistent 5
with building codes or other standards required 6
by the State or local jurisdiction in which the 7
project is located, 8
‘‘(F) in the case of any neighborhood 9
homes credit agency which makes an allocation 10
to a qualified project which includes any quali-11
fied residence to which subsection (i) applies, 12
promulgates standards with respect to pro-13
tecting the owners of such residences, including 14
the capacity of such owners to pay rehabilita-15
tion costs not covered by the credit provided by 16
this section and providing for the disclosure to 17
such owners of their rights and responsibilities 18
with respect to the rehabilitation of such resi-19
dences, 20
‘‘(G) submits to the Secretary (at such 21
time and in such manner as the Secretary may 22
prescribe) an annual report specifying— 23
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‘‘(i) the amount of the neighborhood 1
homes credits allocated to each qualified 2
project for the previous year, 3
‘‘(ii) with respect to each qualified 4
residence completed in the preceding cal-5
endar year— 6
‘‘(I) the census tract in which 7
such qualified residence is located, 8
‘‘(II) with respect to the qualified 9
project that includes such qualified 10
residence, the year in which such 11
project received an allocation under 12
this section, 13
‘‘(III) whether such qualified res-14
idence was new, substantially rehabili-15
tated and sold to a qualified home-16
owner, or substantially rehabilitated 17
pursuant to subsection (i), 18
‘‘(IV) the eligible development 19
costs of such qualified residence, 20
‘‘(V) the amount of the neighbor-21
hood homes credit with respect to 22
such qualified residence, 23
‘‘(VI) the sales price of such 24
qualified residence, if applicable, and 25
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‘‘(VII) the family income of the 1
qualified homeowner (expressed as a 2
percentage of the applicable area me-3
dian family income for the location of 4
the qualified residence), and 5
‘‘(iii) such other information as the 6
Secretary may require, 7
‘‘(H) makes available to the general public 8
a written explanation for any allocation of a 9
neighborhood homes credit dollar amount which 10
is not made in accordance with established pri-11
orities and selection criteria of the neighbor-12
hood homes credit agency, and 13
‘‘(I) provide educational outreach on appli-14
cation and compliance requirements, including 15
for small residential builders and remodelers. 16
‘‘(2) A
LTERNATIVE FOR CERTAIN STATES .— 17
‘‘(A) I
N GENERAL.—In the case of any 18
State which, for a calendar year, is an applica-19
ble State (as defined in subparagraph (B)), in 20
lieu of the requirements under subparagraphs 21
(B) and (C) of paragraph (1), the neighborhood 22
homes credit agency of the State may elect to 23
allocate not more than 40 percent of amounts 24
allocated in the previous year (or for allocations 25
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made in the first allocation year under this sec-1
tion, not more than 40 percent of the neighbor-2
hood homes credit ceiling for such year) to 3
projects with respect to qualified residences 4
which are described in either subparagraph (B) 5
or (C) of paragraph (1). 6
‘‘(B) A
PPLICABLE STATE.—For purposes 7
of this paragraph, the term ‘applicable State’ 8
means a State which, for purposes of the deter-9
mining the amount under subsection 10
(e)(3)(A)(i) for the calendar year with respect 11
to such State, received the amount described in 12
subclause (II) of such subsection. 13
‘‘(3) Q
UALIFIED ALLOCATION PLAN .—For pur-14
poses of this subsection, the term ‘qualified alloca-15
tion plan’ means any plan which— 16
‘‘(A) sets forth the selection criteria to be 17
used to prioritize qualified projects for alloca-18
tions of State neighborhood homes credit dollar 19
amounts, including— 20
‘‘(i) the need for new or substantially 21
rehabilitated owner-occupied homes in the 22
area addressed by the project, 23
‘‘(ii) the expected contribution of the 24
project to neighborhood stability and revi-25
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talization, including the impact on neigh-1
borhood residents, 2
‘‘(iii) the capability and prior perform-3
ance of the project sponsor, and 4
‘‘(iv) the likelihood the project will re-5
sult in long-term homeownership, 6
‘‘(B) has been made available for public 7
comment, 8
‘‘(C) as determined by the neighborhood 9
homes credit agency, is likely to result in the 10
selection of highly qualified applicants while 11
also minimizing, to the extent practicable, appli-12
cation costs and barriers to entry for small resi-13
dential builders and re-modelers, and 14
‘‘(D) provides a procedure that the neigh-15
borhood homes credit agency (or any agent or 16
contractor of such agency) shall follow for pur-17
poses of— 18
‘‘(i) identifying noncompliance with 19
any provisions of this section, and 20
‘‘(ii) notifying the Internal Revenue 21
Service of any such noncompliance of 22
which the agency becomes aware. 23
‘‘(g) R
EPAYMENT.— 24
‘‘(1) I
N GENERAL.— 25
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‘‘(A) SOLD DURING 5-YEAR PERIOD.—If a 1
qualified residence is sold during the 5-year pe-2
riod beginning immediately after the affordable 3
sale of such qualified residence referred to in 4
subsection (a), the seller shall transfer an 5
amount equal to the repayment amount to the 6
relevant neighborhood homes credit agency. 7
‘‘(B) U
SE OF REPAYMENTS .—A neighbor-8
hood homes credit agency shall use any amount 9
received pursuant to subparagraph (A) only for 10
purposes of qualified projects. 11
‘‘(2) R
EPAYMENT AMOUNT .—For purposes of 12
paragraph (1)(A)— 13
‘‘(A) I
N GENERAL .—The repayment 14
amount is an amount equal to the applicable 15
percentage of the gain from the sale to which 16
the repayment relates. 17
‘‘(B) A
PPLICABLE PERCENTAGE .—For 18
purposes of subparagraph (A), the applicable 19
percentage is 50 percent, reduced by 10 per-20
centage points for each year of the 5-year pe-21
riod referred to in paragraph (1)(A) which ends 22
before the date of such sale. 23
‘‘(3) L
IEN FOR REPAYMENT AMOUNT .—A 24
neighborhood homes credit agency receiving an allo-25
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cation under this section shall place a lien on each 1
qualified residence that is built or rehabilitated as 2
part of a qualified project for an amount such agen-3
cy deems necessary to ensure potential repayment 4
pursuant to paragraph (1)(A). 5
‘‘(4) W
AIVER.— 6
‘‘(A) I
N GENERAL.—The neighborhood 7
homes credit agency may waive the repayment 8
required under paragraph (1)(A) if the agency 9
determines that making a repayment would 10
constitute a hardship to the seller. 11
‘‘(B) H
ARDSHIP.—For purposes of sub-12
paragraph (A), with respect to the seller, a 13
hardship may include— 14
‘‘(i) divorce, 15
‘‘(ii) disability, 16
‘‘(iii) illness, or 17
‘‘(iv) any other hardship identified by 18
the neighborhood homes credit agency for 19
purposes of this paragraph. 20
‘‘(h) O
THERDEFINITIONS ANDSPECIALRULES.— 21
For purposes of this section— 22
‘‘(1) N
EIGHBORHOOD HOMES CREDIT AGEN -23
CY.—The term ‘neighborhood homes credit agency’ 24
means the agency designated by the governor of a 25
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State as the neighborhood homes credit agency of 1
the State. 2
‘‘(2) Q
UALIFIED PROJECT.—The term ‘qualified 3
project’ means a project that a neighborhood homes 4
credit agency certifies will build or substantially re-5
habilitate one or more qualified residences. 6
‘‘(3) D
ETERMINATIONS OF FAMILY INCOME .— 7
Rules similar to the rules of section 143(f)(2) shall 8
apply for purposes of this section. 9
‘‘(4) P
OSSESSIONS TREATED AS STATES .—The 10
term ‘State’ includes the District of Columbia and 11
the possessions of the United States. 12
‘‘(5) S
PECIAL RULES RELATED TO CONDOMIN -13
IUMS AND COOPERATIVE HOUSING CORPORATIONS .— 14
‘‘(A) D
ETERMINATION OF DEVELOPMENT 15
COSTS.—In the case of a qualified residence de-16
scribed in clause (ii) or (iii) of subsection 17
(c)(1)(A), the reasonable development costs and 18
eligible development costs of such qualified resi-19
dence shall be an amount equal to such costs, 20
respectively, of the entire condominium or coop-21
erative housing property in which such qualified 22
residence is located, multiplied by a fraction— 23
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‘‘(i) the numerator of which is the 1
total floor space of such qualified resi-2
dence, and 3
‘‘(ii) the denominator of which is the 4
total floor space of all residences within 5
such property. 6
‘‘(B) T
ENANT-STOCKHOLDERS OF COOPER -7
ATIVE HOUSING CORPORATIONS TREATED AS 8
OWNERS.—In the case of a cooperative housing 9
corporation (as such term is defined in section 10
216(b)), a tenant-stockholder shall be treated 11
as owning the house or apartment which such 12
person is entitled to occupy. 13
‘‘(6) R
ELATED PARTY SALES NOT TREATED AS 14
AFFORDABLE SALES.— 15
‘‘(A) I
N GENERAL.—A sale between related 16
persons shall not be treated as an affordable 17
sale. 18
‘‘(B) R
ELATED PERSONS .—For purposes 19
of this paragraph, a person (in this subpara-20
graph referred to as the ‘related person’) is re-21
lated to any person if the related person bears 22
a relationship to such person specified in sec-23
tion 267(b) or 707(b)(1), or the related person 24
and such person are engaged in trades or busi-25
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nesses under common control (within the mean-1
ing of subsections (a) and (b) of section 52). 2
For purposes of the preceding sentence, in ap-3
plying section 267(b) or 707(b)(1), ‘10 percent’ 4
shall be substituted for ‘50 percent’. 5
‘‘(7) I
NFLATION ADJUSTMENT .— 6
‘‘(A) I
N GENERAL.—In the case of a cal-7
endar year after 2025, the dollar amounts in 8
subsections (b)(3)(A), (e)(3)(A)(i)(I), 9
(e)(3)(A)(i)(II), and (i)(2)(C) shall each be in-10
creased by an amount equal to— 11
‘‘(i) such dollar amount, multiplied by 12
‘‘(ii) the cost-of-living adjustment de-13
termined under section 1(f)(3) for such 14
calendar year by substituting ‘calendar 15
year 2024’ for ‘calendar year 2016’ in sub-16
paragraph (A)(ii) thereof. 17
‘‘(B) R
OUNDING.— 18
‘‘(i) In the case of the dollar amounts 19
in subsections (b)(3)(A) and (i)(2)(C), any 20
increase under paragraph (1) which is not 21
a multiple of $1,000 shall be rounded to 22
the nearest multiple of $1,000. 23
‘‘(ii) In the case of the dollar amount 24
in subsection (e)(3)(A)(i)(I), any increase 25
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under paragraph (1) which is not a mul-1
tiple of $0.01 shall be rounded to the near-2
est multiple of $0.01. 3
‘‘(iii) In the case of the dollar amount 4
in subsection (e)(3)(A)(i)(II), any increase 5
under paragraph (1) which is not a mul-6
tiple of $100,000 shall be rounded to the 7
nearest multiple of $100,000. 8
‘‘(8) R
EPORT.— 9
‘‘(A) I
N GENERAL.—The Secretary shall 10
annually issue a report, to be made available to 11
the public, which contains the information sub-12
mitted pursuant to subsection (f)(1)(G). 13
‘‘(B) D
E-IDENTIFICATION.—The Secretary 14
shall ensure that any information made public 15
pursuant to subparagraph (A) excludes any in-16
formation that would allow for the identification 17
of qualified homeowners. 18
‘‘(9) L
IST OF QUALIFIED CENSUS TRACTS .— 19
The Secretary of Housing and Urban Development 20
shall, for each year, make publicly available a list of 21
qualified census tracts under— 22
‘‘(A) on a combined basis, clauses (i) and 23
(ii) of subsection (c)(2)(A), 24
‘‘(B) clause (iii) of such subsection, and 25
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‘‘(C) subsection (i)(5)(A). 1
‘‘(10) D
ENIAL OF DEDUCTIONS IF CONVERTED 2
TO RENTAL HOUSING .—If, during the 5-year period 3
beginning immediately after the affordable sale of a 4
qualified residence referred to in subsection (a), an 5
individual who owns a qualified residence (whether 6
or not such individual was the purchaser in such af-7
fordable sale) fails to use such qualified residence as 8
such individual’s principal residence for any period 9
of time, no deduction shall be allowed for expenses 10
paid or incurred by such individual with respect to 11
renting, during such period of time, such qualified 12
residence. 13
‘‘(i) A
PPLICATION OFCREDITWITHRESPECT TO 14
O
WNER-OCCUPIEDREHABILITATIONS.— 15
‘‘(1) I
N GENERAL.—In the case of a qualified 16
rehabilitation by the taxpayer of any qualified resi-17
dence which is owned (as of the date that the writ-18
ten binding contract referred to in paragraph (3) is 19
entered into) by a specified homeowner, the rules of 20
paragraphs (2) through (7) shall apply. 21
‘‘(2) A
LTERNATIVE CREDIT DETERMINATION .— 22
In the case of any qualified residence described in 23
paragraph (1), the neighborhood homes credit deter-24
mined under subsection (a) with respect to such res-25
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•HR 2854 IH
idence shall (in lieu of any credit otherwise deter-1
mined under subsection (a) with respect to such res-2
idence) be allowed in the taxable year during which 3
the qualified rehabilitation is completed (as deter-4
mined by the neighborhood homes credit agency) 5
and shall be equal to the least of— 6
‘‘(A) the excess (if any) of— 7
‘‘(i) the amounts paid or incurred by 8
the taxpayer for the qualified rehabilitation 9
of the qualified residence to the extent that 10
such amounts are certified by the neigh-11
borhood homes credit agency (at the time 12
of the completion of such rehabilitation) as 13
meeting the standards specified pursuant 14
to subsection (f)(1)(D), over 15
‘‘(ii) any amounts paid to such tax-16
payer for such rehabilitation, 17
‘‘(B) 50 percent of the amounts described 18
in subparagraph (A)(i), or 19
‘‘(C) $50,000. 20
‘‘(3) Q
UALIFIED REHABILITATION .— 21
‘‘(A) I
N GENERAL.—For purposes of this 22
subsection, the term ‘qualified rehabilitation’ 23
means a rehabilitation or reconstruction per-24
formed pursuant to a written binding contract 25
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between the taxpayer and the specified home-1
owner if the amount paid or incurred by the 2
taxpayer in the performance of such rehabilita-3
tion or reconstruction exceeds the dollar 4
amount in effect under subsection (b)(3)(A). 5
‘‘(B) A
PPLICATION OF LIMITATION TO EX -6
PENSES PAID OR INCURRED AFTER ALLOCA -7
TION.—A rule similar to the rule of section 8
(b)(4) shall apply for purposes of this sub-9
section. 10
‘‘(4) S
PECIFIED HOMEOWNER .—For purposes 11
of this subsection, the term ‘specified homeowner’ 12
means, with respect to a qualified residence, an indi-13
vidual— 14
‘‘(A) who owns and uses such qualified res-15
idence as the principal residence of such indi-16
vidual as of the date that the written binding 17
contract referred to in paragraph (3) is entered 18
into, and 19
‘‘(B) whose family income (determined as 20
of such date) does not exceed the median family 21
income for the applicable area (with respect to 22
the census tract in which the qualified residence 23
is located). 24
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‘‘(5) ADDITIONAL CENSUS TRACTS IN WHICH 1
OWNER-OCCUPIED RESIDENCES MAY BE LOCATED .— 2
In the case of any qualified residence described in 3
paragraph (1), the term ‘qualified census tract’ in-4
cludes any census tract which— 5
‘‘(A) meets the requirements of subsection 6
(c)(2)(A)(i) without regard to subclause (III) 7
thereof, and 8
‘‘(B) is designated by the neighborhood 9
homes credit agency for purposes of this para-10
graph. 11
‘‘(6) M
ODIFICATION OF REPAYMENT REQUIRE -12
MENT.—In the case of any qualified residence de-13
scribed in paragraph (1), subsection (g) shall be ap-14
plied by beginning the 5-year period otherwise de-15
scribed therein on the date on which the qualified 16
homeowner acquired such residence. 17
‘‘(7) R
ELATED PARTIES.—Paragraph (1) shall 18
not apply if the taxpayer is the owner of the quali-19
fied residence described in paragraph (1) or is re-20
lated (within the meaning of subsection (h)(6)(B)) 21
to such owner. 22
‘‘(8) P
YRRHOTITE REMEDIATION .—The require-23
ment of subsection (c)(1)(D) shall not apply to a 24
qualified rehabilitation under this subsection of a 25
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•HR 2854 IH
qualified residence that is documented by an engi-1
neer’s report and core testing to have a foundation 2
that is adversely impacted by pyrrhotite or other 3
iron sulfide minerals. 4
‘‘(j) R
EGULATIONS.—The Secretary shall prescribe 5
such regulations as may be necessary or appropriate to 6
carry out the purposes of this section, including regula-7
tions that prevent avoidance of the rules, and abuse of 8
the purposes, of this section.’’. 9
(b) C
REDITALLOWED ASPART OFGENERALBUSI-10
NESSCREDIT.—Section 38(b) of the Internal Revenue 11
Code of 1986 is amended by striking ‘‘plus’’ at the end 12
of paragraph (40), by striking the period at the end of 13
paragraph (41) and inserting ‘‘, plus’’, and by adding at 14
the end the following new paragraph: 15
‘‘(42) the neighborhood homes credit deter-16
mined under section 42A(a).’’. 17
(c) C
REDITALLOWEDAGAINSTALTERNATIVEMIN-18
IMUMTAX.—Section 38(c)(4)(B) of the Internal Revenue 19
Code of 1986 is amended by redesignating clauses (iv) 20
through (xii) as clauses (v) through (xiii), respectively, and 21
by inserting after clause (iii) the following new clause: 22
‘‘(iv) the credit determined under sec-23
tion 42A,’’. 24
(d) B
ASISADJUSTMENTS.— 25
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(1) ENERGY EFFICIENT HOME IMPROVEMENT 1
CREDIT.—Section 25C(g) of the Internal Revenue 2
Code of 1986 is amended by adding after the first 3
sentence the following new sentence: ‘‘This sub-4
section shall not apply for purposes of determining 5
the eligible development costs or adjusted basis of 6
any building under section 42A.’’. 7
(2) R
ESIDENTIAL CLEAN ENERGY CREDIT .— 8
Section 25D(f) of such Code is amended by adding 9
after the first sentence the following new sentence: 10
‘‘This subsection shall not apply for purposes of de-11
termining the eligible development costs or adjusted 12
basis of any building under section 42A.’’. 13
(3) N
EW ENERGY EFFICIENT HOME CREDIT .— 14
Section 45L(e) of such Code is amended by inserting 15
‘‘or for purposes of determining the eligible develop-16
ment costs or adjusted basis of any building under 17
section 42A’’ after ‘‘section 42’’. 18
(e) E
XCLUSIONFROMGROSSINCOME.—Part III of 19
subchapter B of chapter 1 of the Internal Revenue Code 20
of 1986 is amended by inserting before section 140 the 21
following new section: 22
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‘‘SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED 1
RESIDENCES. 2
‘‘(a) E
XCLUSIONFROMGROSSINCOME.—Gross in-3
come shall not include the value of any subsidy provided 4
to a taxpayer (whether directly or indirectly) by any State 5
energy office (as defined in section 124(a) of the Energy 6
Policy Act of 2005 (42 U.S.C. 15821(a))) for purposes 7
of any energy improvements made to a qualified residence 8
(as defined in section 42A(c)(1)).’’. 9
(f) C
ONFORMINGAMENDMENTS.— 10
(1) Subsections (i)(3)(C), (i)(6)(B)(i), and 11
(k)(1) of section 469 of the Internal Revenue Code 12
of 1986 are each amended by inserting ‘‘or 42A’’ 13
after ‘‘section 42’’. 14
(2) The table of sections for subpart D of part 15
IV of subchapter A of chapter 1 of such Code is 16
amended by inserting after the item relating to sec-17
tion 42 the following new item: 18
‘‘Sec. 42A. Neighborhood homes credit.’’.
(3) The table of sections for part III of sub-19
chapter B of chapter 1 of such Code is amended by 20
inserting before the item relating to section 140 the 21
following new item: 22
‘‘Sec. 139J. State energy subsidies for qualified residences.’’.
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(g) EFFECTIVEDATE.—The amendments made by 1
this section shall apply to taxable years beginning after 2
December 31, 2025. 3
Æ
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