Us Congress House Bill HB893 Latest Draft

                            I 
119THCONGRESS 
1
STSESSION H. R. 893 
To amend the Internal Revenue Code of 1986 to provide a credit for working 
families housing development, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY31, 2025 
Mr. R
YANintroduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committees on Energy and 
Commerce, and Transportation and Infrastructure, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
of such provisions as fall within the jurisdiction of the committee con-
cerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a credit for working families housing development, 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 ‘‘Working Families 4
Housing Tax Credit Act’’. 5
SEC. 2. SENSE OF CONGRESS RELATING TO THE WORKING 6
FAMILIES HOUSING TAX CREDIT. 7
It is the sense of Congress that— 8
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(1) the working family housing tax credit under 1
section 42A of the Internal Revenue Code of 1986 2
is a critically important Federal Government policy 3
tool to encourage the production of quality housing 4
for our teachers, firefighters, police officers, vet-5
erans, and all hard-working Americans; and 6
(2) Congress should further improve and en-7
hance the working families housing tax credit by 8
passing pro-housing legislation. 9
SEC. 3. WORKING FAMILIES HOUSING TAX CREDIT. 10
(a) I
NGENERAL.—Subpart D of part IV of sub-11
chapter A of chapter 1 of the Internal Revenue Code of 12
1986 is amended by inserting after section 42 the fol-13
lowing new section: 14
‘‘SEC. 42A. WORKING FAMILIES HOUSING CREDIT. 15
‘‘(a) I
NGENERAL.—For purposes of section 38, the 16
amount of the working families housing credit determined 17
under this section for any taxable year in the credit period 18
shall be an amount equal to— 19
‘‘(1) the applicable percentage, of 20
‘‘(2) the qualified basis of each qualified work-21
ing families building. 22
‘‘(b) A
PPLICABLEPERCENTAGE.— 23
‘‘(1) D
ETERMINATION OF APPLICABLE PER -24
CENTAGE.—For purposes of this section— 25
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‘‘(A) IN GENERAL.—The term ‘applicable 1
percentage’ means, with respect to any building, 2
the appropriate percentage prescribed by the 3
Secretary for the earlier of— 4
‘‘(i) the month in which such building 5
is placed in service, or 6
‘‘(ii) at the election of the taxpayer, 7
the month in which the taxpayer and the 8
housing credit agency enter into an agree-9
ment with respect to such building (which 10
is binding on such agency, the taxpayer, 11
and all successors in interest) as to the 12
housing credit dollar amount to be allo-13
cated to such building. 14
A month may be elected under clause (ii) only 15
if the election is made not later than the 5th 16
day after the close of such month. Such an elec-17
tion, once made, shall be irrevocable. 18
‘‘(B) M
ETHOD OF PRESCRIBING PERCENT -19
AGES.—The percentages prescribed by the Sec-20
retary for any month shall be percentages which 21
will yield over a 15-year period amounts of 22
credit under subsection (a) which have a 23
present value equal to— 24
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‘‘(i) 50 percent of the qualified basis 1
of a new building, and 2
‘‘(ii) 60 percent of the qualified basis 3
of a building not described in clause (i). 4
‘‘(C) M
ETHOD OF DISCOUNTING .—The 5
present value under subparagraph (B) shall be 6
determined— 7
‘‘(i) as of the last day of the 1st year 8
of the 15-year period referred to in sub-9
paragraph (B), 10
‘‘(ii) by using a discount rate equal to 11
72 percent of the average of the annual 12
Federal mid-term rate and the annual 13
Federal long-term rate applicable under 14
section 1274(d)(1) to the month applicable 15
under clause (i) or (ii) of subparagraph 16
(A) and compounded annually, and 17
‘‘(iii) by assuming that the credit al-18
lowable under this section for any year is 19
received on the last day of such year. 20
‘‘(2) M
INIMUM CREDIT RATE.— 21
‘‘(A) I
N GENERAL.—The applicable per-22
centage for any building which is not Federally 23
subsidized for the taxable year shall not be less 24
than 5 percent. 25
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‘‘(B) MINIMUM CREDIT RATE FOR FEDER -1
ALLY SUBSIDIZED BUILDINGS .—In the case of 2
any building to which subparagraph (A) does 3
not apply, except as provided in paragraph (3), 4
the applicable percentage shall not be less than 5
2 percent. 6
‘‘(3) E
XCEPTION FOR CERTAIN FEDERALLY 7
SUBSIDIZED BUILDINGS.—In the case of any build-8
ing to which paragraph (2)(A) does not apply, the 9
applicable percentage is zero unless— 10
‘‘(A) a credit is allowed under section 42 11
with respect to such building for the taxable 12
year, and 13
‘‘(B) such building is financed by tax-ex-14
empt bonds as described in section 42(h)(4). 15
‘‘(4) C
ROSS REFERENCES.— 16
‘‘(A) For treatment of certain rehabilita-17
tion expenditures as separate new buildings, see 18
subsection (e). 19
‘‘(B) For determination of applicable per-20
centage for increases in qualified basis after the 21
1st year of the credit period, see subsection 22
(f)(3). 23
‘‘(C) For authority of housing credit agen-24
cy to limit applicable percentage and qualified 25
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basis which may be taken into account under 1
this section with respect to any building, see 2
subsection (h)(6). 3
‘‘(c) Q
UALIFIEDBASIS; QUALIFIEDWORKINGFAMI-4
LIESBUILDING.—For purposes of this section— 5
‘‘(1) Q
UALIFIED BASIS.— 6
‘‘(A) D
ETERMINATION.—The qualified 7
basis of any qualified working families building 8
for any taxable year is an amount equal to— 9
‘‘(i) the applicable fraction (deter-10
mined as of the close of such taxable year) 11
of 12
‘‘(ii) the eligible basis of such building 13
(determined under subsection (d)). 14
‘‘(B) A
PPLICABLE FRACTION .—For pur-15
poses of subparagraph (A), the term ‘applicable 16
fraction’ means the smaller of the unit fraction 17
or the floor space fraction. 18
‘‘(C) U
NIT FRACTION.—For purposes of 19
subparagraph (B), the term ‘unit fraction’ 20
means the fraction— 21
‘‘(i) the numerator of which is the 22
number of working families units in the 23
building, and 24
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‘‘(ii) the denominator of which is the 1
number of residential rental units (whether 2
or not occupied) in such building. 3
‘‘(D) F
LOOR SPACE FRACTION .—For pur-4
poses of subparagraph (B), the term ‘floor 5
space fraction’ means the fraction— 6
‘‘(i) the numerator of which is the 7
total floor space of the working families 8
units in such building, and 9
‘‘(ii) the denominator of which is the 10
total floor space of the residential rental 11
units (whether or not occupied) in such 12
building. 13
‘‘(2) Q
UALIFIED WORKING FAMILIES BUILD -14
ING.—The term ‘qualified working families building’ 15
means any building which is part of a qualified 16
working families housing project at all times during 17
the period— 18
‘‘(A) beginning on the 1st day in the credit 19
period on which such building is part of such a 20
project, and 21
‘‘(B) ending on the last day of the credit 22
period with respect to such building. 23
‘‘(d) E
LIGIBLEBASIS.—For purposes of this sec-24
tion— 25
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‘‘(1) NEW BUILDINGS.—The eligible basis of a 1
new building is its adjusted basis as of the close of 2
the 1st taxable year of the credit period. 3
‘‘(2) E
XISTING BUILDINGS.— 4
‘‘(A) I
N GENERAL.—The eligible basis of 5
an existing building is— 6
‘‘(i) in the case of a building which 7
meets the requirements of subparagraph 8
(B), its adjusted basis as of the close of 9
the 1st taxable year of the credit period, 10
and 11
‘‘(ii) zero in any other case. 12
‘‘(B) R
EQUIREMENTS.—A building meets 13
the requirements of this subparagraph if— 14
‘‘(i) the building is acquired by pur-15
chase (as defined in section 179(d)(2)), 16
‘‘(ii) there is a period of at least 10 17
years between the date of its acquisition by 18
the taxpayer and the date the building was 19
last placed in service, 20
‘‘(iii) the building was not previously 21
placed in service by the taxpayer or by any 22
person who was a related person with re-23
spect to the taxpayer as of the time pre-24
viously placed in service, and 25
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‘‘(iv) except as provided in subsection 1
(f)(5), a credit is allowable under sub-2
section (a) by reason of subsection (e) with 3
respect to the building. 4
‘‘(C) A
DJUSTED BASIS.—For purposes of 5
subparagraph (A), the adjusted basis of any 6
building shall not include so much of the basis 7
of such building as is determined by reference 8
to the basis of other property held at any time 9
by the person acquiring the building. 10
‘‘(D) S
PECIAL RULES.— 11
‘‘(i) S
PECIAL RULES FOR CERTAIN 12
TRANSFERS.—For purposes of determining 13
under subparagraph (B)(ii) when a build-14
ing was last placed in service, there shall 15
not be taken into account any placement in 16
service— 17
‘‘(I) in connection with the acqui-18
sition of the building in a transaction 19
in which the basis of the building in 20
the hands of the person acquiring it is 21
determined in whole or in part by ref-22
erence to the adjusted basis of such 23
building in the hands of the person 24
from whom acquired, 25
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‘‘(II) by a person whose basis in 1
such building is determined under sec-2
tion 1014(a) (relating to property ac-3
quired from a decedent), 4
‘‘(III) by any governmental unit 5
or qualified nonprofit organization if 6
the requirements of subparagraph 7
(B)(ii) are met with respect to the 8
placement in service by such unit or 9
organization and all the income from 10
such property is exempt from Federal 11
income taxation, 12
‘‘(IV) by any person who ac-13
quired such building by foreclosure 14
(or by instrument in lieu of fore-15
closure) of any purchase-money secu-16
rity interest held by such person if the 17
requirements of subparagraph (B)(ii) 18
are met with respect to the placement 19
in service by such person and such 20
building is resold within 12 months 21
after the date such building is placed 22
in service by such person after such 23
foreclosure, or 24
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‘‘(V) of a single-family residence 1
by any individual who owned and used 2
such residence for no other purpose 3
than as his principal residence. 4
‘‘(ii) R
ELATED PERSON .—For pur-5
poses of subparagraph (B)(iii), a person 6
(hereinafter in this subclause referred to as 7
the ‘related person’) is related to any per-8
son if the related person bears a relation-9
ship to such person specified in section 10
267(b) or 707(b)(1), or the related person 11
and such person are engaged in trades or 12
businesses under common control (within 13
the meaning of subsections (a) and (b) of 14
section 52). 15
‘‘(3) S
PECIAL RULES RELATING TO DETER -16
MINATION OF ADJUSTED BASIS .—For purposes of 17
this subsection— 18
‘‘(A) I
N GENERAL.—Except as provided in 19
subparagraph (B), the adjusted basis of any 20
building shall be determined without regard to 21
the adjusted basis of any property which is not 22
residential rental property. 23
‘‘(B) B
ASIS OF PROPERTY IN COMMON 24
AREAS, ETC., INCLUDED.— 25
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‘‘(i) IN GENERAL.—Except as pro-1
vided in clause (ii), the adjusted basis of 2
any building shall be determined by taking 3
into account the adjusted basis of property 4
(of a character subject to the allowance for 5
depreciation) used in common areas or 6
provided as comparable amenities to all 7
residential rental units in such building. 8
‘‘(ii) S
PECIAL RULE.—In the case of 9
any building for which the low-income 10
housing tax credit is allowable under sec-11
tion 42, the adjusted basis of the building 12
under this section shall be determined 13
without regard to property used in com-14
mon areas or provided as comparable 15
amenities to all residential rental units in 16
such building. 17
‘‘(C) N
O REDUCTION FOR DEPRECIA -18
TION.—The adjusted basis of any building shall 19
be determined without regard to paragraphs (2) 20
and (3) of section 1016(a). 21
‘‘(4) S
PECIAL RULES FOR DETERMINING ELIGI -22
BLE BASIS.— 23
‘‘(A) F
EDERAL GRANTS NOT TAKEN INTO 24
ACCOUNT IN DETERMINING ELIGIBLE BASIS .— 25
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The eligible basis of a building shall not include 1
any costs financed with the proceeds of a Fed-2
erally funded grant. 3
‘‘(B) I
NCREASE IN CREDIT FOR BUILDINGS 4
IN HIGH COST AREAS.— 5
‘‘(i) I
N GENERAL.—In the case of any 6
building located in a difficult development 7
area which is designated for purposes of 8
this subparagraph— 9
‘‘(I) in the case of a new build-10
ing, the eligible basis of such building 11
shall be 130 percent of such basis de-12
termined without regard to this sub-13
paragraph, and 14
‘‘(II) in the case of an existing 15
building, the rehabilitation expendi-16
tures taken into account under sub-17
section (e) shall be 130 percent of 18
such expenditures determined without 19
regard to this subparagraph. 20
‘‘(ii) L
IMITATION.—Clause (i) shall 21
not apply to any building if paragraph (1) 22
of subsection (h) does not apply to any 23
portion of the eligible basis of such build-24
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ing by reason of paragraph (9) of such 1
subsection. 2
‘‘(iii) D
IFFICULT DEVELOPMENT 3
AREAS.— 4
‘‘(I) I
N GENERAL.—The term 5
‘difficult development areas’ means 6
any area designated by the Secretary 7
of Housing and Urban Development 8
as an area which has high construc-9
tion, land, or utility costs relative to 10
area median gross income, any rural 11
area, and any Indian area. 12
‘‘(II) R
URAL AREA.—For pur-13
poses of subclause (I), the term ‘rural 14
area’ means any non-metropolitan 15
area, or any rural area as defined by 16
section 520 of the Housing Act of 17
1949, which is identified by the quali-18
fied allocation plan under subsection 19
(m)(1)(B). 20
‘‘(III) I
NDIAN AREA.—For pur-21
poses of subclause (I), the term ‘In-22
dian area’ means any Indian area (as 23
defined in section 4(11) of the Native 24
American Housing Assistance and 25
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Self Determination Act of 1996 (25 1
U.S.C. 4103(11))). 2
‘‘(IV) S
PECIAL RULE FOR BUILD -3
INGS IN INDIAN AREAS.—In the case 4
of an area which is a difficult develop-5
ment area solely because it is an In-6
dian area, a building shall not be 7
treated as located in such area unless 8
such building is assisted or financed 9
under the Native American Housing 10
Assistance and Self Determination 11
Act of 1996 (25 U.S.C. 4101 et seq.) 12
or the project sponsor is an Indian 13
tribe (as defined in section 14
45A(c)(6)), a tribally designated hous-15
ing entity (as defined in section 4(22) 16
of such Act (25 U.S.C. 4103(22))), or 17
wholly owned or controlled by such an 18
Indian tribe or tribally designated 19
housing entity. 20
‘‘(V) L
IMIT ON AREAS DES -21
IGNATED.—The portions of metropoli-22
tan statistical areas which may be 23
designated for purposes of this sub-24
paragraph shall not exceed an aggre-25
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gate area having 20 percent of the 1
population of such metropolitan sta-2
tistical areas. A comparable rule shall 3
apply to nonmetropolitan areas. 4
‘‘(iv) S
PECIAL RULES AND DEFINI -5
TIONS.—For purposes of this subpara-6
graph— 7
‘‘(I) population shall be deter-8
mined on the basis of the most recent 9
decennial census for which data are 10
available, 11
‘‘(II) area median gross income 12
shall be determined in accordance 13
with subsection (g)(4), 14
‘‘(III) the term ‘metropolitan sta-15
tistical area’ has the same meaning as 16
when used in section 143(k)(2)(B), 17
and 18
‘‘(IV) the term ‘nonmetropolitan 19
area’ means any county (or portion 20
thereof) which is not within a metro-21
politan statistical area. 22
‘‘(v) B
UILDINGS DESIGNATED BY 23
STATE HOUSING CREDIT AGENCY .—Any 24
building which is designated by the State 25
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housing credit agency as requiring the in-1
crease in credit under this subparagraph in 2
order for such building to be financially 3
feasible as part of a qualified working fam-4
ilies housing project shall be treated for 5
purposes of this subparagraph as located 6
in a difficult development area which is 7
designated for purposes of this subpara-8
graph. 9
‘‘(5) C
REDIT ALLOWABLE FOR CERTAIN BUILD -10
INGS ACQUIRED DURING 10 -YEAR PERIOD.—On ap-11
plication by the taxpayer, the Secretary may waive 12
paragraph (2)(B)(ii) with respect to any building ac-13
quired from an insured depository institution in de-14
fault (as defined in section 3 of the Federal Deposit 15
Insurance Act) or from a receiver or conservator of 16
such an institution. 17
‘‘(6) A
CQUISITION OF BUILDING BEFORE END 18
OF PRIOR CREDIT PERIOD.— 19
‘‘(A) I
N GENERAL.—Under regulations 20
prescribed by the Secretary, in the case of a 21
building described in subparagraph (B) (or in-22
terest therein) which is acquired by the tax-23
payer— 24
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‘‘(i) paragraph (2)(B) shall not apply, 1
but 2
‘‘(ii) the credit allowable by reason of 3
subsection (a) to the taxpayer for any pe-4
riod after such acquisition shall be equal to 5
the amount of credit which would have 6
been allowable under subsection (a) for 7
such period to the prior owner referred to 8
in subparagraph (B) had such owner not 9
disposed of the building. 10
‘‘(B) D
ESCRIPTION OF BUILDING .—A 11
building is described in this subparagraph if— 12
‘‘(i) a credit was allowed by reason of 13
subsection (a) to any prior owner of such 14
building, and 15
‘‘(ii) the taxpayer acquired such build-16
ing before the end of the credit period for 17
such building with respect to such prior 18
owner (determined without regard to any 19
disposition by such prior owner). 20
‘‘(e) R
EHABILITATIONEXPENDITURESTREATED AS 21
S
EPARATENEWBUILDING.— 22
‘‘(1) I
N GENERAL.—Rehabilitation expenditures 23
paid or incurred by the taxpayer with respect to any 24
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building shall be treated for purposes of this section 1
as a separate building which is not a new building. 2
‘‘(2) R
EHABILITATION EXPENDITURES .—For 3
purposes of paragraph (1)— 4
‘‘(A) I
N GENERAL.—The term ‘rehabilita-5
tion expenditures’ means amounts chargeable to 6
capital account and incurred for property (or 7
additions or improvements to property) of a 8
character subject to the allowance for deprecia-9
tion in connection with the rehabilitation of a 10
building. 11
‘‘(B) C
OST OF ACQUISITION, ETC., NOT IN-12
CLUDED.—Such term does not include the cost 13
of acquiring any building (or interest therein) 14
or any amount not permitted to be taken into 15
account under paragraph (3) of subsection (d). 16
‘‘(C) C
ERTAIN RELOCATION COSTS .—In 17
the case of a rehabilitation of a building to 18
which section 280B does not apply, costs relat-19
ing to the relocation of occupants, including— 20
‘‘(i) amounts paid to occupants, 21
‘‘(ii) amounts paid to third parties for 22
services relating to such relocation, and 23
‘‘(iii) amounts paid for temporary 24
housing for occupants, 25
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shall be treated as chargeable to capital account 1
and taken into account as rehabilitation ex-2
penditures. 3
‘‘(3) M
INIMUM EXPENDITURES TO QUALIFY .— 4
‘‘(A) I
N GENERAL.—Paragraph (1) shall 5
apply to rehabilitation expenditures with respect 6
to any building only if— 7
‘‘(i) the expenditures are allocable to 8
1 or more working families units or sub-9
stantially benefit such units, and 10
‘‘(ii) the amount of such expenditures 11
during any 24-month period meets the re-12
quirements of whichever of the following 13
subclauses requires the greater amount of 14
such expenditures: 15
‘‘(I) The requirement of this sub-16
clause is met if such amount is not 17
less than 20 percent of the adjusted 18
basis of the building (determined as of 19
the 1st day of such period and with-20
out regard to paragraphs (2) and (3) 21
of section 1016(a)). 22
‘‘(II) The requirement of this 23
subclause is met if the qualified basis 24
attributable to such amount, when di-25
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vided by the number of working fami-1
lies units in the building, is equal to 2
or greater than the dollar amount in 3
effect under section 42(e)(3)(A)(ii)(II) 4
for the calendar year in which such 5
expenditures are treated as placed in 6
service under paragraph (4). 7
‘‘(B) D
ATE OF DETERMINATION .—The de-8
termination under subparagraph (A) shall be 9
made as of the close of the 1st taxable year in 10
the credit period with respect to such expendi-11
tures. 12
‘‘(4) S
PECIAL RULES.—For purposes of apply-13
ing this section with respect to expenditures which 14
are treated as a separate building by reason of this 15
subsection— 16
‘‘(A) such expenditures shall be treated as 17
placed in service at the close of the 24-month 18
period referred to in paragraph (3)(A), and 19
‘‘(B) the applicable fraction under sub-20
section (c)(1) shall be the applicable fraction for 21
the building (without regard to paragraph (1)) 22
with respect to which the expenditures were in-23
curred. 24
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Nothing in subsection (d)(2) shall prevent a credit 1
from being allowed by reason of this subsection. 2
‘‘(5) N
O DOUBLE COUNTING .—Rehabilitation 3
expenditures may, at the election of the taxpayer, be 4
taken into account under this subsection or sub-5
section (d)(2)(A)(i) but not under both such sub-6
sections. 7
‘‘(6) R
EGULATIONS TO APPLY SUBSECTION 8
WITH RESPECT TO GROUP OF UNITS IN BUILDING .— 9
The Secretary may prescribe regulations, consistent 10
with the purposes of this subsection, treating a 11
group of units with respect to which rehabilitation 12
expenditures are incurred as a separate new build-13
ing. 14
‘‘(f) D
EFINITION ANDSPECIALRULESRELATING TO 15
C
REDITPERIOD.— 16
‘‘(1) C
REDIT PERIOD DEFINED .—For purposes 17
of this section, the term ‘credit period’ means, with 18
respect to any building, the period of 15 taxable 19
years beginning with— 20
‘‘(A) the taxable year in which the building 21
is placed in service, or 22
‘‘(B) at the election of the taxpayer, the 23
succeeding taxable year, 24
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but only if the building is a qualified working fami-1
lies building as of the close of the 1st year of such 2
period. The election under subparagraph (B), once 3
made, shall be irrevocable. 4
‘‘(2) S
PECIAL RULE FOR 1ST YEAR OF CREDIT 5
PERIOD.— 6
‘‘(A) I
N GENERAL.—The credit allowable 7
under subsection (a) with respect to any build-8
ing for the 1st taxable year of the credit period 9
shall be determined by substituting for the ap-10
plicable fraction under subsection (c)(1) the 11
fraction— 12
‘‘(i) the numerator of which is the 13
sum of the applicable fractions determined 14
under subsection (c)(1) as of the close of 15
each full month of such year during which 16
such building was in service, and 17
‘‘(ii) the denominator of which is 12. 18
‘‘(B) D
ISALLOWED 1ST-YEAR CREDIT AL-19
LOWED IN 16TH YEAR .—Any reduction by rea-20
son of subparagraph (A) in the credit allowable 21
(without regard to subparagraph (A)) for the 22
1st taxable year of the credit period shall be al-23
lowable under subsection (a) for the 1st taxable 24
year following the credit period. 25
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‘‘(3) DETERMINATION OF APPLICABLE PER -1
CENTAGE WITH RESPECT TO INCREASES IN QUALI -2
FIED BASIS AFTER 1ST YEAR OF CREDIT PERIOD .— 3
‘‘(A) I
N GENERAL.—In the case of any 4
building which was a qualified working families 5
building as of the close of the 1st year of the 6
credit period, if— 7
‘‘(i) as of the close of any taxable year 8
in the credit period (after the 1st year of 9
such period) the qualified basis of such 10
building, exceeds 11
‘‘(ii) the qualified basis of such build-12
ing as of the close of the 1st year of the 13
credit period, 14
the applicable percentage which shall apply 15
under subsection (a) for the taxable year to 16
such excess shall be the percentage equal to 
2
⁄3 17
of the applicable percentage which (after the 18
application of subsection (h)) would but for this 19
paragraph apply to such basis. 20
‘‘(B) 1
ST YEAR COMPUTATION APPLIES .— 21
A rule similar to the rule of paragraph (2)(A) 22
shall apply to any increase in qualified basis to 23
which subparagraph (A) applies for the 1st year 24
of such increase. 25
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‘‘(4) DISPOSITIONS OF PROPERTY .—If a build-1
ing (or an interest therein) is disposed of during any 2
year for which credit is allowable under subsection 3
(a), such credit shall be allocated between the par-4
ties on the basis of the number of days during such 5
year the building (or interest) was held by each. 6
‘‘(5) C
REDIT PERIOD FOR EXISTING BUILDINGS 7
NOT TO BEGIN BEFORE REHABILITATION CREDIT 8
ALLOWED.— 9
‘‘(A) I
N GENERAL.—The credit period for 10
an existing building shall not begin before the 11
1st taxable year of the credit period for reha-12
bilitation expenditures with respect to the build-13
ing. 14
‘‘(B) A
CQUISITION CREDIT ALLOWED FOR 15
CERTAIN BUILDINGS NOT ALLOWED A REHA -16
BILITATION CREDIT.— 17
‘‘(i) I
N GENERAL.—In the case of a 18
building described in clause (ii)— 19
‘‘(I) subsection (d)(2)(B)(iv) 20
shall not apply, and 21
‘‘(II) the credit period for such 22
building shall not begin before the 23
taxable year which would be the 1st 24
taxable year of the credit period for 25
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rehabilitation expenditures with re-1
spect to the building under the modi-2
fications described in clause (ii)(II). 3
‘‘(ii) B
UILDING DESCRIBED.—A build-4
ing is described in this clause if— 5
‘‘(I) a waiver is granted under 6
subsection (d)(4) with respect to the 7
acquisition of the building, and 8
‘‘(II) a credit would be allowed 9
for rehabilitation expenditures with 10
respect to such building if subsection 11
(e)(3)(A)(ii)(I) did not apply and if 12
the dollar amount in effect under sub-13
section (e)(3)(A)(ii)(II) were two- 14
thirds of such amount. 15
‘‘(g) Q
UALIFIEDWORKINGFAMILIESHOUSING 16
P
ROJECT.—For purposes of this section— 17
‘‘(1) Q
UALIFIED WORKING FAMILIES HOUSING 18
PROJECT.— 19
‘‘(A) I
N GENERAL.—The term ‘qualified 20
working families housing project’ means any 21
project for residential rental property if such 22
project meets the low-income requirements of 23
subparagraph (B) and the working families re-24
quirements of subparagraph (C). 25
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‘‘(B) LOW-INCOME REQUIREMENTS .—The 1
project meets the low-income requirements of 2
this subparagraph if 20 percent or more of the 3
residential units in such project are both rent- 4
restricted and occupied by individuals whose in-5
come is 60 percent or less of area median gross 6
income. 7
‘‘(C) W
ORKING FAMILIES REQUIRE -8
MENTS.— 9
‘‘(i) I
N GENERAL.—The project meets 10
the working families requirements of this 11
subparagraph if 40 percent or more of the 12
residential units in such project are both 13
rent-restricted and occupied by individuals 14
whose income does not exceed the imputed 15
income limitation designated by the tax-16
payer with respect to the respective unit. 17
‘‘(ii) S
PECIAL RULES RELATING TO 18
INCOME LIMITATION .—For purposes of 19
clause (i)— 20
‘‘(I) D
ESIGNATION.—The tax-21
payer shall designate the imputed in-22
come limitation of each unit taken 23
into account under such clause. 24
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‘‘(II) AVERAGE TEST.—The aver-1
age of the imputed income limitations 2
designated under subclause (I) shall 3
not exceed 100 percent of area me-4
dian gross income. 5
‘‘(III) P
ERMITTED INCRE -6
MENTS.—The designated imputed in-7
come limitation of any unit under sub-8
clause (I) shall be 70, 80, 90, 100, 9
110, 120, 130, 140, 150, 160, 170, or 10
180 percent of area median gross in-11
come. 12
Any designation under this paragraph, once made, 13
shall be irrevocable. For purposes of this paragraph, 14
any property shall not be treated as failing to be res-15
idential rental property merely because part of the 16
building in which such property is located is used for 17
purposes other than residential rental purposes. 18
‘‘(2) R
ENT-RESTRICTED UNITS.— 19
‘‘(A) I
N GENERAL.—For purposes of para-20
graph (1), a residential unit is rent-restricted if 21
the gross rent with respect to such unit does 22
not exceed 30 percent of the imputed income 23
limitation applicable to such unit. For purposes 24
of the preceding sentence, the amount of the in-25
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come limitation under paragraph (1) applicable 1
for any period shall not be less than such limi-2
tation applicable for the earliest period the 3
building (which contains the unit) was included 4
in the determination of whether the project is 5
a qualified working families housing project. 6
‘‘(B) G
ROSS RENT.—For purposes of sub-7
paragraph (A), gross rent— 8
‘‘(i) includes any utility allowance de-9
termined by the Secretary after taking into 10
account such determinations under section 11
8 of the United States Housing Act of 12
1937, 13
‘‘(ii) does not include any fee for a 14
supportive service which is paid to the 15
owner of the unit (on the basis of the 16
working families status of the tenant of the 17
unit) by any governmental program of as-18
sistance (or by an organization described 19
in section 501(c)(3) and exempt from tax 20
under section 501(a)) if such program (or 21
organization) provides assistance for rent 22
and the amount of assistance provided for 23
rent is not separable from the amount of 24
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assistance provided for supportive services, 1
and 2
‘‘(iii) does not include any rental pay-3
ment to the owner of the unit to the extent 4
such owner pays an equivalent amount to 5
the Farmers’ Home Administration under 6
section 515 of the Housing Act of 1949. 7
For purposes of clause (ii), the term ‘supportive 8
service’ means any service provided under a 9
planned program of services designed to enable 10
residents of a residential rental property to re-11
main independent and avoid placement in a 12
hospital, nursing home, or intermediate care fa-13
cility for the mentally or physically handi-14
capped. 15
‘‘(C) I
MPUTED INCOME LIMITATION APPLI -16
CABLE TO UNIT.—For purposes of this para-17
graph, the imputed income limitation applicable 18
to a unit is the income limitation which would 19
apply under paragraph (1) to individuals occu-20
pying the unit if the number of individuals oc-21
cupying the unit were as follows: 22
‘‘(i) In the case of a unit which does 23
not have a separate bedroom, 1 individual. 24
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‘‘(ii) In the case of a unit which has 1
1 or more separate bedrooms, 1.5 individ-2
uals for each separate bedroom. 3
In the case of a project with respect to which 4
a credit is allowable by reason of this section 5
and for which financing is provided by a bond 6
described in section 142(a)(7), the imputed in-7
come limitation shall apply in lieu of the other-8
wise applicable income limitation for purposes 9
of applying section 142(d)(4)(B)(ii). 10
‘‘(D) T
REATMENT OF UNITS OCCUPIED BY 11
INDIVIDUALS WHOSE INCOMES RISE ABOVE 12
LIMIT.— 13
‘‘(i) I
N GENERAL.—Except as pro-14
vided in clause (ii), notwithstanding an in-15
crease in the income of the occupants of a 16
working families unit above the income 17
limitation applicable under paragraph (1), 18
such unit shall continue to be treated as a 19
working families unit if the income of such 20
occupants initially met such income limita-21
tion and such unit continues to be rent-re-22
stricted. 23
‘‘(ii) N
EXT AVAILABLE UNIT MUST BE 24
RENTED TO WORKING FAMILIES TENANT 25
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IF INCOME RISES ABOVE 140 PERCENT OF 1
INCOME LIMIT.—If the income of the occu-2
pants of the unit increases above 140 per-3
cent of the income limitation applicable 4
under paragraph (1), clause (i) shall cease 5
to apply to such unit if any residential 6
rental unit in the building (of a size com-7
parable to, or smaller than, such unit) is 8
occupied by a new resident whose income 9
exceeds such income limitation. 10
‘‘(3) D
ATE FOR MEETING REQUIREMENTS .— 11
‘‘(A) I
N GENERAL.—Except as otherwise 12
provided in this paragraph, a building shall be 13
treated as a qualified working families building 14
only if the project (of which such building is a 15
part) meets the requirements of paragraph (1) 16
not later than the close of the 1st year of the 17
credit period for such building. 18
‘‘(B) B
UILDINGS WHICH RELY ON LATER 19
BUILDINGS FOR QUALIFICATION .— 20
‘‘(i) I
N GENERAL.—In determining 21
whether a building (hereinafter in this sub-22
paragraph referred to as the ‘prior build-23
ing’) is a qualified working families build-24
ing, the taxpayer may take into account 1 25
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or more additional buildings placed in serv-1
ice during the 12-month period described 2
in subparagraph (A) with respect to the 3
prior building only if the taxpayer elects to 4
apply clause (ii) with respect to each addi-5
tional building taken into account. 6
‘‘(ii) T
REATMENT OF ELECTED 7
BUILDINGS.—In the case of a building 8
which the taxpayer elects to take into ac-9
count under clause (i), the period under 10
subparagraph (A) for such building shall 11
end at the close of the 12-month period ap-12
plicable to the prior building. 13
‘‘(iii) D
ATE PRIOR BUILDING IS 14
TREATED AS PLACED IN SERVICE .—For 15
purposes of determining the credit period 16
for the prior building, the prior building 17
shall be treated for purposes of this section 18
as placed in service on the most recent 19
date any additional building elected by the 20
taxpayer (with respect to such prior build-21
ing) was placed in service. 22
‘‘(C) S
PECIAL RULE.—A building— 23
‘‘(i) other than the 1st building placed 24
in service as part of a project, and 25
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‘‘(ii) other than a building which is 1
placed in service during the 12-month pe-2
riod described in subparagraph (A) with 3
respect to a prior building which becomes 4
a qualified working families building, 5
shall in no event be treated as a qualified work-6
ing families building unless the project is a 7
qualified working families housing project 8
(without regard to such building) on the date 9
such building is placed in service. 10
‘‘(D) P
ROJECTS WITH MORE THAN 1 11
BUILDING MUST BE IDENTIFIED .—For pur-12
poses of this section, a project shall be treated 13
as consisting of only 1 building unless, before 14
the close of the 1st calendar year in the project 15
period (as defined in subsection (h)(1)(F)(ii)), 16
each building which is (or will be) part of such 17
project is identified in such form and manner 18
as the Secretary may provide. 19
‘‘(4) C
ERTAIN RULES MADE APPLICABLE .— 20
Paragraphs (2) (other than subparagraph (A) there-21
of), (3), and (7) of section 142(d), and section 22
6652(j), shall apply for purposes of determining 23
whether any project is a qualified working families 24
housing project and whether any unit is a working 25
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families unit; except that, in applying such provi-1
sions for such purposes— 2
‘‘(A) the term ‘gross rent’ shall have the 3
meaning given such term by paragraph (2)(B) 4
of this subsection, and 5
‘‘(B) the term ‘applicable income limit’ 6
means the limitation under paragraph (1) of 7
this subsection. 8
‘‘(5) E
LECTION TO TREAT BUILDING AFTER 9
CREDIT PERIOD AS NOT PART OF A PROJECT .—For 10
purposes of this section, the taxpayer may elect to 11
treat any building as not part of a qualified working 12
families housing project for any period beginning 13
after the credit period for such building. 14
‘‘(6) S
PECIAL RULE WHERE DE MINIMIS EQ -15
UITY CONTRIBUTION.—Property shall not be treated 16
as failing to be residential rental property for pur-17
poses of this section merely because the occupant of 18
a residential unit in the project pays (on a voluntary 19
basis) to the lessor a de minimis amount to be held 20
toward the purchase by such occupant of a residen-21
tial unit in such project if— 22
‘‘(A) all amounts so paid are refunded to 23
the occupant on the cessation of his occupancy 24
of a unit in the project, and 25
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‘‘(B) the purchase of the unit is not per-1
mitted until after the close of the credit period 2
with respect to the building in which the unit 3
is located. 4
Any amount paid to the lessor as described in the 5
preceding sentence shall be included in gross rent 6
under paragraph (2) for purposes of determining 7
whether the unit is rent-restricted. 8
‘‘(7) S
CATTERED SITE PROJECTS .—Buildings 9
which would (but for their lack of proximity) be 10
treated as a project for purposes of this section shall 11
be so treated if all of the dwelling units in each of 12
the buildings are rent-restricted (within the meaning 13
of paragraph (2)) residential rental units. 14
‘‘(8) W
AIVER OF CERTAIN RECERTIFI -15
CATIONS.—On application by the taxpayer, the Sec-16
retary may waive any annual recertification of ten-17
ant income for purposes of this subsection, if the en-18
tire building is occupied by working families tenants. 19
‘‘(9) C
LARIFICATION OF GENERAL PUBLIC USE 20
REQUIREMENT.—A project does not fail to meet the 21
general public use requirement solely because of oc-22
cupancy restrictions or preferences that favor ten-23
ants— 24
‘‘(A) with special needs, or 25
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‘‘(B) who are members of a specified group 1
under a Federal program or State program or 2
policy that supports housing for such a speci-3
fied group. 4
‘‘(10) P
REVAILING WAGE REQUIREMENTS .—No 5
credit shall be determined under this section with re-6
spect to any building (including any rehabilitation 7
expenditures treated as a separate building under 8
subsection (e)) unless such building meets require-9
ments similar the requirements described in section 10
45(b)(7). 11
‘‘(h) L
IMITATION ONAGGREGATECREDITALLOW-12
ABLEWITHRESPECT TO PROJECTSLOCATED IN A 13
S
TATE.— 14
‘‘(1) C
REDIT MAY NOT EXCEED CREDIT 15
AMOUNT ALLOCATED TO BUILDING .— 16
‘‘(A) I
N GENERAL.—The amount of the 17
credit determined under this section for any 18
taxable year with respect to any building shall 19
not exceed the housing credit dollar amount al-20
located to such building under this subsection. 21
‘‘(B) T
IME FOR MAKING ALLOCATION .— 22
Except in the case of an allocation which meets 23
the requirements of subparagraph (C), (D), 24
(E), or (F), an allocation shall be taken into ac-25
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count under subparagraph (A) only if it is 1
made not later than the close of the calendar 2
year in which the building is placed in service. 3
‘‘(C) E
XCEPTION WHERE BINDING COM -4
MITMENT.—An allocation meets the require-5
ments of this subparagraph if there is a binding 6
commitment (not later than the close of the cal-7
endar year in which the building is placed in 8
service) by the housing credit agency to allocate 9
a specified housing credit dollar amount to such 10
building beginning in a specified later taxable 11
year. 12
‘‘(D) E
XCEPTION WHERE INCREASE IN 13
QUALIFIED BASIS.— 14
‘‘(i) I
N GENERAL.—An allocation 15
meets the requirements of this subpara-16
graph if such allocation is made not later 17
than the close of the calendar year in 18
which ends the taxable year to which it will 19
1st apply but only to the extent the 20
amount of such allocation does not exceed 21
the limitation under clause (ii). 22
‘‘(ii) L
IMITATION.—The limitation 23
under this clause is the amount of credit 24
allowable under this section (without re-25
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gard to this subsection) for a taxable year 1
with respect to an increase in the qualified 2
basis of the building equal to the excess 3
of— 4
‘‘(I) the qualified basis of such 5
building as of the close of the 1st tax-6
able year to which such allocation will 7
apply, over 8
‘‘(II) the qualified basis of such 9
building as of the close of the 1st tax-10
able year to which the most recent 11
prior housing credit allocation with re-12
spect to such building applied. 13
‘‘(iii) H
OUSING CREDIT DOLLAR 14
AMOUNT REDUCED BY FULL ALLOCA -15
TION.—Notwithstanding clause (i), the full 16
amount of the allocation shall be taken 17
into account under paragraph (2). 18
‘‘(E) E
XCEPTION WHERE 10 PERCENT OF 19
COST INCURRED.— 20
‘‘(i) I
N GENERAL.—An allocation 21
meets the requirements of this subpara-22
graph if such allocation is made with re-23
spect to a qualified building which is 24
placed in service not later than the close of 25
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the second calendar year following the cal-1
endar year in which the allocation is made. 2
‘‘(ii) Q
UALIFIED BUILDING.—For pur-3
poses of clause (i), the term ‘qualified 4
building’ means any building which is part 5
of a project if the taxpayer’s basis in such 6
project (as of the date which is 1 year 7
after the date that the allocation was 8
made) is more than 10 percent of the tax-9
payer’s reasonably expected basis in such 10
project (as of the close of the second cal-11
endar year referred to in clause (i)). Such 12
term does not include any existing building 13
unless a credit is allowable under sub-14
section (e) for rehabilitation expenditures 15
paid or incurred by the taxpayer with re-16
spect to such building for a taxable year 17
ending during the second calendar year re-18
ferred to in clause (i) or the prior taxable 19
year. 20
‘‘(F) A
LLOCATION OF CREDIT ON A 21
PROJECT BASIS.— 22
‘‘(i) I
N GENERAL.—In the case of a 23
project which includes (or will include) 24
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more than 1 building, an allocation meets 1
the requirements of this subparagraph if— 2
‘‘(I) the allocation is made to the 3
project for a calendar year during the 4
project period, 5
‘‘(II) the allocation only applies 6
to buildings placed in service during 7
or after the calendar year for which 8
the allocation is made, and 9
‘‘(III) the portion of such alloca-10
tion which is allocated to any building 11
in such project is specified not later 12
than the close of the calendar year in 13
which the building is placed in service. 14
‘‘(ii) P
ROJECT PERIOD.—For pur-15
poses of clause (i), the term ‘project pe-16
riod’ means the period— 17
‘‘(I) beginning with the 1st cal-18
endar year for which an allocation 19
may be made for the 1st building 20
placed in service as part of such 21
project, and 22
‘‘(II) ending with the calendar 23
year the last building is placed in 24
service as part of such project. 25
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‘‘(2) ALLOCATED CREDIT AMOUNT TO APPLY 1
TO ALL TAXABLE YEARS ENDING DURING OR AFTER 2
CREDIT ALLOCATION YEAR .—Any housing credit dol-3
lar amount allocated to any building for any cal-4
endar year— 5
‘‘(A) shall apply to such building for all 6
taxable years in the credit period ending during 7
or after such calendar year, and 8
‘‘(B) shall reduce the aggregate housing 9
credit dollar amount of the allocating agency 10
only for such calendar year. 11
‘‘(3) H
OUSING CREDIT DOLLAR AMOUNT FOR 12
AGENCIES.— 13
‘‘(A) I
N GENERAL.—The aggregate hous-14
ing credit dollar amount which a housing credit 15
agency may allocate for any calendar year is 16
the portion of the State housing credit ceiling 17
allocated under this paragraph for such cal-18
endar year to such agency. 19
‘‘(B) S
TATE CEILING INITIALLY ALLO -20
CATED TO STATE HOUSING CREDIT AGEN -21
CIES.—Except as provided in subparagraph 22
(D), the State housing credit ceiling for each 23
calendar year shall be allocated to the housing 24
credit agency of such State. If there is more 25
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than 1 housing credit agency of a State, all 1
such agencies shall be treated as a single agen-2
cy. 3
‘‘(C) S
TATE HOUSING CREDIT CEILING .— 4
The State housing credit ceiling applicable to 5
any State for any calendar year shall be an 6
amount equal to the sum of— 7
‘‘(i) the unused State housing credit 8
ceiling (if any) of such State for the pre-9
ceding calendar year, 10
‘‘(ii) the greater of— 11
‘‘(I) $1.00 multiplied by the 12
State population, or 13
‘‘(II) $1,500,000, plus 14
‘‘(iii) the amount of State housing 15
credit ceiling returned in the calendar year. 16
For purposes of clause (i), the unused State 17
housing credit ceiling for any calendar year is 18
the excess (if any) of the sum of the amounts 19
described in clauses (ii) (reduced by the aggre-20
gate amounts described in paragraph (10)(A)(i) 21
with respect to all elections made for such cal-22
endar year) and (iii) over the aggregate housing 23
credit dollar amount allocated for such year. 24
For purposes of clause (iii), the amount of 25
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State housing credit ceiling returned in the cal-1
endar year equals the housing credit dollar 2
amount previously allocated within the State to 3
any project which fails to meet the 10 percent 4
test under paragraph (1)(E)(ii) on a date after 5
the close of the calendar year in which the allo-6
cation was made or which does not become a 7
qualified working families housing project with-8
in the period required by this section or the 9
terms of the allocation or to any project with 10
respect to which an allocation is cancelled by 11
mutual consent of the housing credit agency 12
and the allocation recipient. 13
‘‘(D) S
TATE MAY PROVIDE FOR DIF -14
FERENT ALLOCATION .—Rules similar to the 15
rules of section 146(e) (other than paragraph 16
(2)(B) thereof) shall apply for purposes of this 17
paragraph. 18
‘‘(E) P
OPULATION.—For purposes of this 19
paragraph, population shall be determined in 20
accordance with section 146(j). 21
‘‘(F) C
OST-OF-LIVING ADJUSTMENT.— 22
‘‘(i) I
N GENERAL.—In the case of a 23
calendar year after 2026, the $1,500,000 24
and $1.00 amounts in subparagraph (C) 25
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shall each be increased by an amount equal 1
to— 2
‘‘(I) such dollar amount, multi-3
plied by 4
‘‘(II) the cost-of-living adjust-5
ment determined under section 1(f)(3) 6
for such calendar year by substituting 7
‘calendar year 2025’ for ‘calendar 8
year 2016’ in subparagraph (A)(ii) 9
thereof. 10
‘‘(ii) R
OUNDING.— 11
‘‘(I) In the case of the 12
$1,140,000 amount, any increase 13
under clause (i) which is not a mul-14
tiple of $5,000 shall be rounded to the 15
next lowest multiple of $5,000. 16
‘‘(II) In the case of the $1.00 17
amount, any increase under clause (i) 18
which is not a multiple of 5 cents 19
shall be rounded to the next lowest 20
multiple of 5 cents. 21
‘‘(4) P
ORTION OF STATE CEILING SET -ASIDE 22
FOR CERTAIN PROJECTS INVOLVING QUALIFIED 23
NONPROFIT ORGANIZATIONS .— 24
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‘‘(A) IN GENERAL.—Not more than 90 1
percent of the State housing credit ceiling (de-2
termined without regard to paragraph (7)) for 3
any State for any calendar year shall be allo-4
cated to projects other than qualified working 5
families housing projects described in subpara-6
graph (B). 7
‘‘(B) P
ROJECTS INVOLVING QUALIFIED 8
NONPROFIT ORGANIZATIONS .—For purposes of 9
subparagraph (A), a qualified working families 10
housing project is described in this subpara-11
graph if a qualified nonprofit organization is to 12
own an interest in the project (directly or 13
through a partnership) and materially partici-14
pate (within the meaning of section 469(h)) in 15
the development and operation of the project 16
throughout the credit period. 17
‘‘(C) Q
UALIFIED NONPROFIT ORGANIZA -18
TION.—For purposes of this paragraph, the 19
term ‘qualified nonprofit organization’ means 20
any organization if— 21
‘‘(i) such organization is described in 22
paragraph (3) or (4) of section 501(c) and 23
is exempt from tax under section 501(a), 24
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‘‘(ii) such organization is determined 1
by the State housing credit agency not to 2
be affiliated with or controlled by a for- 3
profit organization, and 4
‘‘(iii) one of the exempt purposes of 5
such organization includes the fostering of 6
working families housing. 7
‘‘(D) T
REATMENT OF CERTAIN SUBSIDI -8
ARIES.— 9
‘‘(i) I
N GENERAL.—For purposes of 10
this paragraph, a qualified nonprofit orga-11
nization shall be treated as satisfying the 12
ownership and material participation test 13
of subparagraph (B) if any qualified cor-14
poration in which such organization holds 15
stock satisfies such test. 16
‘‘(ii) Q
UALIFIED CORPORATION .—For 17
purposes of clause (i), the term ‘qualified 18
corporation’ means any corporation if 100 19
percent of the stock of such corporation is 20
held by 1 or more qualified nonprofit orga-21
nizations at all times during the period 22
such corporation is in existence. 23
‘‘(E) S
TATE MAY NOT OVERRIDE SET - 24
ASIDE.—Nothing in subparagraph (E) of para-25
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graph (3) shall be construed to permit a State 1
not to comply with subparagraph (A) of this 2
paragraph. 3
‘‘(5) B
UILDINGS ELIGIBLE FOR CREDIT ONLY 4
IF MINIMUM LONG-TERM COMMITMENT TO WORKING 5
FAMILIES HOUSING.— 6
‘‘(A) I
N GENERAL.—No credit shall be al-7
lowed by reason of this section with respect to 8
any building for the taxable year unless an ex-9
tended working families housing commitment is 10
in effect as of the end of such taxable year. 11
‘‘(B) E
XTENDED WORKING FAMILIES 12
HOUSING COMMITMENT .—For purposes of this 13
paragraph, the term ‘extended working families 14
housing commitment’ means any agreement be-15
tween the taxpayer and the housing credit agen-16
cy— 17
‘‘(i) which requires that the applicable 18
fraction (as defined in subsection (c)(1)) 19
for the building for each taxable year in 20
the extended use period will not be less 21
than the applicable fraction specified in 22
such agreement and which prohibits the 23
actions described in subclauses (I) and (II) 24
of subparagraph (E)(ii), 25
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‘‘(ii) which allows individuals who 1
meet the income limitation applicable to 2
the building under subsection (g) (whether 3
prospective, present, or former occupants 4
of the building) the right to enforce in any 5
State court the requirement and prohibi-6
tions of clause (i), 7
‘‘(iii) which prohibits the disposition 8
to any person of any portion of the build-9
ing to which such agreement applies unless 10
all of the building to which such agreement 11
applies is disposed of to such person, 12
‘‘(iv) which prohibits the refusal to 13
lease to a holder of a voucher or certificate 14
of eligibility under section 8 of the United 15
States Housing Act of 1937 because of the 16
status of the prospective tenant as such a 17
holder, 18
‘‘(v) which is binding on all successors 19
of the taxpayer, and 20
‘‘(vi) which, with respect to the prop-21
erty, is recorded pursuant to State law as 22
a restrictive covenant. 23
‘‘(C) A
LLOCATION OF CREDIT MAY NOT 24
EXCEED AMOUNT NECESSARY TO SUPPORT 25
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COMMITMENT.—The housing credit dollar 1
amount allocated to any building may not ex-2
ceed the amount necessary to support the appli-3
cable fraction specified in the extended working 4
families housing commitment for such building, 5
including any increase in such fraction pursu-6
ant to the application of subsection (f)(3) if 7
such increase is reflected in an amended work-8
ing families housing commitment. 9
‘‘(D) E
XTENDED USE PERIOD .—For pur-10
poses of this paragraph, the term ‘extended use 11
period’ means the period— 12
‘‘(i) beginning on the 1st day in the 13
credit period on which such building is 14
part of a qualified working families hous-15
ing project, and 16
‘‘(ii) ending on the later of— 17
‘‘(I) the date specified by such 18
agency in such agreement, or 19
‘‘(II) the date which is 15 years 20
after the close of the credit period. 21
‘‘(E) E
XCEPTIONS IF FORECLOSURE OR IF 22
NO BUYER WILLING TO MAINTAIN WORKING 23
FAMILIES STATUS.— 24
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‘‘(i) IN GENERAL.—The extended use 1
period for any building shall terminate on 2
the 61st day after the taxpayer (or a suc-3
cessor in interest) provides notice to the 4
Secretary and the housing credit agency 5
that the building has been acquired by 6
foreclosure (or instrument in lieu of fore-7
closure) and that the taxpayer intends the 8
termination of such period, unless, before 9
such date, the Secretary or the housing 10
credit agency determines that such acquisi-11
tion is part of an arrangement with the 12
taxpayer a purpose of which is to termi-13
nate such period. 14
‘‘(ii) E
VICTION, ETC., OF EXISTING 15
WORKING FAMILIES TENANTS NOT PER -16
MITTED.—The termination of an extended 17
use period under clause (i) shall not be 18
construed to permit before the close of the 19
3-year period following such termination— 20
‘‘(I) the eviction or the termi-21
nation of tenancy (other than for good 22
cause) of an existing tenant of any 23
working families unit, or 24
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‘‘(II) any increase in the gross 1
rent with respect to such unit not oth-2
erwise permitted under this section. 3
‘‘(F) E
FFECT OF NONCOMPLIANCE .—If, 4
during a taxable year, there is a determination 5
that an extended working families housing 6
agreement was not in effect as of the beginning 7
of such year, such determination shall not apply 8
to any period before such year and subpara-9
graph (A) shall be applied without regard to 10
such determination if the failure is corrected 11
within 1 year from the date of the determina-12
tion. 13
‘‘(G) P
ROJECTS WHICH CONSIST OF MORE 14
THAN 1 BUILDING .—The application of this 15
paragraph to projects which consist of more 16
than 1 building shall be made under regulations 17
prescribed by the Secretary. 18
‘‘(6) S
PECIAL RULES.— 19
‘‘(A) B
UILDING MUST BE LOCATED WITH -20
IN JURISDICTION OF CREDIT AGENCY .—A hous-21
ing credit agency may allocate its aggregate 22
housing credit dollar amount only to buildings 23
located in the jurisdiction of the governmental 24
unit of which such agency is a part. 25
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‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF 1
LIMIT.—If the aggregate housing credit dollar 2
amounts allocated by a housing credit agency 3
for any calendar year exceed the portion of the 4
State housing credit ceiling allocated to such 5
agency for such calendar year, the housing 6
credit dollar amounts so allocated shall be re-7
duced (to the extent of such excess) for build-8
ings in the reverse of the order in which the al-9
locations of such amounts were made. 10
‘‘(C) C
REDIT REDUCED IF ALLOCATED 11
CREDIT DOLLAR AMOUNT IS LESS THAN CREDIT 12
WHICH WOULD BE ALLOWABLE WITHOUT RE -13
GARD TO PLACED IN SERVICE CONVENTION , 14
ETC.— 15
‘‘(i) I
N GENERAL.—The amount of 16
the credit determined under this section 17
with respect to any building shall not ex-18
ceed the clause (ii) percentage of the 19
amount of the credit which would (but for 20
this subparagraph) be determined under 21
this section with respect to such building. 22
‘‘(ii) D
ETERMINATION OF PERCENT -23
AGE.—For purposes of clause (i), the 24
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clause (ii) percentage with respect to any 1
building is the percentage which— 2
‘‘(I) the housing credit dollar 3
amount allocated to such building, 4
bears to 5
‘‘(II) the credit amount deter-6
mined in accordance with clause (iii). 7
‘‘(iii) D
ETERMINATION OF CREDIT 8
AMOUNT.—The credit amount determined 9
in accordance with this clause is the 10
amount of the credit which would (but for 11
this subparagraph) be determined under 12
this section with respect to the building 13
if— 14
‘‘(I) this section were applied 15
without regard to paragraphs (2)(A) 16
and (3)(B) of subsection (f), and 17
‘‘(II) subsection (f)(3)(A) were 18
applied without regard to ‘the per-19
centage equal to 
2
⁄3of’. 20
‘‘(D) H
OUSING CREDIT AGENCY TO SPECI -21
FY APPLICABLE PERCENTAGE AND MAXIMUM 22
QUALIFIED BASIS.—In allocating a housing 23
credit dollar amount to any building, the hous-24
ing credit agency shall specify the applicable 25
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percentage and the maximum qualified basis 1
which may be taken into account under this 2
section with respect to such building. The appli-3
cable percentage and maximum qualified basis 4
so specified shall not exceed the applicable per-5
centage and qualified basis determined under 6
this section without regard to this subsection. 7
‘‘(7) I
NCREASE IN STATE CEILING DEDICATED 8
TO CERTAIN RURAL DEVELOPMENT PROJECTS .— 9
‘‘(A) I
N GENERAL.—The State housing 10
credit ceiling for any calendar year shall be in-11
creased by an amount equal to 20 percent of 12
the amount determined under paragraph 13
(3)(C)(ii). 14
‘‘(B) U
SE OF INCREASED AMOUNT .— 15
‘‘(i) I
N GENERAL.—The amount of 16
the increase under subparagraph (A) for 17
any calendar year may only be allocated to 18
buildings located in a rural area or 19
exurban area. 20
‘‘(ii) R
URAL AREA.—For purposes of 21
clause (i), the term ‘rural area’ means any 22
non-metropolitan area, or any rural area 23
as defined by section 520 of the Housing 24
Act of 1949, which is identified by the 25
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qualified allocation plan under subsection 1
(l)(1)(B). 2
‘‘(iii) E
XURBAN AREA.—For purposes 3
of clause (i), the term ‘exurban area’ has 4
the meaning given such term by the Sec-5
retary after consultation with the Bureau 6
of the Census. 7
‘‘(8) O
THER DEFINITIONS.—For purposes of 8
this subsection— 9
‘‘(A) H
OUSING CREDIT AGENCY .—The 10
term ‘housing credit agency’ means any agency 11
authorized to carry out this subsection. 12
‘‘(B) P
OSSESSIONS TREATED AS STATES .— 13
The term ‘State’ includes a possession of the 14
United States. 15
‘‘(9) C
REDIT FOR BUILDINGS FINANCED BY 16
TAX-EXEMPT BONDS SUBJECT TO VOLUME CAP NOT 17
TAKEN INTO ACCOUNT .—Rules similar to the rules 18
of subsections (h)(4), (m)(1)(D), and (m)(2)(D) of 19
section 42 shall apply for purposes of this sub-20
section. 21
‘‘(10) E
LECTION TO TRANSFER STATE HOUSING 22
CREDIT CEILING FOR ALLOCATIONS TO LOW -INCOME 23
BUILDINGS.— 24
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‘‘(A) IN GENERAL.—If a State housing 1
credit agency makes an election under this 2
paragraph with respect to a calendar year— 3
‘‘(i) the State housing credit ceiling 4
for such calendar year under paragraph 5
(3) (determined before application of para-6
graph (7)) shall be reduced by the amount 7
specified in such election, 8
‘‘(ii) the amount determined under 9
paragraph (7) for such calendar year shall 10
be reduced by the amount specified in such 11
election, and 12
‘‘(iii) the amount determined under 13
section 42(h)(3)(C)(ii) for such calendar 14
year shall be increased by the sum of the 15
amounts specified in clauses (i) and (ii), 16
except that any amount specified under 17
clause (ii)— 18
‘‘(I) may only be allocated under 19
such section to qualified low-income 20
buildings (as defined in section 42) lo-21
cated in a rural area or exurban area 22
(as defined in paragraph (7)), and 23
‘‘(II) shall not be taken into ac-24
count for purposes of determining the 25
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unused housing credit ceiling under 1
the second sentence of section 2
42(h)(3)(C). 3
‘‘(B) T
IME AND MANNER FOR MAKING 4
ELECTION.— 5
‘‘(i) I
N GENERAL.—An election under 6
this paragraph— 7
‘‘(I) shall be made before the end 8
of the calendar year with respect to 9
which such election applies, 10
‘‘(II) shall be made in such man-11
ner as specified by the Secretary, and 12
‘‘(III) shall separately specify the 13
amount of reductions to be made 14
under paragraph (3) and paragraph 15
(7). 16
‘‘(ii) F
REQUENCY.—A State housing 17
credit agency may make more than one 18
election under this section with respect to 19
any calendar year, and any such election, 20
once made, shall be revocable only if such 21
revocation is made before the end of the 22
calendar year with respect to which such 23
election is made. 24
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‘‘(C) LIMITATION.—The aggregate amount 1
specified in elections under this paragraph with 2
respect to any State housing credit agency for 3
calendar year shall not exceed the sum of— 4
‘‘(i) the amount determined under 5
paragraph (3)(C)(ii) for such calendar 6
year, plus 7
‘‘(ii) the amount determined under 8
paragraph (7) for such calendar year. 9
‘‘(i) D
EFINITIONS ANDSPECIALRULES.—For pur-10
poses of this section— 11
‘‘(1) W
ORKING FAMILIES UNIT.— 12
‘‘(A) I
N GENERAL.—The term ‘working 13
families unit’ means any unit in a building if— 14
‘‘(i) such unit is rent-restricted (as de-15
fined in subsection (g)(2)), and 16
‘‘(ii) the individuals occupying such 17
unit meet the income limitation applicable 18
under subsection (g)(1) to the project of 19
which such building is a part. 20
‘‘(B) E
XCEPTIONS.— 21
‘‘(i) E
XCLUSION OF LOW -INCOME 22
UNITS.—A unit shall not be treated as a 23
working families unit if such unit is a low- 24
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income unit (as defined under section 1
42(i)(3)). 2
‘‘(ii) U
NIT MUST BE SUITABLE FOR 3
PERMANENT OCCUPANCY .— 4
‘‘(I) I
N GENERAL.—A unit shall 5
not be treated as a working families 6
unit unless the unit is suitable for oc-7
cupancy and used other than on a 8
transient basis. 9
‘‘(II) S
UITABILITY FOR OCCU -10
PANCY.—For purposes of subclause 11
(I), the suitability of a unit for occu-12
pancy shall be determined under regu-13
lations prescribed by the Secretary 14
taking into account local health, safe-15
ty, and building codes. 16
‘‘(III) S
INGLE-ROOM OCCUPANCY 17
UNITS.—For purposes of subclause 18
(I), a single-room occupancy unit shall 19
not be treated as used on a transient 20
basis merely because it is rented on a 21
month-by-month basis. 22
‘‘(C) S
PECIAL RULE FOR BUILDINGS HAV -23
ING 4 OR FEWER UNITS .—In the case of any 24
building which has 4 or fewer residential rental 25
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units, no unit in such building shall be treated 1
as a working families unit if the units in such 2
building are owned by— 3
‘‘(i) any individual who occupies a res-4
idential unit in such building, or 5
‘‘(ii) any person who is related (as de-6
fined in subsection (d)(2)(D)(ii)) to such 7
individual. 8
‘‘(D) R
ULES RELATING TO STUDENTS .— 9
‘‘(i) I
N GENERAL.—A unit occupied 10
solely by individuals who— 11
‘‘(I) have not attained age 24, 12
and 13
‘‘(II) are enrolled in a full-time 14
course of study at an institution of 15
higher education (as defined in section 16
3304(f)), 17
shall not be treated as a working families 18
unit. 19
‘‘(ii) E
XCEPTION FOR CERTAIN FED -20
ERAL PROGRAMS.—In the case of a Feder-21
ally-assisted building (as defined in sub-22
section (d)(6)(C)(i) of section 42), clause 23
(i) shall not apply to a unit all of the occu-24
pants of which meet all applicable require-25
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ments under the housing program de-1
scribed in such subsection through which 2
the building is assisted, financed, or oper-3
ated. 4
‘‘(iii) O
THER EXCEPTIONS .—Clause 5
(i) shall not apply to a unit occupied by an 6
individual who— 7
‘‘(I) is married, if such individ-8
ual’s spouse also occupies the unit, 9
‘‘(II) is a person with disabilities 10
(as defined in section 3(b)(3)(E) of 11
the United States Housing Act of 12
1937), 13
‘‘(III) is a veteran (as defined in 14
section 101(2) of title 38, United 15
States Code), 16
‘‘(IV) has one or more qualifying 17
children (as defined in section 18
152(c)), if such children also occupy 19
the unit, the individual is not a de-20
pendent (as defined in section 152, 21
determined without regard to sub-22
sections (b)(1), (b)(2), and (d)(1)(B) 23
thereof) of another individual, and 24
such children are not claimed as de-25
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pendents (as so defined) of another 1
individual, or 2
‘‘(V) is, or was immediately prior 3
to attaining the age of majority— 4
‘‘(aa) an emancipated minor 5
or in legal guardianship as deter-6
mined by a court of competent 7
jurisdiction in the individual’s 8
State of legal residence, 9
‘‘(bb) under the care and 10
placement responsibility of the 11
State agency responsible for ad-12
ministering a plan under part B 13
or part E of title IV of the Social 14
Security Act, or 15
‘‘(cc) was an unaccompanied 16
youth (within the meaning of sec-17
tion 725(6) of the McKinney- 18
Vento Homeless Assistance Act 19
(42 U.S.C. 11434a(6))) or a 20
homeless child or youth (within 21
the meaning of section 725(2) of 22
such Act (42 U.S.C. 23
11434a(2))). 24
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‘‘(E) OWNER-OCCUPIED BUILDINGS HAV -1
ING 4 OR FEWER UNITS ELIGIBLE FOR CREDIT 2
WHERE DEVELOPMENT PLAN .— 3
‘‘(i) I
N GENERAL.—Subparagraph (C) 4
shall not apply to the acquisition or reha-5
bilitation of a building pursuant to a devel-6
opment plan of action sponsored by a 7
State or local government or a qualified 8
nonprofit organization. 9
‘‘(ii) L
IMITATION ON CREDIT.—In the 10
case of a building to which clause (i) ap-11
plies, the applicable fraction shall not ex-12
ceed 80 percent of the unit fraction. 13
‘‘(iii) C
ERTAIN UNRENTED UNITS 14
TREATED AS OWNER -OCCUPIED.—In the 15
case of a building to which clause (i) ap-16
plies, any unit which is not rented for 90 17
days or more shall be treated as occupied 18
by the owner of the building as of the 1st 19
day it is not rented. 20
‘‘(2) N
EW BUILDING.—The term ‘new building’ 21
means a building the original use of which begins 22
with the taxpayer. 23
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‘‘(3) EXISTING BUILDING.—The term ‘existing 1
building’ means any building which is not a new 2
building. 3
‘‘(4) A
PPLICATION TO ESTATES AND TRUSTS .— 4
In the case of an estate or trust, the amount of the 5
credit determined under subsection (a) shall be ap-6
portioned between the estate or trust and the bene-7
ficiaries on the basis of the income of the estate or 8
trust allocable to each. 9
‘‘(5) I
MPACT OF TENANT’S OPTION TO ACQUIRE 10
PROPERTY.— 11
‘‘(A) I
N GENERAL.—No Federal income 12
tax benefit shall fail to be allowable to the tax-13
payer with respect to any qualified working 14
families building merely by reason of an option 15
held by the tenants (in cooperative form or oth-16
erwise) or resident management corporation of 17
such building or by a qualified nonprofit organi-18
zation or government agency to purchase the 19
property or all of the partnership interests 20
(other than interests of the person exercising 21
such option or a related party thereto (within 22
the meaning of section 267(b) or 707(b)(1))) 23
relating to the property after the close of the 24
credit period for a price which is not less than 25
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the minimum purchase price determined under 1
subparagraph (B). 2
‘‘(B) M
INIMUM PURCHASE PRICE .—For 3
purposes of subparagraph (A), the minimum 4
purchase price under this subparagraph is an 5
amount equal to the principal amount of out-6
standing indebtedness secured by the building 7
(other than indebtedness incurred within the 5- 8
year period ending on the date of the sale to 9
the tenants). In the case of a purchase of a 10
partnership interest, the minimum purchase 11
price is an amount equal to such interest’s rat-12
able share of the amount determined under the 13
preceding sentence. 14
‘‘(6) T
REATMENT OF RURAL PROJECTS .—For 15
purposes of this section, in the case of any project 16
for residential rental property located in a rural area 17
(as defined in section 520 of the Housing Act of 18
1949), any income limitation measured by reference 19
to area median gross income shall be measured by 20
reference to the greater of area median gross income 21
or national non-metropolitan median income. 22
‘‘(7) D
ETERMINATION OF WHETHER BUILDING 23
IS FEDERALLY SUBSIDIZED .— 24
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‘‘(A) IN GENERAL.—Except as otherwise 1
provided in this paragraph, for purposes of this 2
section, a project shall be treated as Federally 3
subsidized for any taxable year if, at any time 4
during such taxable year or any prior taxable 5
year, there is or was outstanding any obligation 6
the interest on which is exempt from tax under 7
section 103 the proceeds of which are or were 8
used (directly or indirectly) with respect to such 9
project or the operation thereof. 10
‘‘(B) S
PECIAL RULE FOR SUBSIDIZED CON -11
STRUCTION FINANCING .—Subparagraph (A) 12
shall not apply to any tax-exempt obligation 13
used to provide construction financing for any 14
building if— 15
‘‘(i) such obligation (when issued) 16
identified the building for which the pro-17
ceeds of such obligation would be used, 18
and 19
‘‘(ii) such obligation is redeemed be-20
fore such building is placed in service. 21
‘‘(8) R
EDUCTION IN BASIS.—In the case of any 22
building for which a credit is allowable under this 23
section and section 42, the basis of the building shall 24
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be reduced by the amount of such credit allowed 1
under subsection (a). 2
‘‘(j) A
PPLICATION OFAT-RISKRULES.—For pur-3
poses of this section— 4
‘‘(1) I
N GENERAL.—Except as otherwise pro-5
vided in this subsection, rules similar to the rules of 6
section 49(a)(1) (other than subparagraphs 7
(D)(ii)(II) and (D)(iv)(I) thereof), section 49(a)(2), 8
and section 49(b)(1) shall apply in determining the 9
qualified basis of any building in the same manner 10
as such sections apply in determining the credit base 11
of property. 12
‘‘(2) S
PECIAL RULES FOR DETERMINING QUALI -13
FIED PERSON.—For purposes of paragraph (1)— 14
‘‘(A) I
N GENERAL.—If the requirements of 15
subparagraphs (B), (C), and (D) are met with 16
respect to any financing borrowed from a quali-17
fied nonprofit organization, the determination 18
of whether such financing is qualified commer-19
cial financing with respect to any qualified 20
working families building shall be made without 21
regard to whether such organization— 22
‘‘(i) is actively and regularly engaged 23
in the business of lending money, or 24
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‘‘(ii) is a person described in section 1
49(a)(1)(D)(iv)(II). 2
‘‘(B) F
INANCING SECURED BY PROP -3
ERTY.—The requirements of this subparagraph 4
are met with respect to any financing if such fi-5
nancing is secured by the qualified working 6
families building, except that this subparagraph 7
shall not apply in the case of a federally as-8
sisted building described in section 42(d)(6)(C) 9
if— 10
‘‘(i) a security interest in such build-11
ing is not permitted by a Federal agency 12
holding or insuring the mortgage secured 13
by such building, and 14
‘‘(ii) the proceeds from the financing 15
(if any) are applied to acquire or improve 16
such building. 17
‘‘(C) P
ORTION OF BUILDING ATTRIB -18
UTABLE TO FINANCING .—The requirements of 19
this subparagraph are met with respect to any 20
financing for any taxable year in the credit pe-21
riod if, as of the close of such taxable year, not 22
more than 60 percent of the eligible basis of the 23
qualified working families building is attrib-24
utable to such financing (reduced by the prin-25
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cipal and interest of any governmental financ-1
ing which is part of a wrap-around mortgage 2
involving such financing). 3
‘‘(D) R
EPAYMENT OF PRINCIPAL AND IN -4
TEREST.—The requirements of this subpara-5
graph are met with respect to any financing if 6
such financing is fully repaid on or before the 7
earliest of— 8
‘‘(i) the date on which such financing 9
matures, 10
‘‘(ii) the 90th day after the close of 11
the credit period with respect to the quali-12
fied working families building, or 13
‘‘(iii) the date of its refinancing or the 14
sale of the building to which such financ-15
ing relates. 16
In the case of a qualified nonprofit organization 17
which is not described in section 18
49(a)(1)(D)(iv)(II) with respect to a building, 19
clause (ii) of this subparagraph shall be applied 20
as if the date described therein were the 90th 21
day after the earlier of the date the building 22
ceases to be a qualified working families build-23
ing or the date which is 15 years after the close 24
of a credit period with respect thereto. 25
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‘‘(3) PRESENT VALUE OF FINANCING .—If the 1
rate of interest on any financing described in para-2
graph (2)(A) is less than the rate which is 1 per-3
centage point below the applicable Federal rate as of 4
the time such financing is incurred, then the quali-5
fied basis (to which such financing relates) of the 6
qualified working families building shall be the 7
present value of the amount of such financing, using 8
as the discount rate such applicable Federal rate. 9
For purposes of the preceding sentence, the rate of 10
interest on any financing shall be determined by 11
treating interest to the extent of government sub-12
sidies as not payable. 13
‘‘(4) F
AILURE TO FULLY REPAY .— 14
‘‘(A) I
N GENERAL.—To the extent that the 15
requirements of paragraph (2)(D) are not met, 16
then the taxpayer’s tax under this chapter for 17
the taxable year in which such failure occurs 18
shall be increased by an amount equal to the 19
applicable portion of the credit under this sec-20
tion with respect to such building, increased by 21
an amount of interest for the period— 22
‘‘(i) beginning with the due date for 23
the filing of the return of tax imposed by 24
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chapter 1 for the 1st taxable year for 1
which such credit was allowable, and 2
‘‘(ii) ending with the due date for the 3
taxable year in which such failure occurs, 4
determined by using the underpayment rate and 5
method under section 6621. 6
‘‘(B) A
PPLICABLE PORTION .—For pur-7
poses of subparagraph (A), the term ‘applicable 8
portion’ means the aggregate decrease in the 9
credits allowed to a taxpayer under section 38 10
for all prior taxable years which would have re-11
sulted if the eligible basis of the building were 12
reduced by the amount of financing which does 13
not meet requirements of paragraph (2)(D). 14
‘‘(C) C
ERTAIN RULES TO APPLY .—Rules 15
similar to the rules of subparagraphs (A) and 16
(D) of section 42(j)(4) shall apply for purposes 17
of this subsection. 18
‘‘(k) C
ERTIFICATIONS ANDOTHERREPORTS TOSEC-19
RETARY.— 20
‘‘(1) C
ERTIFICATION WITH RESPECT TO 1ST 21
YEAR OF CREDIT PERIOD .—Following the close of 22
the 1st taxable year in the credit period with respect 23
to any qualified working families building, the tax-24
payer shall certify to the Secretary (at such time 25
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and in such form and in such manner as the Sec-1
retary prescribes)— 2
‘‘(A) the taxable year, and calendar year, 3
in which such building was placed in service, 4
‘‘(B) the adjusted basis and eligible basis 5
of such building as of the close of the 1st year 6
of the credit period, 7
‘‘(C) the maximum applicable percentage 8
and qualified basis permitted to be taken into 9
account by the appropriate housing credit agen-10
cy under subsection (h), and 11
‘‘(D) such other information as the Sec-12
retary may require. 13
In the case of a failure to make the certification re-14
quired by the preceding sentence on the date pre-15
scribed therefor, unless it is shown that such failure 16
is due to reasonable cause and not to willful neglect, 17
no credit shall be allowable by reason of subsection 18
(a) with respect to such building for any taxable 19
year ending before such certification is made. 20
‘‘(2) A
NNUAL REPORTS TO THE SECRETARY .— 21
The Secretary may require taxpayers to submit an 22
information return (at such time and in such form 23
and manner as the Secretary prescribes) for each 24
taxable year setting forth— 25
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‘‘(A) the qualified basis for the taxable 1
year of each qualified working families building 2
of the taxpayer, 3
‘‘(B) the information described in para-4
graph (1)(C) for the taxable year, and 5
‘‘(C) such other information as the Sec-6
retary may require. 7
The penalty under section 6652(j) shall apply to any 8
failure to submit the return required by the Sec-9
retary under the preceding sentence on the date pre-10
scribed therefor. 11
‘‘(3) A
NNUAL REPORTS FROM HOUSING CREDIT 12
AGENCIES.—Each agency which allocates any hous-13
ing credit amount to any building for any calendar 14
year shall submit to the Secretary (at such time and 15
in such manner as the Secretary shall prescribe) an 16
annual report specifying— 17
‘‘(A) the amount of housing credit amount 18
allocated to each building for such year, 19
‘‘(B) sufficient information to identify each 20
such building and the taxpayer with respect 21
thereto, and 22
‘‘(C) such other information as the Sec-23
retary may require. 24
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The penalty under section 6652(j) shall apply to any 1
failure to submit the report required by the pre-2
ceding sentence on the date prescribed therefor. 3
‘‘(l) R
ESPONSIBILITIES OFHOUSINGCREDITAGEN-4
CIES.— 5
‘‘(1) P
LANS FOR ALLOCATION OF CREDIT 6
AMONG PROJECTS.— 7
‘‘(A) I
N GENERAL.—Notwithstanding any 8
other provision of this section, the housing cred-9
it dollar amount with respect to any building 10
shall be zero unless— 11
‘‘(i) such amount was allocated pursu-12
ant to a qualified allocation plan of the 13
housing credit agency which is approved by 14
the governmental unit (in accordance with 15
rules similar to the rules of section 16
42(m)(1)) of which such agency is a part, 17
‘‘(ii) a comprehensive market study of 18
the housing needs of working family indi-19
viduals in the area to be served by the 20
project is conducted before the credit allo-21
cation is made and at the developer’s ex-22
pense by a disinterested party who is ap-23
proved by such agency, and 24
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‘‘(iii) a written explanation is available 1
to the general public for any allocation of 2
a housing credit dollar amount which is 3
not made in accordance with established 4
priorities and selection criteria of the hous-5
ing credit agency. 6
‘‘(B) Q
UALIFIED ALLOCATION PLAN .—For 7
purposes of this paragraph, the term ‘qualified 8
allocation plan’ means any plan— 9
‘‘(i) which sets forth selection criteria 10
to be used to determine housing priorities 11
of the housing credit agency which are ap-12
propriate to local conditions, 13
‘‘(ii) which also gives preference in al-14
locating housing credit dollar amounts 15
among selected projects to— 16
‘‘(I) projects obligated to serve 17
qualified tenants for the longest peri-18
ods, 19
‘‘(II) projects in areas with insuf-20
ficient supply of housing affordable to 21
median income households, 22
‘‘(III) projects which target hous-23
ing to tenants at a range of incomes 24
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between 60 and 100 percent of area 1
median gross income, and 2
‘‘(IV) projects located near tran-3
sit hubs, and 4
‘‘(iii) which provides a procedure that 5
the agency (or an agent or other private 6
contractor of such agency) will follow in 7
monitoring for noncompliance with the 8
provisions of this section and in notifying 9
the Internal Revenue Service of such non-10
compliance which such agency becomes 11
aware of and in monitoring for noncompli-12
ance with habitability standards through 13
regular site visits. 14
‘‘(C) C
ERTAIN SELECTION CRITERIA MUST 15
BE USED.—The selection criteria set forth in a 16
qualified allocation plan must include— 17
‘‘(i) project location, 18
‘‘(ii) housing needs characteristics, 19
‘‘(iii) project characteristics, including 20
whether the project includes the use of ex-21
isting housing as part of a community revi-22
talization plan, 23
‘‘(iv) sponsor characteristics, 24
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‘‘(v) tenant populations with special 1
housing needs, 2
‘‘(vi) tenant populations of individuals 3
with children, 4
‘‘(vii) projects intended for eventual 5
tenant ownership, 6
‘‘(viii) the energy efficiency of the 7
project, and 8
‘‘(ix) the historic nature of the 9
project. 10
‘‘(D) C
ERTAIN SELECTION CRITERIA PRO -11
HIBITED.—The selection criteria set forth in a 12
qualified allocation plan shall not include a re-13
quirement of local approval or local contribu-14
tions, either as a threshold qualification re-15
quirement or as part of a point system to be 16
considered for allocations of housing credit dol-17
lar amount. 18
‘‘(2) C
REDIT ALLOCATED TO BUILDING NOT TO 19
EXCEED AMOUNT NECESSARY TO ASSURE PROJECT 20
FEASIBILITY.— 21
‘‘(A) I
N GENERAL.—The housing credit 22
dollar amount allocated to a project shall not 23
exceed the amount the housing credit agency 24
determines is necessary for the financial feasi-25
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bility of the project and its viability as a quali-1
fied working families housing project through-2
out the credit period. 3
‘‘(B) A
GENCY EVALUATION .—In making 4
the determination under subparagraph (A), the 5
housing credit agency shall consider— 6
‘‘(i) the sources and uses of funds and 7
the total financing planned for the project, 8
‘‘(ii) any proceeds or receipts expected 9
to be generated by reason of tax benefits, 10
‘‘(iii) the percentage of the housing 11
credit dollar amount used for project costs 12
other than the cost of intermediaries, and 13
‘‘(iv) the reasonableness of the devel-14
opmental and operational costs of the 15
project. 16
Clause (iii) shall not be applied so as to impede 17
the development of projects in hard-to-develop 18
areas. Such a determination shall not be con-19
strued to be a representation or warranty as to 20
the feasibility or viability of the project. 21
‘‘(C) D
ETERMINATION MADE WHEN CRED -22
IT AMOUNT APPLIED FOR AND WHEN BUILDING 23
PLACED IN SERVICE.— 24
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‘‘(i) IN GENERAL.—A determination 1
under subparagraph (A) shall be made as 2
of each of the following times: 3
‘‘(I) The application for the 4
housing credit dollar amount. 5
‘‘(II) The allocation of the hous-6
ing credit dollar amount. 7
‘‘(III) The date the building is 8
placed in service. 9
‘‘(ii) C
ERTIFICATION AS TO AMOUNT 10
OF OTHER SUBSIDIES .—Prior to each de-11
termination under clause (i), the taxpayer 12
shall certify to the housing credit agency 13
the full extent of all Federal, State, and 14
local subsidies which apply (or which the 15
taxpayer expects to apply) with respect to 16
the building. 17
‘‘(m) R
EGULATIONS.—The Secretary shall prescribe 18
such regulations as may be necessary or appropriate to 19
carry out the purposes of this section, including— 20
‘‘(1) regulations dealing with— 21
‘‘(A) projects which include more than 1 22
building or only a portion of a building, or 23
‘‘(B) buildings which are placed in service 24
in portions, 25
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‘‘(2) regulations providing for the application of 1
this section to short taxable years, 2
‘‘(3) regulations preventing the avoidance of the 3
rules of this section, 4
‘‘(4) regulations providing the opportunity for 5
housing credit agencies to correct administrative er-6
rors and omissions with respect to allocations and 7
record keeping within a reasonable period after their 8
discovery, taking into account the availability of reg-9
ulations and other administrative guidance from the 10
Secretary, and 11
‘‘(5) in consultation with the Secretary of 12
Housing and Urban Development, regulations or 13
guidance to promote uniform definitions and to 14
streamline requirements for with respect to qualified 15
working families buildings which receive funding 16
from programs administrated by the Department of 17
Housing and Urban Development, including pro-18
grams authorized by Native American Housing As-19
sistance and Self-Determination Act of 1996.’’. 20
(b) T
REATMENT AS PART OFGENERALBUSINESS 21
C
REDIT.—Section 38(b) of the Internal Revenue Code of 22
1986 is amended by striking ‘‘plus’’ at the end of para-23
graph (40), by striking the period at the end of paragraph 24
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(41) and inserting ‘‘, plus’’, and by adding at the end the 1
following new paragraph: 2
‘‘(42) the working families housing credit deter-3
mined under section 42A(a).’’. 4
(c) R
EDUCTION INBASIS.—Section 1016(a) of the 5
Internal Revenue Code of 1986 is amended— 6
(1) by striking ‘‘and’’ at the end of paragraph 7
(37); 8
(2) by redesignating paragraph (38) as para-9
graph (39); and 10
(3) by inserting after paragraph (37) the fol-11
lowing new paragraph: 12
‘‘(38) to the extent provided in section 13
42A(i)(8), and’’. 14
(d) T
REATMENTUNDERBASEEROSIONMINIMUM 15
T
AX.—Section 59A(b)(4) of he Internal Revenue Code of 16
1986 is amended by redesignating subparagraphs (B) and 17
(C) as subparagraphs (C) and (D), respectively, and by 18
inserting after subparagraphs (A) the following new sub-19
paragraph: 20
‘‘(B) the working families housing credit 21
determined under section 42A(a),’’. 22
(e) C
ONFORMINGAMENDMENTSRELATING TOLOW- 23
I
NCOMEHOUSINGTAXCREDIT.—Section 42(n) of the In-24
ternal Revenue Code of 1986 is amended— 25
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(1) by striking ‘‘regulations’’ in the matter pre-1
ceding paragraph (1), 2
(2) by inserting ‘‘regulations’’ before ‘‘dealing 3
with’’ in paragraph (1), 4
(3) by inserting ‘‘regulations’’ before ‘‘pro-5
viding’’ in paragraphs (2) and (4), 6
(4) by inserting ‘‘regulations’’ before ‘‘pre-7
venting’’ in paragraph (3), 8
(5) by striking ‘‘and’’ at the end of paragraph 9
(3), 10
(6) by striking the period at the end of para-11
graph (4) and inserting ‘‘, and’’, and 12
(7) by adding at the end the following new 13
paragraph: 14
‘‘(5) in consultation with the Secretary of 15
Housing and Urban Development, regulations or 16
guidance to promote uniform definitions and to 17
streamline requirements with respect to qualified 18
low-income buildings which receive funding from 19
programs administrated by the Department of Hous-20
ing and Urban Development, including programs au-21
thorized by Native American Housing Assistance 22
and Self-Determination Act of 1996.’’. 23
(f) C
ONFORMINGAMENDMENTS.— 24
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(1) Section 45L(e) of the Internal Revenue 1
Code of 1986 is amended by inserting ‘‘or 42A’’ 2
after ‘‘42’’. 3
(2) Section 50(c)(3)(C) of such Code is amend-4
ed by inserting ‘‘or 42A’’ after ‘‘42’’. 5
(3) Section 55(c)(1) of such Code is amended 6
by inserting ‘‘42A(j),’’ before ‘‘45(e)(11)(C)’’. 7
(4) Subsections (i)(3)(C), (i)(6)(B)(i), and 8
(k)(1) of section 469 of such Code are each amended 9
by inserting ‘‘or 42A’’ after ‘‘42’’. 10
(5) The table of sections for subpart D of part 11
IV of subchapter A of chapter 1 of such Code is 12
amended by inserting after the item relating to sec-13
tion 42 the following new item: 14
‘‘Sec. 42A. Working families housing credit.’’. 
(g) EFFECTIVEDATE.—The amendments made by 15
this section shall apply to buildings placed in service after 16
December 31, 2025, in taxable years ending after such 17
date. 18
SEC. 4. LOANS AND GRANTS FOR INFRASTRUCTURE 19
PROJECTS IN CONNECTION WITH QUALIFIED 20
WORKING FAMILIES HOUSING PROJECTS. 21
(a) I
NGENERAL.—The Secretary shall make grants 22
and below-market-rate loans (as the Secretary determines 23
appropriate) to local governments in rural and exurban 24
areas for covered infrastructure projects carried out in 25
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connection with the development of qualified working fam-1
ilies housing projects. 2
(b) C
OVEREDINFRASTRUCTURE PROJECTS.—For 3
purposes of this section— 4
(1) I
N GENERAL.—The term ‘‘covered infra-5
structure project’’ means projects for electricity, 6
waters, sewers, local access roads, and such other 7
projects as the Secretary determines appropriate. 8
(2) C
LEAN ENERGY PRIORITIZATION .—With re-9
spect to any infrastructure project for electricity, the 10
Secretary shall give priority to clean energy projects. 11
(c) O
THERDEFINITIONS AND SPECIALRULES.— 12
Terms used in this section which are also used in section 13
42A of the Internal Revenue Code of 1986 shall have the 14
same meaning when used in this section as when used in 15
such section of such Code. Requirements similar to the 16
requirements of section 45(b)(7) of such Code shall apply 17
with respect to infrastructure projects with respect to 18
which grants or loans are made under this section. 19
(d) A
UTHORIZATION OF APPROPRIATIONS.—There 20
are authorized to be appropriated $100,000,000 to carry 21
out the purposes of this section. 22
Æ 
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