Us Congress 2025-2026 Regular Session

Us Congress House Bill HB2854 Compare Versions

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Old	New	Differences
1	1	I
2	2	119THCONGRESS
3	3	1
4	4	STSESSION H. R. 2854
5	5	To amend the Internal Revenue Code of 1986 to establish a tax credit
6	6	for neighborhood revitalization, and for other purposes.
7	7	IN THE HOUSE OF REPRESENTATIVES
8	8	APRIL10, 2025
9	9	Mr. K
10	10	ELLYof Pennsylvania (for himself, Mr. LARSONof Connecticut, Mr.
11	11	C
12	12	AREY, Ms. SEWELL, Mr. BUCHANAN, Mr. DAVISof Illinois, Mrs. MIL-
13	13	LERof West Virginia, Mr. PANETTA, Mr. FEENSTRA, Mr. KUSTOFF, Ms.
14	14	M
15	15	ALLIOTAKIS, and Mr. MORAN) introduced the following bill; which was
16	16	referred to the Committee on Ways and Means
17	17	A BILL
18	18	To amend the Internal Revenue Code of 1986 to establish
19	19	a tax credit for neighborhood revitalization, and for other
20	20	purposes.
21	21	Be it enacted by the Senate and House of Representa-1
22	22	tives of the United States of America in Congress assembled, 2
23	23	SECTION 1. SHORT TITLE. 3
24	24	This Act may be cited as the ‘‘Neighborhood Homes 4
25	25	Investment Act’’. 5
26	26	SEC. 2. FINDINGS AND SENSE OF CONGRESS. 6
27	27	(a) F
28	28	INDINGS.—Congress finds the following: 7
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32	32	(1) Experts have determined that it could take 1
33	33	nearly a decade to address the housing shortage in 2
34	34	the United States, in large part due to increasing 3
35	35	housing prices and insufficient supply. 4
36	36	(2) The housing supply shortage disproportion-5
37	37	ately impacts low-income and distressed commu-6
38	38	nities. 7
39	39	(3) Homeownership is a primary source of 8
40	40	household wealth and neighborhood stability. Many 9
41	41	distressed communities have low rates of homeown-10
42	42	ership and lack quality, affordable starter homes, 11
43	43	while many individuals who own their homes have 12
44	44	difficulty securing financing for home repairs and 13
45	45	improvements. 14
46	46	(4) Housing construction in distressed commu-15
47	47	nities is prevented by the value gap, the difference 16
48	48	between the cost to develop a home and the sale 17
49	49	price of the home. 18
50	50	(5) The Neighborhood Homes Investment Act 19
51	51	can close these financing gaps to increase housing 20
52	52	development and rehabilitation in distressed commu-21
53	53	nities. 22
54	54	(b) S
55	55	ENSE OFCONGRESS.—It is the sense of Con-23
56	56	gress that the neighborhood homes credit (as added under 24
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59	59	•HR 2854 IH
60	60	section 3 of this Act) should be an activity administered 1
61	61	in a manner which— 2
62	62	(1) revitalizes distressed communities in rural 3
63	63	and urban geographies; 4
64	64	(2) minimizes application burdens on small 5
65	65	businesses applying for such credit; and 6
66	66	(3) is consistent with the Fair Housing Act of 7
67	67	1968 (42 U.S.C. 3601 et seq.). 8
68	68	SEC. 3. NEIGHBORHOOD HOMES CREDIT. 9
69	69	(a) I
70	70	NGENERAL.—Subpart D of part IV of sub-10
71	71	chapter A of chapter 1 of the Internal Revenue Code of 11
72	72	1986 is amended by inserting after section 42 the fol-12
73	73	lowing new section: 13
74	74	‘‘SEC. 42A. NEIGHBORHOOD HOMES CREDIT. 14
75	75	‘‘(a) A
76	76	LLOWANCE OFCREDIT.—For purposes of sec-15
77	77	tion 38, the neighborhood homes credit determined under 16
78	78	this section for the taxable year is, with respect to each 17
79	79	qualified residence sold by the taxpayer during such tax-18
80	80	able year in an affordable sale, the lesser of— 19
81	81	‘‘(1) an amount equal to— 20
82	82	‘‘(A) the excess (if any) of— 21
83	83	‘‘(i) the reasonable development costs 22
84	84	paid or incurred by the taxpayer with re-23
85	85	spect to such qualified residence, over 24
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88	88	•HR 2854 IH
89	89	‘‘(ii) the sale price of such qualified 1
90	90	residence (reduced by any reasonable ex-2
91	91	penses paid or incurred by the taxpayer in 3
92	92	connection with such sale), or 4
93	93	‘‘(B) if the neighborhood homes credit 5
94	94	agency determines it is necessary to ensure fi-6
95	95	nancial feasibility, an amount not to exceed 120 7
96	96	percent of the amount under subparagraph (A), 8
97	97	‘‘(2) 40 percent of the eligible development 9
98	98	costs paid or incurred by the taxpayer with respect 10
99	99	to such qualified residence, or 11
100	100	‘‘(3) 32 percent of the national median sale 12
101	101	price for new homes (as determined pursuant to the 13
102	102	most recent census data available as of the date on 14
103	103	which the neighborhood homes credit agency makes 15
104	104	an allocation for the qualified project). 16
105	105	‘‘(b) D
106	106	EVELOPMENT COSTS.—For purposes of this 17
107	107	section— 18
108	108	‘‘(1) R
109	109	EASONABLE DEVELOPMENT COSTS .— 19
110	110	‘‘(A) I
111	111	N GENERAL.—The term ‘reasonable 20
112	112	development costs’ means amounts paid or in-21
113	113	curred for the acquisition of buildings and land, 22
114	114	construction, substantial rehabilitation, demoli-23
115	115	tion of structures, or environmental remedi-24
116	116	ation, to the extent that the neighborhood 25
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119	119	•HR 2854 IH
120	120	homes credit agency determines that such 1
121	121	amounts meet the standards specified pursuant 2
122	122	to subsection (f)(1)(D) (as of the date on which 3
123	123	construction or substantial rehabilitation is sub-4
124	124	stantially complete, as determined by such 5
125	125	agency) and are necessary to ensure the finan-6
126	126	cial feasibility of such qualified residence. 7
127	127	‘‘(B) C
128	128	ONSIDERATIONS IN MAKING DETER -8
129	129	MINATION.—In making the determination under 9
130	130	subparagraph (A), the neighborhood homes 10
131	131	credit agency shall consider— 11
132	132	‘‘(i) the sources and uses of funds and 12
133	133	the total financing, 13
134	134	‘‘(ii) any proceeds or receipts gen-14
135	135	erated or expected to be generated by rea-15
136	136	son of tax benefits, and 16
137	137	‘‘(iii) the reasonableness of the devel-17
138	138	opmental costs and fees. 18
139	139	‘‘(2) E
140	140	LIGIBLE DEVELOPMENT COSTS .—The 19
141	141	term ‘eligible development costs’ means the amount 20
142	142	which would be reasonable development costs if the 21
143	143	amounts taken into account as paid or incurred for 22
144	144	the acquisition of buildings and land did not exceed 23
145	145	75 percent of such costs determined without regard 24
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148	148	•HR 2854 IH
149	149	to any amount paid or incurred for the acquisition 1
150	150	of buildings and land. 2
151	151	‘‘(3) S
152	152	UBSTANTIAL REHABILITATION .—The 3
153	153	term ‘substantial rehabilitation’ means amounts paid 4
154	154	or incurred for rehabilitation of a qualified residence 5
155	155	if such amounts exceed the greater of— 6
156	156	‘‘(A) $25,000, or 7
157	157	‘‘(B) 20 percent of the amounts paid or in-8
158	158	curred by the taxpayer for the acquisition of 9
159	159	buildings and land with respect to such quali-10
160	160	fied residence. 11
161	161	‘‘(4) C
162	162	ONSTRUCTION AND REHABILITATION 12
163	163	ONLY AFTER ALLOCATION TAKEN INTO ACCOUNT .— 13
164	164	‘‘(A) I
165	165	N GENERAL.—The terms ‘reasonable 14
166	166	development costs’ and ‘eligible development 15
167	167	costs’ shall not include any amount paid or in-16
168	168	curred before the date on which an allocation is 17
169	169	made to the taxpayer under subsection (e) with 18
170	170	respect to the qualified project of which the 19
171	171	qualified residence is part unless such amount 20
172	172	is paid or incurred for the acquisition of build-21
173	173	ings or land. 22
174	174	‘‘(B) L
175	175	AND AND BUILDING ACQUISITION 23
176	176	COSTS.—Amounts paid or incurred for the ac-24
177	177	quisition of buildings or land shall be included 25
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180	180	•HR 2854 IH
181	181	under paragraph (A) only if paid or incurred 1
182	182	not more than 3 years before the date on which 2
183	183	the allocation referred to in subparagraph (A) 3
184	184	is made. If the taxpayer acquired any building 4
185	185	or land from an entity (or any related party to 5
186	186	such entity) that holds an ownership interest in 6
187	187	the taxpayer, then such entity must also have 7
188	188	acquired such property within such 3-year pe-8
189	189	riod, and the acquisition cost included under 9
190	190	subparagraph (A) with respect to the taxpayer 10
191	191	shall not exceed the amount such entity paid or 11
192	192	incurred to acquire such property. 12
193	193	‘‘(c) Q
194	194	UALIFIEDRESIDENCE.—For purposes of this 13
195	195	section— 14
196	196	‘‘(1) I
197	197	N GENERAL.—The term ‘qualified resi-15
198	198	dence’ means a residence that— 16
199	199	‘‘(A) is real property (constructed on-site 17
200	200	or manufactured off-site) affixed on a perma-18
201	201	nent foundation, 19
202	202	‘‘(B) is— 20
203	203	‘‘(i) a house which is comprised of 4 21
204	204	or fewer residential units, 22
205	205	‘‘(ii) a condominium unit, or 23
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209	209	‘‘(iii) a house or an apartment owned 1
210	210	by a cooperative housing corporation (as 2
211	211	defined in section 216(b)), 3
212	212	‘‘(C) is part of a qualified project with re-4
213	213	spect to which the neighborhood homes credit 5
214	214	agency has made an allocation under subsection 6
215	215	(e), and 7
216	216	‘‘(D) is located in a qualified census tract 8
217	217	(determined as of the date of such allocation). 9
218	218	‘‘(2) Q
219	219	UALIFIED CENSUS TRACT .— 10
220	220	‘‘(A) I
221	221	N GENERAL.—The term ‘qualified 11
222	222	census tract’ means a census tract— 12
223	223	‘‘(i) which— 13
224	224	‘‘(I) has a median family income 14
225	225	which does not exceed 80 percent of 15
226	226	the median family income for the ap-16
227	227	plicable area, 17
228	228	‘‘(II) has a poverty rate that is 18
229	229	not less than 130 percent of the pov-19
230	230	erty rate of the applicable area, and 20
231	231	‘‘(III) has a median value for 21
232	232	owner-occupied homes that does not 22
233	233	exceed the median value for owner-oc-23
234	234	cupied homes in the applicable area, 24
235	235	‘‘(ii) which— 25
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238	238	•HR 2854 IH
239	239	‘‘(I) is located in a city which has 1
240	240	a population of not less than 50,000 2
241	241	and such city has a poverty rate that 3
242	242	is not less than 150 percent of the 4
243	243	poverty rate of the applicable area, 5
244	244	‘‘(II) has a median family income 6
245	245	which does not exceed the median 7
246	246	family income for the applicable area, 8
247	247	and 9
248	248	‘‘(III) has a median value for 10
249	249	owner-occupied homes that does not 11
250	250	exceed 80 percent of the median value 12
251	251	for owner-occupied homes in the ap-13
252	252	plicable area, 14
253	253	‘‘(iii) which— 15
254	254	‘‘(I) is located in a nonmetropoli-16
255	255	tan county, 17
256	256	‘‘(II) has a median family income 18
257	257	which does not exceed the median 19
258	258	family income for the applicable area, 20
259	259	and 21
260	260	‘‘(III) has been designated by a 22
261	261	neighborhood homes credit agency 23
262	262	under this clause, 24
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266	266	‘‘(iv) which is not otherwise a quali-1
267	267	fied census tract and is located in a dis-2
268	268	aster area (as defined in section 3
269	269	7508A(d)(3)), but only with respect to 4
270	270	credits allocated in any period during 5
271	271	which the President of the United States 6
272	272	has determined that such area warrants in-7
273	273	dividual or individual and public assistance 8
274	274	by the Federal Government under the Rob-9
275	275	ert T. Stafford Disaster Relief and Emer-10
276	276	gency Assistance Act, or 11
277	277	‘‘(v) which is not otherwise a qualified 12
278	278	census tract and is identified by the neigh-13
279	279	borhood homes credit agency, through 14
280	280	methodologies detailed in the qualified allo-15
281	281	cation plan, as having a shortage of afford-16
282	282	able owner-occupied homes. 17
283	283	‘‘(B) A
284	284	PPLICABLE AREA.—The term ‘appli-18
285	285	cable area’ means— 19
286	286	‘‘(i) in the case of a metropolitan cen-20
287	287	sus tract, the metropolitan area in which 21
288	288	such census tract is located, and 22
289	289	‘‘(ii) in the case of a census tract 23
290	290	other than a census tract described in 24
291	291	clause (i), the State. 25
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294	294	•HR 2854 IH
295	295	‘‘(d) AFFORDABLESALE.—For purposes of this sec-1
296	296	tion— 2
297	297	‘‘(1) I
298	298	N GENERAL.—The term ‘affordable sale’ 3
299	299	means a sale to a qualified homeowner of a qualified 4
300	300	residence that the neighborhood homes credit agency 5
301	301	certifies as meeting the standards promulgated 6
302	302	under subsection (f)(1)(D) for a price that does not 7
303	303	exceed— 8
304	304	‘‘(A) in the case of any qualified residence 9
305	305	not described in subparagraph (B), (C), or (D), 10
306	306	the amount equal to the product of 4 multiplied 11
307	307	by the median family income for the applicable 12
308	308	area (as determined pursuant to the most re-13
309	309	cent census data available as of the date of the 14
310	310	contract for such sale), 15
311	311	‘‘(B) in the case of a house comprised of 16
312	312	2 residential units, 125 percent of the amount 17
313	313	described in subparagraph (A), 18
314	314	‘‘(C) in the case of a house comprised of 19
315	315	3 residential units, 150 percent of the amount 20
316	316	described in subparagraph (A), or 21
317	317	‘‘(D) in the case of a house comprised of 22
318	318	4 residential units, 175 percent of the amount 23
319	319	described in subparagraph (A). 24
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322	322	•HR 2854 IH
323	323	‘‘(2) QUALIFIED HOMEOWNER .—The term 1
324	324	‘qualified homeowner’ means, with respect to a 2
325	325	qualified residence, an individual— 3
326	326	‘‘(A) who owns and uses such qualified res-4
327	327	idence as the principal residence of such indi-5
328	328	vidual, and 6
329	329	‘‘(B) whose family income (determined as 7
330	330	of the date that a binding contract for the af-8
331	331	fordable sale of such residence is entered into) 9
332	332	is 140 percent or less of the median family in-10
333	333	come for the applicable area in which the quali-11
334	334	fied residence is located. 12
335	335	‘‘(e) C
336	336	REDITCEILING ANDALLOCATIONS.— 13
337	337	‘‘(1) C
338	338	REDIT LIMITED BASED ON ALLOCATIONS 14
339	339	TO QUALIFIED PROJECTS.— 15
340	340	‘‘(A) I
341	341	N GENERAL.—The credit allowed 16
342	342	under subsection (a) to any taxpayer for any 17
343	343	taxable year with respect to one or more quali-18
344	344	fied residences which are part of the same 19
345	345	qualified project shall not exceed the excess (if 20
346	346	any) of— 21
347	347	‘‘(i) the amount allocated by the 22
348	348	neighborhood homes credit agency under 23
349	349	this paragraph to such taxpayer with re-24
350	350	spect to such qualified project, over 25
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354	354	‘‘(ii) the aggregate amount of credit 1
355	355	allowed under subsection (a) to such tax-2
356	356	payer with respect to qualified residences 3
357	357	which are a part of such qualified project 4
358	358	for all prior taxable years. 5
359	359	‘‘(B) D
360	360	EADLINE FOR COMPLETION .—No 6
361	361	credit shall be allowed under subsection (a) 7
362	362	with respect to any qualified residence unless 8
363	363	the affordable sale of such residence is during 9
364	364	the 5-year period beginning on the date of the 10
365	365	allocation to the qualified project of which such 11
366	366	residence is a part (or, in the case of a qualified 12
367	367	residence to which subsection (i) applies, the re-13
368	368	habilitation of such residence is completed dur-14
369	369	ing such 5-year period). 15
370	370	‘‘(2) L
371	371	IMITATIONS ON ALLOCATIONS TO QUALI -16
372	372	FIED PROJECTS.— 17
373	373	‘‘(A) A
374	374	LLOCATIONS LIMITED BY STATE 18
375	375	NEIGHBORHOOD HOMES CREDIT CEILING .—The 19
376	376	aggregate amount allocated to taxpayers with 20
377	377	respect to qualified projects by the neighbor-21
378	378	hood homes credit agency of any State for any 22
379	379	calendar year shall not exceed the State neigh-23
380	380	borhood homes credit amount of such State for 24
381	381	such calendar year. 25
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384	384	•HR 2854 IH
385	385	‘‘(B) SET-ASIDE FOR CERTAIN PROJECTS 1
386	386	INVOLVING QUALIFIED NONPROFIT ORGANIZA -2
387	387	TIONS.—Rules similar to the rules of section 3
388	388	42(h)(5) shall apply for purposes of this sec-4
389	389	tion. 5
390	390	‘‘(3) D
391	391	ETERMINATION OF STATE NEIGHBOR -6
392	392	HOOD HOMES CREDIT CEILING .— 7
393	393	‘‘(A) I
394	394	N GENERAL.—The State neighbor-8
395	395	hood homes credit amount for a State for a cal-9
396	396	endar year is an amount equal to the sum of— 10
397	397	‘‘(i) the greater of— 11
398	398	‘‘(I) the product of $9, multiplied 12
399	399	by the State population (determined 13
400	400	in accordance with section 146(j)), or 14
401	401	‘‘(II) $12,000,000, and 15
402	402	‘‘(ii) any amount previously allocated 16
403	403	to any taxpayer with respect to any quali-17
404	404	fied project by the neighborhood homes 18
405	405	credit agency of such State which can no 19
406	406	longer be allocated to any qualified resi-20
407	407	dence because the 5-year period described 21
408	408	in paragraph (1)(B) expires during cal-22
409	409	endar year. 23
410	410	‘‘(B) 3-
411	411	YEAR CARRYFORWARD OF UNUSED 24
412	412	LIMITATION.—The State neighborhood homes 25
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415	415	•HR 2854 IH
416	416	credit amount for a State for a calendar year 1
417	417	shall be increased by the excess (if any) of the 2
418	418	State neighborhood homes credit amount for 3
419	419	such State for the preceding calendar year over 4
420	420	the aggregate amount allocated by the neigh-5
421	421	borhood homes credit agency of such State dur-6
422	422	ing such preceding calendar year. Any amount 7
423	423	carried forward under the preceding sentence 8
424	424	shall not be carried past the third calendar year 9
425	425	after the calendar year in which such credit 10
426	426	amount originally arose, determined on a first- 11
427	427	in, first-out basis. 12
428	428	‘‘(f) R
429	429	ESPONSIBILITIES OFNEIGHBORHOOD HOMES 13
430	430	C
431	431	REDITAGENCIES.— 14
432	432	‘‘(1) I
433	433	N GENERAL.—Notwithstanding subsection 15
434	434	(e), the State neighborhood homes credit dollar 16
435	435	amount shall be zero for a calendar year unless the 17
436	436	neighborhood homes credit agency of the State— 18
437	437	‘‘(A) allocates such amount pursuant to a 19
438	438	qualified allocation plan of the neighborhood 20
439	439	homes credit agency, 21
440	440	‘‘(B) subject to paragraph (2), allocates 22
441	441	not more than 20 percent of amounts allocated 23
442	442	in the previous year (or for allocations made in 24
443	443	the first allocation year under this section, not 25
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446	446	•HR 2854 IH
447	447	more than 20 percent of the neighborhood 1
448	448	homes credit ceiling for such year) to projects 2
449	449	with respect to qualified residences which— 3
450	450	‘‘(i) are located in census tracts de-4
451	451	scribed in subsection (c)(2)(A)(iii), 5
452	452	(c)(2)(A)(iv), (i)(5), or 6
453	453	‘‘(ii) are not located in a qualified 7
454	454	census tract but meet the requirements of 8
455	455	subsection (i)(8), 9
456	456	‘‘(C) subject to paragraph (2), in addition 10
457	457	to any allocation described in subparagraph 11
458	458	(B), allocates not more than 20 percent of 12
459	459	amounts allocated in the previous year (or for 13
460	460	allocations made in the first allocation year 14
461	461	under this section, not more than 20 percent of 15
462	462	the neighborhood homes credit ceiling for such 16
463	463	year) to projects with respect to qualified resi-17
464	464	dences which are located in any census tract de-18
465	465	scribed in subsection (c)(2)(A)(v), except that, 19
466	466	with respect to any qualified residence located 20
467	467	within such census tract which is sold to a 21
468	468	qualified homeowner, subsection (d)(2) shall be 22
469	469	applied by substituting ‘120 percent’ for ‘140 23
470	470	percent’, 24
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473	473	•HR 2854 IH
474	474	‘‘(D) promulgates standards with respect 1
475	475	to reasonable qualified development costs and 2
476	476	fees, 3
477	477	‘‘(E) promulgates standards with respect 4
478	478	to construction quality which are consistent 5
479	479	with building codes or other standards required 6
480	480	by the State or local jurisdiction in which the 7
481	481	project is located, 8
482	482	‘‘(F) in the case of any neighborhood 9
483	483	homes credit agency which makes an allocation 10
484	484	to a qualified project which includes any quali-11
485	485	fied residence to which subsection (i) applies, 12
486	486	promulgates standards with respect to pro-13
487	487	tecting the owners of such residences, including 14
488	488	the capacity of such owners to pay rehabilita-15
489	489	tion costs not covered by the credit provided by 16
490	490	this section and providing for the disclosure to 17
491	491	such owners of their rights and responsibilities 18
492	492	with respect to the rehabilitation of such resi-19
493	493	dences, 20
494	494	‘‘(G) submits to the Secretary (at such 21
495	495	time and in such manner as the Secretary may 22
496	496	prescribe) an annual report specifying— 23
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498	498	kjohnson on DSK7ZCZBW3PROD with $$_JOB 18
499	499	•HR 2854 IH
500	500	‘‘(i) the amount of the neighborhood 1
501	501	homes credits allocated to each qualified 2
502	502	project for the previous year, 3
503	503	‘‘(ii) with respect to each qualified 4
504	504	residence completed in the preceding cal-5
505	505	endar year— 6
506	506	‘‘(I) the census tract in which 7
507	507	such qualified residence is located, 8
508	508	‘‘(II) with respect to the qualified 9
509	509	project that includes such qualified 10
510	510	residence, the year in which such 11
511	511	project received an allocation under 12
512	512	this section, 13
513	513	‘‘(III) whether such qualified res-14
514	514	idence was new, substantially rehabili-15
515	515	tated and sold to a qualified home-16
516	516	owner, or substantially rehabilitated 17
517	517	pursuant to subsection (i), 18
518	518	‘‘(IV) the eligible development 19
519	519	costs of such qualified residence, 20
520	520	‘‘(V) the amount of the neighbor-21
521	521	hood homes credit with respect to 22
522	522	such qualified residence, 23
523	523	‘‘(VI) the sales price of such 24
524	524	qualified residence, if applicable, and 25
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526	526	kjohnson on DSK7ZCZBW3PROD with $$_JOB 19
527	527	•HR 2854 IH
528	528	‘‘(VII) the family income of the 1
529	529	qualified homeowner (expressed as a 2
530	530	percentage of the applicable area me-3
531	531	dian family income for the location of 4
532	532	the qualified residence), and 5
533	533	‘‘(iii) such other information as the 6
534	534	Secretary may require, 7
535	535	‘‘(H) makes available to the general public 8
536	536	a written explanation for any allocation of a 9
537	537	neighborhood homes credit dollar amount which 10
538	538	is not made in accordance with established pri-11
539	539	orities and selection criteria of the neighbor-12
540	540	hood homes credit agency, and 13
541	541	‘‘(I) provide educational outreach on appli-14
542	542	cation and compliance requirements, including 15
543	543	for small residential builders and remodelers. 16
544	544	‘‘(2) A
545	545	LTERNATIVE FOR CERTAIN STATES .— 17
546	546	‘‘(A) I
547	547	N GENERAL.—In the case of any 18
548	548	State which, for a calendar year, is an applica-19
549	549	ble State (as defined in subparagraph (B)), in 20
550	550	lieu of the requirements under subparagraphs 21
551	551	(B) and (C) of paragraph (1), the neighborhood 22
552	552	homes credit agency of the State may elect to 23
553	553	allocate not more than 40 percent of amounts 24
554	554	allocated in the previous year (or for allocations 25
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556	556	kjohnson on DSK7ZCZBW3PROD with $$_JOB 20
557	557	•HR 2854 IH
558	558	made in the first allocation year under this sec-1
559	559	tion, not more than 40 percent of the neighbor-2
560	560	hood homes credit ceiling for such year) to 3
561	561	projects with respect to qualified residences 4
562	562	which are described in either subparagraph (B) 5
563	563	or (C) of paragraph (1). 6
564	564	‘‘(B) A
565	565	PPLICABLE STATE.—For purposes 7
566	566	of this paragraph, the term ‘applicable State’ 8
567	567	means a State which, for purposes of the deter-9
568	568	mining the amount under subsection 10
569	569	(e)(3)(A)(i) for the calendar year with respect 11
570	570	to such State, received the amount described in 12
571	571	subclause (II) of such subsection. 13
572	572	‘‘(3) Q
573	573	UALIFIED ALLOCATION PLAN .—For pur-14
574	574	poses of this subsection, the term ‘qualified alloca-15
575	575	tion plan’ means any plan which— 16
576	576	‘‘(A) sets forth the selection criteria to be 17
577	577	used to prioritize qualified projects for alloca-18
578	578	tions of State neighborhood homes credit dollar 19
579	579	amounts, including— 20
580	580	‘‘(i) the need for new or substantially 21
581	581	rehabilitated owner-occupied homes in the 22
582	582	area addressed by the project, 23
583	583	‘‘(ii) the expected contribution of the 24
584	584	project to neighborhood stability and revi-25
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586	586	kjohnson on DSK7ZCZBW3PROD with $$_JOB 21
587	587	•HR 2854 IH
588	588	talization, including the impact on neigh-1
589	589	borhood residents, 2
590	590	‘‘(iii) the capability and prior perform-3
591	591	ance of the project sponsor, and 4
592	592	‘‘(iv) the likelihood the project will re-5
593	593	sult in long-term homeownership, 6
594	594	‘‘(B) has been made available for public 7
595	595	comment, 8
596	596	‘‘(C) as determined by the neighborhood 9
597	597	homes credit agency, is likely to result in the 10
598	598	selection of highly qualified applicants while 11
599	599	also minimizing, to the extent practicable, appli-12
600	600	cation costs and barriers to entry for small resi-13
601	601	dential builders and re-modelers, and 14
602	602	‘‘(D) provides a procedure that the neigh-15
603	603	borhood homes credit agency (or any agent or 16
604	604	contractor of such agency) shall follow for pur-17
605	605	poses of— 18
606	606	‘‘(i) identifying noncompliance with 19
607	607	any provisions of this section, and 20
608	608	‘‘(ii) notifying the Internal Revenue 21
609	609	Service of any such noncompliance of 22
610	610	which the agency becomes aware. 23
611	611	‘‘(g) R
612	612	EPAYMENT.— 24
613	613	‘‘(1) I
614	614	N GENERAL.— 25
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616	616	kjohnson on DSK7ZCZBW3PROD with $$_JOB 22
617	617	•HR 2854 IH
618	618	‘‘(A) SOLD DURING 5-YEAR PERIOD.—If a 1
619	619	qualified residence is sold during the 5-year pe-2
620	620	riod beginning immediately after the affordable 3
621	621	sale of such qualified residence referred to in 4
622	622	subsection (a), the seller shall transfer an 5
623	623	amount equal to the repayment amount to the 6
624	624	relevant neighborhood homes credit agency. 7
625	625	‘‘(B) U
626	626	SE OF REPAYMENTS .—A neighbor-8
627	627	hood homes credit agency shall use any amount 9
628	628	received pursuant to subparagraph (A) only for 10
629	629	purposes of qualified projects. 11
630	630	‘‘(2) R
631	631	EPAYMENT AMOUNT .—For purposes of 12
632	632	paragraph (1)(A)— 13
633	633	‘‘(A) I
634	634	N GENERAL .—The repayment 14
635	635	amount is an amount equal to the applicable 15
636	636	percentage of the gain from the sale to which 16
637	637	the repayment relates. 17
638	638	‘‘(B) A
639	639	PPLICABLE PERCENTAGE .—For 18
640	640	purposes of subparagraph (A), the applicable 19
641	641	percentage is 50 percent, reduced by 10 per-20
642	642	centage points for each year of the 5-year pe-21
643	643	riod referred to in paragraph (1)(A) which ends 22
644	644	before the date of such sale. 23
645	645	‘‘(3) L
646	646	IEN FOR REPAYMENT AMOUNT .—A 24
647	647	neighborhood homes credit agency receiving an allo-25
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649	649	kjohnson on DSK7ZCZBW3PROD with $$_JOB 23
650	650	•HR 2854 IH
651	651	cation under this section shall place a lien on each 1
652	652	qualified residence that is built or rehabilitated as 2
653	653	part of a qualified project for an amount such agen-3
654	654	cy deems necessary to ensure potential repayment 4
655	655	pursuant to paragraph (1)(A). 5
656	656	‘‘(4) W
657	657	AIVER.— 6
658	658	‘‘(A) I
659	659	N GENERAL.—The neighborhood 7
660	660	homes credit agency may waive the repayment 8
661	661	required under paragraph (1)(A) if the agency 9
662	662	determines that making a repayment would 10
663	663	constitute a hardship to the seller. 11
664	664	‘‘(B) H
665	665	ARDSHIP.—For purposes of sub-12
666	666	paragraph (A), with respect to the seller, a 13
667	667	hardship may include— 14
668	668	‘‘(i) divorce, 15
669	669	‘‘(ii) disability, 16
670	670	‘‘(iii) illness, or 17
671	671	‘‘(iv) any other hardship identified by 18
672	672	the neighborhood homes credit agency for 19
673	673	purposes of this paragraph. 20
674	674	‘‘(h) O
675	675	THERDEFINITIONS ANDSPECIALRULES.— 21
676	676	For purposes of this section— 22
677	677	‘‘(1) N
678	678	EIGHBORHOOD HOMES CREDIT AGEN -23
679	679	CY.—The term ‘neighborhood homes credit agency’ 24
680	680	means the agency designated by the governor of a 25
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682	682	kjohnson on DSK7ZCZBW3PROD with $$_JOB 24
683	683	•HR 2854 IH
684	684	State as the neighborhood homes credit agency of 1
685	685	the State. 2
686	686	‘‘(2) Q
687	687	UALIFIED PROJECT.—The term ‘qualified 3
688	688	project’ means a project that a neighborhood homes 4
689	689	credit agency certifies will build or substantially re-5
690	690	habilitate one or more qualified residences. 6
691	691	‘‘(3) D
692	692	ETERMINATIONS OF FAMILY INCOME .— 7
693	693	Rules similar to the rules of section 143(f)(2) shall 8
694	694	apply for purposes of this section. 9
695	695	‘‘(4) P
696	696	OSSESSIONS TREATED AS STATES .—The 10
697	697	term ‘State’ includes the District of Columbia and 11
698	698	the possessions of the United States. 12
699	699	‘‘(5) S
700	700	PECIAL RULES RELATED TO CONDOMIN -13
701	701	IUMS AND COOPERATIVE HOUSING CORPORATIONS .— 14
702	702	‘‘(A) D
703	703	ETERMINATION OF DEVELOPMENT 15
704	704	COSTS.—In the case of a qualified residence de-16
705	705	scribed in clause (ii) or (iii) of subsection 17
706	706	(c)(1)(A), the reasonable development costs and 18
707	707	eligible development costs of such qualified resi-19
708	708	dence shall be an amount equal to such costs, 20
709	709	respectively, of the entire condominium or coop-21
710	710	erative housing property in which such qualified 22
711	711	residence is located, multiplied by a fraction— 23
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713	713	kjohnson on DSK7ZCZBW3PROD with $$_JOB 25
714	714	•HR 2854 IH
715	715	‘‘(i) the numerator of which is the 1
716	716	total floor space of such qualified resi-2
717	717	dence, and 3
718	718	‘‘(ii) the denominator of which is the 4
719	719	total floor space of all residences within 5
720	720	such property. 6
721	721	‘‘(B) T
722	722	ENANT-STOCKHOLDERS OF COOPER -7
723	723	ATIVE HOUSING CORPORATIONS TREATED AS 8
724	724	OWNERS.—In the case of a cooperative housing 9
725	725	corporation (as such term is defined in section 10
726	726	216(b)), a tenant-stockholder shall be treated 11
727	727	as owning the house or apartment which such 12
728	728	person is entitled to occupy. 13
729	729	‘‘(6) R
730	730	ELATED PARTY SALES NOT TREATED AS 14
731	731	AFFORDABLE SALES.— 15
732	732	‘‘(A) I
733	733	N GENERAL.—A sale between related 16
734	734	persons shall not be treated as an affordable 17
735	735	sale. 18
736	736	‘‘(B) R
737	737	ELATED PERSONS .—For purposes 19
738	738	of this paragraph, a person (in this subpara-20
739	739	graph referred to as the ‘related person’) is re-21
740	740	lated to any person if the related person bears 22
741	741	a relationship to such person specified in sec-23
742	742	tion 267(b) or 707(b)(1), or the related person 24
743	743	and such person are engaged in trades or busi-25
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745	745	kjohnson on DSK7ZCZBW3PROD with $$_JOB 26
746	746	•HR 2854 IH
747	747	nesses under common control (within the mean-1
748	748	ing of subsections (a) and (b) of section 52). 2
749	749	For purposes of the preceding sentence, in ap-3
750	750	plying section 267(b) or 707(b)(1), ‘10 percent’ 4
751	751	shall be substituted for ‘50 percent’. 5
752	752	‘‘(7) I
753	753	NFLATION ADJUSTMENT .— 6
754	754	‘‘(A) I
755	755	N GENERAL.—In the case of a cal-7
756	756	endar year after 2025, the dollar amounts in 8
757	757	subsections (b)(3)(A), (e)(3)(A)(i)(I), 9
758	758	(e)(3)(A)(i)(II), and (i)(2)(C) shall each be in-10
759	759	creased by an amount equal to— 11
760	760	‘‘(i) such dollar amount, multiplied by 12
761	761	‘‘(ii) the cost-of-living adjustment de-13
762	762	termined under section 1(f)(3) for such 14
763	763	calendar year by substituting ‘calendar 15
764	764	year 2024’ for ‘calendar year 2016’ in sub-16
765	765	paragraph (A)(ii) thereof. 17
766	766	‘‘(B) R
767	767	OUNDING.— 18
768	768	‘‘(i) In the case of the dollar amounts 19
769	769	in subsections (b)(3)(A) and (i)(2)(C), any 20
770	770	increase under paragraph (1) which is not 21
771	771	a multiple of $1,000 shall be rounded to 22
772	772	the nearest multiple of $1,000. 23
773	773	‘‘(ii) In the case of the dollar amount 24
774	774	in subsection (e)(3)(A)(i)(I), any increase 25
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776	776	kjohnson on DSK7ZCZBW3PROD with $$_JOB 27
777	777	•HR 2854 IH
778	778	under paragraph (1) which is not a mul-1
779	779	tiple of $0.01 shall be rounded to the near-2
780	780	est multiple of $0.01. 3
781	781	‘‘(iii) In the case of the dollar amount 4
782	782	in subsection (e)(3)(A)(i)(II), any increase 5
783	783	under paragraph (1) which is not a mul-6
784	784	tiple of $100,000 shall be rounded to the 7
785	785	nearest multiple of $100,000. 8
786	786	‘‘(8) R
787	787	EPORT.— 9
788	788	‘‘(A) I
789	789	N GENERAL.—The Secretary shall 10
790	790	annually issue a report, to be made available to 11
791	791	the public, which contains the information sub-12
792	792	mitted pursuant to subsection (f)(1)(G). 13
793	793	‘‘(B) D
794	794	E-IDENTIFICATION.—The Secretary 14
795	795	shall ensure that any information made public 15
796	796	pursuant to subparagraph (A) excludes any in-16
797	797	formation that would allow for the identification 17
798	798	of qualified homeowners. 18
799	799	‘‘(9) L
800	800	IST OF QUALIFIED CENSUS TRACTS .— 19
801	801	The Secretary of Housing and Urban Development 20
802	802	shall, for each year, make publicly available a list of 21
803	803	qualified census tracts under— 22
804	804	‘‘(A) on a combined basis, clauses (i) and 23
805	805	(ii) of subsection (c)(2)(A), 24
806	806	‘‘(B) clause (iii) of such subsection, and 25
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808	808	kjohnson on DSK7ZCZBW3PROD with $$_JOB 28
809	809	•HR 2854 IH
810	810	‘‘(C) subsection (i)(5)(A). 1
811	811	‘‘(10) D
812	812	ENIAL OF DEDUCTIONS IF CONVERTED 2
813	813	TO RENTAL HOUSING .—If, during the 5-year period 3
814	814	beginning immediately after the affordable sale of a 4
815	815	qualified residence referred to in subsection (a), an 5
816	816	individual who owns a qualified residence (whether 6
817	817	or not such individual was the purchaser in such af-7
818	818	fordable sale) fails to use such qualified residence as 8
819	819	such individual’s principal residence for any period 9
820	820	of time, no deduction shall be allowed for expenses 10
821	821	paid or incurred by such individual with respect to 11
822	822	renting, during such period of time, such qualified 12
823	823	residence. 13
824	824	‘‘(i) A
825	825	PPLICATION OFCREDITWITHRESPECT TO 14
826	826	O
827	827	WNER-OCCUPIEDREHABILITATIONS.— 15
828	828	‘‘(1) I
829	829	N GENERAL.—In the case of a qualified 16
830	830	rehabilitation by the taxpayer of any qualified resi-17
831	831	dence which is owned (as of the date that the writ-18
832	832	ten binding contract referred to in paragraph (3) is 19
833	833	entered into) by a specified homeowner, the rules of 20
834	834	paragraphs (2) through (7) shall apply. 21
835	835	‘‘(2) A
836	836	LTERNATIVE CREDIT DETERMINATION .— 22
837	837	In the case of any qualified residence described in 23
838	838	paragraph (1), the neighborhood homes credit deter-24
839	839	mined under subsection (a) with respect to such res-25
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842	842	•HR 2854 IH
843	843	idence shall (in lieu of any credit otherwise deter-1
844	844	mined under subsection (a) with respect to such res-2
845	845	idence) be allowed in the taxable year during which 3
846	846	the qualified rehabilitation is completed (as deter-4
847	847	mined by the neighborhood homes credit agency) 5
848	848	and shall be equal to the least of— 6
849	849	‘‘(A) the excess (if any) of— 7
850	850	‘‘(i) the amounts paid or incurred by 8
851	851	the taxpayer for the qualified rehabilitation 9
852	852	of the qualified residence to the extent that 10
853	853	such amounts are certified by the neigh-11
854	854	borhood homes credit agency (at the time 12
855	855	of the completion of such rehabilitation) as 13
856	856	meeting the standards specified pursuant 14
857	857	to subsection (f)(1)(D), over 15
858	858	‘‘(ii) any amounts paid to such tax-16
859	859	payer for such rehabilitation, 17
860	860	‘‘(B) 50 percent of the amounts described 18
861	861	in subparagraph (A)(i), or 19
862	862	‘‘(C) $50,000. 20
863	863	‘‘(3) Q
864	864	UALIFIED REHABILITATION .— 21
865	865	‘‘(A) I
866	866	N GENERAL.—For purposes of this 22
867	867	subsection, the term ‘qualified rehabilitation’ 23
868	868	means a rehabilitation or reconstruction per-24
869	869	formed pursuant to a written binding contract 25
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872	872	•HR 2854 IH
873	873	between the taxpayer and the specified home-1
874	874	owner if the amount paid or incurred by the 2
875	875	taxpayer in the performance of such rehabilita-3
876	876	tion or reconstruction exceeds the dollar 4
877	877	amount in effect under subsection (b)(3)(A). 5
878	878	‘‘(B) A
879	879	PPLICATION OF LIMITATION TO EX -6
880	880	PENSES PAID OR INCURRED AFTER ALLOCA -7
881	881	TION.—A rule similar to the rule of section 8
882	882	(b)(4) shall apply for purposes of this sub-9
883	883	section. 10
884	884	‘‘(4) S
885	885	PECIFIED HOMEOWNER .—For purposes 11
886	886	of this subsection, the term ‘specified homeowner’ 12
887	887	means, with respect to a qualified residence, an indi-13
888	888	vidual— 14
889	889	‘‘(A) who owns and uses such qualified res-15
890	890	idence as the principal residence of such indi-16
891	891	vidual as of the date that the written binding 17
892	892	contract referred to in paragraph (3) is entered 18
893	893	into, and 19
894	894	‘‘(B) whose family income (determined as 20
895	895	of such date) does not exceed the median family 21
896	896	income for the applicable area (with respect to 22
897	897	the census tract in which the qualified residence 23
898	898	is located). 24
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900	900	kjohnson on DSK7ZCZBW3PROD with $$_JOB 31
901	901	•HR 2854 IH
902	902	‘‘(5) ADDITIONAL CENSUS TRACTS IN WHICH 1
903	903	OWNER-OCCUPIED RESIDENCES MAY BE LOCATED .— 2
904	904	In the case of any qualified residence described in 3
905	905	paragraph (1), the term ‘qualified census tract’ in-4
906	906	cludes any census tract which— 5
907	907	‘‘(A) meets the requirements of subsection 6
908	908	(c)(2)(A)(i) without regard to subclause (III) 7
909	909	thereof, and 8
910	910	‘‘(B) is designated by the neighborhood 9
911	911	homes credit agency for purposes of this para-10
912	912	graph. 11
913	913	‘‘(6) M
914	914	ODIFICATION OF REPAYMENT REQUIRE -12
915	915	MENT.—In the case of any qualified residence de-13
916	916	scribed in paragraph (1), subsection (g) shall be ap-14
917	917	plied by beginning the 5-year period otherwise de-15
918	918	scribed therein on the date on which the qualified 16
919	919	homeowner acquired such residence. 17
920	920	‘‘(7) R
921	921	ELATED PARTIES.—Paragraph (1) shall 18
922	922	not apply if the taxpayer is the owner of the quali-19
923	923	fied residence described in paragraph (1) or is re-20
924	924	lated (within the meaning of subsection (h)(6)(B)) 21
925	925	to such owner. 22
926	926	‘‘(8) P
927	927	YRRHOTITE REMEDIATION .—The require-23
928	928	ment of subsection (c)(1)(D) shall not apply to a 24
929	929	qualified rehabilitation under this subsection of a 25
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932	932	•HR 2854 IH
933	933	qualified residence that is documented by an engi-1
934	934	neer’s report and core testing to have a foundation 2
935	935	that is adversely impacted by pyrrhotite or other 3
936	936	iron sulfide minerals. 4
937	937	‘‘(j) R
938	938	EGULATIONS.—The Secretary shall prescribe 5
939	939	such regulations as may be necessary or appropriate to 6
940	940	carry out the purposes of this section, including regula-7
941	941	tions that prevent avoidance of the rules, and abuse of 8
942	942	the purposes, of this section.’’. 9
943	943	(b) C
944	944	REDITALLOWED ASPART OFGENERALBUSI-10
945	945	NESSCREDIT.—Section 38(b) of the Internal Revenue 11
946	946	Code of 1986 is amended by striking ‘‘plus’’ at the end 12
947	947	of paragraph (40), by striking the period at the end of 13
948	948	paragraph (41) and inserting ‘‘, plus’’, and by adding at 14
949	949	the end the following new paragraph: 15
950	950	‘‘(42) the neighborhood homes credit deter-16
951	951	mined under section 42A(a).’’. 17
952	952	(c) C
953	953	REDITALLOWEDAGAINSTALTERNATIVEMIN-18
954	954	IMUMTAX.—Section 38(c)(4)(B) of the Internal Revenue 19
955	955	Code of 1986 is amended by redesignating clauses (iv) 20
956	956	through (xii) as clauses (v) through (xiii), respectively, and 21
957	957	by inserting after clause (iii) the following new clause: 22
958	958	‘‘(iv) the credit determined under sec-23
959	959	tion 42A,’’. 24
960	960	(d) B
961	961	ASISADJUSTMENTS.— 25
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964	964	•HR 2854 IH
965	965	(1) ENERGY EFFICIENT HOME IMPROVEMENT 1
966	966	CREDIT.—Section 25C(g) of the Internal Revenue 2
967	967	Code of 1986 is amended by adding after the first 3
968	968	sentence the following new sentence: ‘‘This sub-4
969	969	section shall not apply for purposes of determining 5
970	970	the eligible development costs or adjusted basis of 6
971	971	any building under section 42A.’’. 7
972	972	(2) R
973	973	ESIDENTIAL CLEAN ENERGY CREDIT .— 8
974	974	Section 25D(f) of such Code is amended by adding 9
975	975	after the first sentence the following new sentence: 10
976	976	‘‘This subsection shall not apply for purposes of de-11
977	977	termining the eligible development costs or adjusted 12
978	978	basis of any building under section 42A.’’. 13
979	979	(3) N
980	980	EW ENERGY EFFICIENT HOME CREDIT .— 14
981	981	Section 45L(e) of such Code is amended by inserting 15
982	982	‘‘or for purposes of determining the eligible develop-16
983	983	ment costs or adjusted basis of any building under 17
984	984	section 42A’’ after ‘‘section 42’’. 18
985	985	(e) E
986	986	XCLUSIONFROMGROSSINCOME.—Part III of 19
987	987	subchapter B of chapter 1 of the Internal Revenue Code 20
988	988	of 1986 is amended by inserting before section 140 the 21
989	989	following new section: 22
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992	992	•HR 2854 IH
993	993	‘‘SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED 1
994	994	RESIDENCES. 2
995	995	‘‘(a) E
996	996	XCLUSIONFROMGROSSINCOME.—Gross in-3
997	997	come shall not include the value of any subsidy provided 4
998	998	to a taxpayer (whether directly or indirectly) by any State 5
999	999	energy office (as defined in section 124(a) of the Energy 6
1000	1000	Policy Act of 2005 (42 U.S.C. 15821(a))) for purposes 7
1001	1001	of any energy improvements made to a qualified residence 8
1002	1002	(as defined in section 42A(c)(1)).’’. 9
1003	1003	(f) C
1004	1004	ONFORMINGAMENDMENTS.— 10
1005	1005	(1) Subsections (i)(3)(C), (i)(6)(B)(i), and 11
1006	1006	(k)(1) of section 469 of the Internal Revenue Code 12
1007	1007	of 1986 are each amended by inserting ‘‘or 42A’’ 13
1008	1008	after ‘‘section 42’’. 14
1009	1009	(2) The table of sections for subpart D of part 15
1010	1010	IV of subchapter A of chapter 1 of such Code is 16
1011	1011	amended by inserting after the item relating to sec-17
1012	1012	tion 42 the following new item: 18
1013	1013	‘‘Sec. 42A. Neighborhood homes credit.’’.
1014	1014	(3) The table of sections for part III of sub-19
1015	1015	chapter B of chapter 1 of such Code is amended by 20
1016	1016	inserting before the item relating to section 140 the 21
1017	1017	following new item: 22
1018	1018	‘‘Sec. 139J. State energy subsidies for qualified residences.’’.
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1021	1021	•HR 2854 IH
1022	1022	(g) EFFECTIVEDATE.—The amendments made by 1
1023	1023	this section shall apply to taxable years beginning after 2
1024	1024	December 31, 2025. 3
1025	1025	Æ
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