119-hr2854

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2854 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 2854

 To amend the Internal Revenue Code of 1986 to establish a tax credit 
 for neighborhood revitalization, and for other purposes.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 April 10, 2025

Mr. Kelly of Pennsylvania (for himself, Mr. Larson of Connecticut, Mr. 
Carey, Ms. Sewell, Mr. Buchanan, Mr. Davis of Illinois, Mrs. Miller of 
West Virginia, Mr. Panetta, Mr. Feenstra, Mr. Kustoff, Ms. Malliotakis, 
and Mr. Moran) introduced the following bill; which was referred to the 
 Committee on Ways and Means

_______________________________________________________________________

 A BILL

 To amend the Internal Revenue Code of 1986 to establish a tax credit 
 for neighborhood revitalization, and for other purposes.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Neighborhood Homes Investment Act''.

SEC. 2. FINDINGS AND SENSE OF CONGRESS.

    (a) 

=== Findings ===
-Congress finds the following:

    (1) Experts have determined that it could take nearly a 
 decade to address the housing shortage in the United States, in 
 large part due to increasing housing prices and insufficient 
 supply.

    (2) The housing supply shortage disproportionately impacts 
 low-income and distressed communities.

    (3) Homeownership is a primary source of household wealth 
 and neighborhood stability. Many distressed communities have 
 low rates of homeownership and lack quality, affordable starter 
 homes, while many individuals who own their homes have 
 difficulty securing financing for home repairs and 
 improvements.

    (4) Housing construction in distressed communities is 
 prevented by the value gap, the difference between the cost to 
 develop a home and the sale price of the home.

    (5) The Neighborhood Homes Investment Act can close these 
 financing gaps to increase housing development and 
 rehabilitation in distressed communities.

    (b) Sense of Congress.--It is the sense of Congress that the 
neighborhood homes credit (as added under 

section 3 of this Act) should 
be an activity administered in a manner which--

    (1) revitalizes distressed communities in rural and urban 
 geographies;

    (2) minimizes application burdens on small businesses 
 applying for such credit; and

    (3) is consistent with the Fair Housing Act of 1968 (42 
 U.S.C. 3601 et seq.).

SEC. 3. NEIGHBORHOOD HOMES CREDIT.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by inserting after 

section 42 the following new section:

``

SEC. 42A. NEIGHBORHOOD HOMES CREDIT.

 ``

    (a) Allowance of Credit.--For purposes of 

section 38, the 
neighborhood homes credit determined under this section for the taxable 
year is, with respect to each qualified residence sold by the taxpayer 
during such taxable year in an affordable sale, the lesser of--
 ``

    (1) an amount equal to--
 ``
        (A) the excess (if any) of--
 ``
            (i) the reasonable development costs paid 
 or incurred by the taxpayer with respect to 
 such qualified residence, over
 ``
            (ii) the sale price of such qualified 
 residence (reduced by any reasonable expenses 
 paid or incurred by the taxpayer in connection 
 with such sale), or
 ``
        (B) if the neighborhood homes credit agency 
 determines it is necessary to ensure financial 
 feasibility, an amount not to exceed 120 percent of the 
 amount under subparagraph
        (A) ,
 ``

    (2) 40 percent of the eligible development costs paid or 
 incurred by the taxpayer with respect to such qualified 
 residence, or
 ``

    (3) 32 percent of the national median sale price for new 
 homes (as determined pursuant to the most recent census data 
 available as of the date on which the neighborhood homes credit 
 agency makes an allocation for the qualified project).
 ``

    (b) Development Costs.--For purposes of this section--
 ``

    (1) Reasonable development costs.--
 ``
        (A) In general.--The term `reasonable development 
 costs' means amounts paid or incurred for the 
 acquisition of buildings and land, construction, 
 substantial rehabilitation, demolition of structures, 
 or environmental remediation, to the extent that the 
 neighborhood homes credit agency determines that such 
 amounts meet the standards specified pursuant to 
 subsection

    (f)

    (1)
            (D) (as of the date on which 
 construction or substantial rehabilitation is 
 substantially complete, as determined by such agency) 
 and are necessary to ensure the financial feasibility 
 of such qualified residence.
 ``
        (B) Considerations in making determination.--In 
 making the determination under subparagraph
        (A) , the 
 neighborhood homes credit agency shall consider--
 ``
            (i) the sources and uses of funds and the 
 total financing,
 ``
            (ii) any proceeds or receipts generated 
 or expected to be generated by reason of tax 
 benefits, and
 ``
            (iii) the reasonableness of the 
 developmental costs and fees.
 ``

    (2) Eligible development costs.--The term `eligible 
 development costs' means the amount which would be reasonable 
 development costs if the amounts taken into account as paid or 
 incurred for the acquisition of buildings and land did not 
 exceed 75 percent of such costs determined without regard to 
 any amount paid or incurred for the acquisition of buildings 
 and land.
 ``

    (3) Substantial rehabilitation.--The term `substantial 
 rehabilitation' means amounts paid or incurred for 
 rehabilitation of a qualified residence if such amounts exceed 
 the greater of--
 ``
        (A) $25,000, or
 ``
        (B) 20 percent of the amounts paid or incurred by 
 the taxpayer for the acquisition of buildings and land 
 with respect to such qualified residence.
 ``

    (4) Construction and rehabilitation only after allocation 
 taken into account.--
 ``
        (A) In general.--The terms `reasonable 
 development costs' and `eligible development costs' 
 shall not include any amount paid or incurred before 
 the date on which an allocation is made to the taxpayer 
 under subsection

    (e) with respect to the qualified 
 project of which the qualified residence is part unless 
 such amount is paid or incurred for the acquisition of 
 buildings or land.
 ``
        (B) Land and building acquisition costs.--Amounts 
 paid or incurred for the acquisition of buildings or 
 land shall be included under paragraph
        (A) only if paid 
 or incurred not more than 3 years before the date on 
 which the allocation referred to in subparagraph
        (A) is 
 made. If the taxpayer acquired any building or land 
 from an entity (or any related party to such entity) 
 that holds an ownership interest in the taxpayer, then 
 such entity must also have acquired such property 
 within such 3-year period, and the acquisition cost 
 included under subparagraph
        (A) with respect to the 
 taxpayer shall not exceed the amount such entity paid 
 or incurred to acquire such property.
 ``
            (c) Qualified Residence.--For purposes of this section--
 ``

    (1) In general.--The term `qualified residence' means a 
 residence that--
 ``
        (A) is real property (constructed on-site or 
 manufactured off-site) affixed on a permanent 
 foundation,
 ``
        (B) is--
 ``
            (i) a house which is comprised of 4 or 
 fewer residential units,
 ``
            (ii) a condominium unit, or
 ``
            (iii) a house or an apartment owned by a 
 cooperative housing corporation (as defined in 
 

section 216

    (b) ),
 ``
            (C) is part of a qualified project with respect 
 to which the neighborhood homes credit agency has made 
 an allocation under subsection

    (e) , and
 ``
            (D) is located in a qualified census tract 
 (determined as of the date of such allocation).
 ``

    (2) Qualified census tract.--
 ``
        (A) In general.--The term `qualified census 
 tract' means a census tract--
 ``
            (i) which--
 ``
            (I) has a median family income 
 which does not exceed 80 percent of the 
 median family income for the applicable 
 area,
 ``
            (II) has a poverty rate that is 
 not less than 130 percent of the 
 poverty rate of the applicable area, 
 and
 ``
            (III) has a median value for 
 owner-occupied homes that does not 
 exceed the median value for owner-
 occupied homes in the applicable area,
 ``
            (ii) which--
 ``
            (I) is located in a city which 
 has a population of not less than 
 50,000 and such city has a poverty rate 
 that is not less than 150 percent of 
 the poverty rate of the applicable 
 area,
 ``
            (II) has a median family income 
 which does not exceed the median family 
 income for the applicable area, and
 ``
            (III) has a median value for 
 owner-occupied homes that does not 
 exceed 80 percent of the median value 
 for owner-occupied homes in the 
 applicable area,
 ``
            (iii) which--
 ``
            (I) is located in a 
 nonmetropolitan county,
 ``
            (II) has a median family income 
 which does not exceed the median family 
 income for the applicable area, and
 ``
            (III) has been designated by a 
 neighborhood homes credit agency under 
 this clause,
 ``
            (iv) which is not otherwise a qualified 
 census tract and is located in a disaster area 
 (as defined in 

section 7508A
            (d) (3) ), but only 
 with respect to credits allocated in any period 
 during which the President of the United States 
 has determined that such area warrants 
 individual or individual and public assistance 
 by the Federal Government under the Robert T. 
 Stafford Disaster Relief and Emergency 
 Assistance Act, or
 ``
            (v) which is not otherwise a qualified 
 census tract and is identified by the 
 neighborhood homes credit agency, through 
 methodologies detailed in the qualified 
 allocation plan, as having a shortage of 
 affordable owner-occupied homes.
 ``
        (B) Applicable area.--The term `applicable area' 
 means--
 ``
            (i) in the case of a metropolitan census 
 tract, the metropolitan area in which such 
 census tract is located, and
 ``
            (ii) in the case of a census tract other 
 than a census tract described in clause
            (i) , 
 the State.
 ``
            (d) Affordable Sale.--For purposes of this section--
 ``

    (1) In general.--The term `affordable sale' means a sale 
 to a qualified homeowner of a qualified residence that the 
 neighborhood homes credit agency certifies as meeting the 
 standards promulgated under subsection

    (f)

    (1)
            (D) for a price 
 that does not exceed--
 ``
        (A) in the case of any qualified residence not 
 described in subparagraph
        (B) ,
            (C) , or
            (D) , the amount 
 equal to the product of 4 multiplied by the median 
 family income for the applicable area (as determined 
 pursuant to the most recent census data available as of 
 the date of the contract for such sale),
 ``
        (B) in the case of a house comprised of 2 
 residential units, 125 percent of the amount described 
 in subparagraph
        (A) ,
 ``
            (C) in the case of a house comprised of 3 
 residential units, 150 percent of the amount described 
 in subparagraph
        (A) , or
 ``
            (D) in the case of a house comprised of 4 
 residential units, 175 percent of the amount described 
 in subparagraph
        (A) .
 ``

    (2) Qualified homeowner.--The term `qualified homeowner' 
 means, with respect to a qualified residence, an individual--
 ``
        (A) who owns and uses such qualified residence as 
 the principal residence of such individual, and
 ``
        (B) whose family income (determined as of the 
 date that a binding contract for the affordable sale of 
 such residence is entered into) is 140 percent or less 
 of the median family income for the applicable area in 
 which the qualified residence is located.
 ``

    (e) Credit Ceiling and Allocations.--
 ``

    (1) Credit limited based on allocations to qualified 
 projects.--
 ``
        (A) In general.--The credit allowed under 
 subsection

    (a) to any taxpayer for any taxable year 
 with respect to one or more qualified residences which 
 are part of the same qualified project shall not exceed 
 the excess (if any) of--
 ``
            (i) the amount allocated by the 
 neighborhood homes credit agency under this 
 paragraph to such taxpayer with respect to such 
 qualified project, over
 ``
            (ii) the aggregate amount of credit 
 allowed under subsection

    (a) to such taxpayer 
 with respect to qualified residences which are 
 a part of such qualified project for all prior 
 taxable years.
 ``
        (B) Deadline for completion.--No credit shall be 
 allowed under subsection

    (a) with respect to any 
 qualified residence unless the affordable sale of such 
 residence is during the 5-year period beginning on the 
 date of the allocation to the qualified project of 
 which such residence is a part (or, in the case of a 
 qualified residence to which subsection
            (i) applies, 
 the rehabilitation of such residence is completed 
 during such 5-year period).
 ``

    (2) Limitations on allocations to qualified projects.--
 ``
        (A) Allocations limited by state neighborhood 
 homes credit ceiling.--The aggregate amount allocated 
 to taxpayers with respect to qualified projects by the 
 neighborhood homes credit agency of any State for any 
 calendar year shall not exceed the State neighborhood 
 homes credit amount of such State for such calendar 
 year.
 ``
        (B) Set-aside for certain projects involving 
 qualified nonprofit organizations.--Rules similar to 
 the rules of 

section 42

    (h)

    (5) shall apply for purposes 
 of this section.
 ``

    (3) Determination of state neighborhood homes credit 
 ceiling.--
 ``
        (A) In general.--The State neighborhood homes 
 credit amount for a State for a calendar year is an 
 amount equal to the sum of--
 ``
            (i) the greater of--
 ``
            (I) the product of $9, multiplied 
 by the State population (determined in 
 accordance with 

section 146

    (j) ), or
 ``
            (II) $12,000,000, and
 ``
            (ii) any amount previously allocated to 
 any taxpayer with respect to any qualified 
 project by the neighborhood homes credit agency 
 of such State which can no longer be allocated 
 to any qualified residence because the 5-year 
 period described in paragraph

    (1)
        (B) expires 
 during calendar year.
 ``
        (B) 3-year carryforward of unused limitation.--
 The State neighborhood homes credit amount for a State 
 for a calendar year shall be increased by the excess 
 (if any) of the State neighborhood homes credit amount 
 for such State for the preceding calendar year over the 
 aggregate amount allocated by the neighborhood homes 
 credit agency of such State during such preceding 
 calendar year. Any amount carried forward under the 
 preceding sentence shall not be carried past the third 
 calendar year after the calendar year in which such 
 credit amount originally arose, determined on a first-
 in, first-out basis.
 ``

    (f) Responsibilities of Neighborhood Homes Credit Agencies.--
 ``

    (1) In general.--Notwithstanding subsection

    (e) , the 
 State neighborhood homes credit dollar amount shall be zero for 
 a calendar year unless the neighborhood homes credit agency of 
 the State--
 ``
        (A) allocates such amount pursuant to a qualified 
 allocation plan of the neighborhood homes credit 
 agency,
 ``
        (B) subject to paragraph

    (2) , allocates not more 
 than 20 percent of amounts allocated in the previous 
 year (or for allocations made in the first allocation 
 year under this section, not more than 20 percent of 
 the neighborhood homes credit ceiling for such year) to 
 projects with respect to qualified residences which--
 ``
            (i) are located in census tracts 
 described in subsection
            (c) (2)
        (A)
            (iii) ,
            (c) (2)
        (A)
            (iv) ,
            (i) (5) , or
 ``
            (ii) are not located in a qualified 
 census tract but meet the requirements of 
 subsection
            (i) (8) ,
 ``
            (C) subject to paragraph

    (2) , in addition to any 
 allocation described in subparagraph
        (B) , allocates not 
 more than 20 percent of amounts allocated in the 
 previous year (or for allocations made in the first 
 allocation year under this section, not more than 20 
 percent of the neighborhood homes credit ceiling for 
 such year) to projects with respect to qualified 
 residences which are located in any census tract 
 described in subsection
            (c) (2)
        (A)
            (v) , except that, with 
 respect to any qualified residence located within such 
 census tract which is sold to a qualified homeowner, 
 subsection
            (d) (2) shall be applied by substituting `120 
 percent' for `140 percent',
 ``
            (D) promulgates standards with respect to 
 reasonable qualified development costs and fees,
 ``
        (E) promulgates standards with respect to 
 construction quality which are consistent with building 
 codes or other standards required by the State or local 
 jurisdiction in which the project is located,
 ``
        (F) in the case of any neighborhood homes credit 
 agency which makes an allocation to a qualified project 
 which includes any qualified residence to which 
 subsection
            (i) applies, promulgates standards with 
 respect to protecting the owners of such residences, 
 including the capacity of such owners to pay 
 rehabilitation costs not covered by the credit provided 
 by this section and providing for the disclosure to 
 such owners of their rights and responsibilities with 
 respect to the rehabilitation of such residences,
 ``
        (G) submits to the Secretary (at such time and in 
 such manner as the Secretary may prescribe) an annual 
 report specifying--
 ``
            (i) the amount of the neighborhood homes 
 credits allocated to each qualified project for 
 the previous year,
 ``
            (ii) with respect to each qualified 
 residence completed in the preceding calendar 
 year--
 ``
            (I) the census tract in which 
 such qualified residence is located,
 ``
            (II) with respect to the 
 qualified project that includes such 
 qualified residence, the year in which 
 such project received an allocation 
 under this section,
 ``
            (III) whether such qualified 
 residence was new, substantially 
 rehabilitated and sold to a qualified 
 homeowner, or substantially 
 rehabilitated pursuant to subsection
            (i) ,
 ``
            (IV) the eligible development 
 costs of such qualified residence,
 ``
            (V) the amount of the 
 neighborhood homes credit with respect 
 to such qualified residence,
 ``
            (VI) the sales price of such 
 qualified residence, if applicable, and
 ``
            (VII) the family income of the 
 qualified homeowner (expressed as a 
 percentage of the applicable area 
 median family income for the location 
 of the qualified residence), and
 ``
            (iii) such other information as the 
 Secretary may require,
 ``
        (H) makes available to the general public a 
 written explanation for any allocation of a 
 neighborhood homes credit dollar amount which is not 
 made in accordance with established priorities and 
 selection criteria of the neighborhood homes credit 
 agency, and
 ``
            (I) provide educational outreach on application 
 and compliance requirements, including for small 
 residential builders and remodelers.
 ``

    (2) Alternative for certain states.--
 ``
        (A) In general.--In the case of any State which, 
 for a calendar year, is an applicable State (as defined 
 in subparagraph
        (B) ), in lieu of the requirements under 
 subparagraphs
        (B) and
            (C) of paragraph

    (1) , the 
 neighborhood homes credit agency of the State may elect 
 to allocate not more than 40 percent of amounts 
 allocated in the previous year (or for allocations made 
 in the first allocation year under this section, not 
 more than 40 percent of the neighborhood homes credit 
 ceiling for such year) to projects with respect to 
 qualified residences which are described in either 
 subparagraph
        (B) or
            (C) of paragraph

    (1) .
 ``
        (B) Applicable state.--For purposes of this 
 paragraph, the term `applicable State' means a State 
 which, for purposes of the determining the amount under 
 subsection

    (e)

    (3)
        (A)
            (i) for the calendar year with 
 respect to such State, received the amount described in 
 subclause
            (II) of such subsection.
 ``

    (3) Qualified allocation plan.--For purposes of this 
 subsection, the term `qualified allocation plan' means any plan 
 which--
 ``
        (A) sets forth the selection criteria to be used 
 to prioritize qualified projects for allocations of 
 State neighborhood homes credit dollar amounts, 
 including--
 ``
            (i) the need for new or substantially 
 rehabilitated owner-occupied homes in the area 
 addressed by the project,
 ``
            (ii) the expected contribution of the 
 project to neighborhood stability and 
 revitalization, including the impact on 
 neighborhood residents,
 ``
            (iii) the capability and prior 
 performance of the project sponsor, and
 ``
            (iv) the likelihood the project will 
 result in long-term homeownership,
 ``
        (B) has been made available for public comment,
 ``
            (C) as determined by the neighborhood homes 
 credit agency, is likely to result in the selection of 
 highly qualified applicants while also minimizing, to 
 the extent practicable, application costs and barriers 
 to entry for small residential builders and re-
 modelers, and
 ``
            (D) provides a procedure that the neighborhood 
 homes credit agency (or any agent or contractor of such 
 agency) shall follow for purposes of--
 ``
            (i) identifying noncompliance with any 
 provisions of this section, and
 ``
            (ii) notifying the Internal Revenue 
 Service of any such noncompliance of which the 
 agency becomes aware.
 ``

    (g) Repayment.--
 ``

    (1) In general.--
 ``
        (A) Sold during 5-year period.--If a qualified 
 residence is sold during the 5-year period beginning 
 immediately after the affordable sale of such qualified 
 residence referred to in subsection

    (a) , the seller 
 shall transfer an amount equal to the repayment amount 
 to the relevant neighborhood homes credit agency.
 ``
        (B) Use of repayments.--A neighborhood homes 
 credit agency shall use any amount received pursuant to 
 subparagraph
        (A) only for purposes of qualified 
 projects.
 ``

    (2) Repayment amount.--For purposes of paragraph

    (1)
        (A) --
 ``
        (A) In general.--The repayment amount is an 
 amount equal to the applicable percentage of the gain 
 from the sale to which the repayment relates.
 ``
        (B) Applicable percentage.--For purposes of 
 subparagraph
        (A) , the applicable percentage is 50 
 percent, reduced by 10 percentage points for each year 
 of the 5-year period referred to in paragraph

    (1)
        (A) which ends before the date of such sale.
 ``

    (3) Lien for repayment amount.--A neighborhood homes 
 credit agency receiving an allocation under this section shall 
 place a lien on each qualified residence that is built or 
 rehabilitated as part of a qualified project for an amount such 
 agency deems necessary to ensure potential repayment pursuant 
 to paragraph

    (1)
        (A) .
 ``

    (4) Waiver.--
 ``
        (A) In general.--The neighborhood homes credit 
 agency may waive the repayment required under paragraph

    (1)
        (A) if the agency determines that making a repayment 
 would constitute a hardship to the seller.
 ``
        (B) Hardship.--For purposes of subparagraph
        (A) , 
 with respect to the seller, a hardship may include--
 ``
            (i) divorce,
 ``
            (ii) disability,
 ``
            (iii) illness, or
 ``
            (iv) any other hardship identified by the 
 neighborhood homes credit agency for purposes 
 of this paragraph.
 ``

    (h) Other Definitions and Special Rules.--For purposes of this 
section--
 ``

    (1) Neighborhood homes credit agency.--The term 
 `neighborhood homes credit agency' means the agency designated 
 by the governor of a State as the neighborhood homes credit 
 agency of the State.
 ``

    (2) Qualified project.--The term `qualified project' 
 means a project that a neighborhood homes credit agency 
 certifies will build or substantially rehabilitate one or more 
 qualified residences.
 ``

    (3) Determinations of family income.--Rules similar to 
 the rules of 

section 143

    (f)

    (2) shall apply for purposes of this 
 section.
 ``

    (4) Possessions treated as states.--The term `State' 
 includes the District of Columbia and the possessions of the 
 United States.
 ``

    (5) Special rules related to condominiums and cooperative 
 housing corporations.--
 ``
        (A) Determination of development costs.--In the 
 case of a qualified residence described in clause
            (ii) or
            (iii) of subsection
            (c) (1)
        (A) , the reasonable 
 development costs and eligible development costs of 
 such qualified residence shall be an amount equal to 
 such costs, respectively, of the entire condominium or 
 cooperative housing property in which such qualified 
 residence is located, multiplied by a fraction--
 ``
            (i) the numerator of which is the total 
 floor space of such qualified residence, and
 ``
            (ii) the denominator of which is the 
 total floor space of all residences within such 
 property.
 ``
        (B) Tenant-stockholders of cooperative housing 
 corporations treated as owners.--In the case of a 
 cooperative housing corporation (as such term is 
 defined in 

section 216

    (b) ), a tenant-stockholder shall 
 be treated as owning the house or apartment which such 
 person is entitled to occupy.
 ``

    (6) Related party sales not treated as affordable 
 sales.--
 ``
        (A) In general.--A sale between related persons 
 shall not be treated as an affordable sale.
 ``
        (B) Related persons.--For purposes of this 
 paragraph, a person (in this subparagraph referred to 
 as the `related person') is related to any person if 
 the related person bears a relationship to such person 
 specified in 

section 267

    (b) or 707

    (b)

    (1) , or the 
 related person and such person are engaged in trades or 
 businesses under common control (within the meaning of 
 subsections

    (a) and

    (b) of 

section 52). For purposes of 
 the preceding sentence, in applying 

section 267

    (b) or 
 707

    (b)

    (1) , `10 percent' shall be substituted for `50 
 percent'.
 ``

    (7) Inflation adjustment.--
 ``
        (A) In general.--In the case of a calendar year 
 after 2025, the dollar amounts in subsections

    (b)

    (3)
        (A) ,

    (e)

    (3)
        (A)
            (i) 
            (I) ,

    (e)

    (3)
        (A)
            (i) 
            (II) , and
            (i) (2)
            (C) shall each be increased by an amount equal 
 to--
 ``
            (i) such dollar amount, multiplied by
 ``
            (ii) the cost-of-living adjustment 
 determined under 

section 1

    (f)

    (3) for such 
 calendar year by substituting `calendar year 
 2024' for `calendar year 2016' in subparagraph
        (A)
            (ii) thereof.
 ``
        (B) Rounding.--
 ``
            (i) In the case of the dollar amounts in 
 subsections

    (b)

    (3)
        (A) and
            (i) (2)
            (C) , any 
 increase under paragraph

    (1) which is not a 
 multiple of $1,000 shall be rounded to the 
 nearest multiple of $1,000.
 ``
            (ii) In the case of the dollar amount in 
 subsection

    (e)

    (3)
        (A)
            (i) 
            (I) , any increase under 
 paragraph

    (1) which is not a multiple of $0.01 
 shall be rounded to the nearest multiple of 
 $0.01.
 ``
            (iii) In the case of the dollar amount in 
 subsection

    (e)

    (3)
        (A)
            (i) 
            (II) , any increase under 
 paragraph

    (1) which is not a multiple of 
 $100,000 shall be rounded to the nearest 
 multiple of $100,000.
 ``

    (8) Report.--
 ``
        (A) In general.--The Secretary shall annually 
 issue a report, to be made available to the public, 
 which contains the information submitted pursuant to 
 subsection

    (f)

    (1)
        (G) .
 ``
        (B) De-identification.--The Secretary shall 
 ensure that any information made public pursuant to 
 subparagraph
        (A) excludes any information that would 
 allow for the identification of qualified homeowners.
 ``

    (9) List of qualified census tracts.--The Secretary of 
 Housing and Urban Development shall, for each year, make 
 publicly available a list of qualified census tracts under--
 ``
        (A) on a combined basis, clauses
            (i) and
            (ii) of 
 subsection
            (c) (2)
        (A) ,
 ``
        (B) clause
            (iii) of such subsection, and
 ``
            (C) subsection
            (i) (5)
        (A) .
 ``

    (10) Denial of deductions if converted to rental 
 housing.--If, during the 5-year period beginning immediately 
 after the affordable sale of a qualified residence referred to 
 in subsection

    (a) , an individual who owns a qualified residence 
 (whether or not such individual was the purchaser in such 
 affordable sale) fails to use such qualified residence as such 
 individual's principal residence for any period of time, no 
 deduction shall be allowed for expenses paid or incurred by 
 such individual with respect to renting, during such period of 
 time, such qualified residence.
 ``
            (i) Application of Credit With Respect to Owner-Occupied 
Rehabilitations.--
 ``

    (1) In general.--In the case of a qualified 
 rehabilitation by the taxpayer of any qualified residence which 
 is owned (as of the date that the written binding contract 
 referred to in paragraph

    (3) is entered into) by a specified 
 homeowner, the rules of paragraphs

    (2) through

    (7) shall apply.
 ``

    (2) Alternative credit determination.--In the case of any 
 qualified residence described in paragraph

    (1) , the 
 neighborhood homes credit determined under subsection

    (a) with 
 respect to such residence shall (in lieu of any credit 
 otherwise determined under subsection

    (a) with respect to such 
 residence) be allowed in the taxable year during which the 
 qualified rehabilitation is completed (as determined by the 
 neighborhood homes credit agency) and shall be equal to the 
 least of--
 ``
        (A) the excess (if any) of--
 ``
            (i) the amounts paid or incurred by the 
 taxpayer for the qualified rehabilitation of 
 the qualified residence to the extent that such 
 amounts are certified by the neighborhood homes 
 credit agency (at the time of the completion of 
 such rehabilitation) as meeting the standards 
 specified pursuant to subsection

    (f)

    (1)
            (D) , 
 over
 ``
            (ii) any amounts paid to such taxpayer 
 for such rehabilitation,
 ``
        (B) 50 percent of the amounts described in 
 subparagraph
        (A)
            (i) , or
 ``
            (C) $50,000.
 ``

    (3) Qualified rehabilitation.--
 ``
        (A) In general.--For purposes of this subsection, 
 the term `qualified rehabilitation' means a 
 rehabilitation or reconstruction performed pursuant to 
 a written binding contract between the taxpayer and the 
 specified homeowner if the amount paid or incurred by 
 the taxpayer in the performance of such rehabilitation 
 or reconstruction exceeds the dollar amount in effect 
 under subsection

    (b)

    (3)
        (A) .
 ``
        (B) Application of limitation to expenses paid or 
 incurred after allocation.--A rule similar to the rule 
 of section

    (b)

    (4) shall apply for purposes of this 
 subsection.
 ``

    (4) Specified homeowner.--For purposes of this 
 subsection, the term `specified homeowner' means, with respect 
 to a qualified residence, an individual--
 ``
        (A) who owns and uses such qualified residence as 
 the principal residence of such individual as of the 
 date that the written binding contract referred to in 
 paragraph

    (3) is entered into, and
 ``
        (B) whose family income (determined as of such 
 date) does not exceed the median family income for the 
 applicable area (with respect to the census tract in 
 which the qualified residence is located).
 ``

    (5) Additional census tracts in which owner-occupied 
 residences may be located.--In the case of any qualified 
 residence described in paragraph

    (1) , the term `qualified 
 census tract' includes any census tract which--
 ``
        (A) meets the requirements of subsection
            (c) (2)
        (A)
            (i) without regard to subclause
            (III) thereof, 
 and
 ``
        (B) is designated by the neighborhood homes 
 credit agency for purposes of this paragraph.
 ``

    (6) Modification of repayment requirement.--In the case 
 of any qualified residence described in paragraph

    (1) , 
 subsection

    (g) shall be applied by beginning the 5-year period 
 otherwise described therein on the date on which the qualified 
 homeowner acquired such residence.
 ``

    (7) Related parties.--Paragraph

    (1) shall not apply if 
 the taxpayer is the owner of the qualified residence described 
 in paragraph

    (1) or is related (within the meaning of 
 subsection

    (h)

    (6)
        (B) ) to such owner.
 ``

    (8) Pyrrhotite remediation.--The requirement of 
 subsection
            (c) (1)
            (D) shall not apply to a qualified 
 rehabilitation under this subsection of a qualified residence 
 that is documented by an engineer's report and core testing to 
 have a foundation that is adversely impacted by pyrrhotite or 
 other iron sulfide minerals.
 ``

    (j) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section, including regulations that prevent avoidance of the rules, and 
abuse of the purposes, of this section.''.

    (b) Credit Allowed as Part of General Business Credit.--

Section 38

    (b) of the Internal Revenue Code of 1986 is amended by striking 
``plus'' at the end of paragraph

    (40) , by striking the period at the 
end of paragraph

    (41) and inserting ``, plus'', and by adding at the 
end the following new paragraph:
 ``

    (42) the neighborhood homes credit determined under 
 

section 42A

    (a) .''.
            (c) Credit Allowed Against Alternative Minimum Tax.--

Section 38
            (c) (4)
        (B) of the Internal Revenue Code of 1986 is amended by 
redesignating clauses
            (iv) through
            (xii) as clauses
            (v) through
            (xiii) , 
respectively, and by inserting after clause
            (iii) the following new 
clause:
 ``
            (iv) the credit determined under 

section 42A,''.
            (d) Basis Adjustments.--

    (1) Energy efficient home improvement credit.--

Section 25C

    (g) of the Internal Revenue Code of 1986 is amended by 
 adding after the first sentence the following new sentence: 
 ``This subsection shall not apply for purposes of determining 
 the eligible development costs or adjusted basis of any 
 building under 

section 42A.''.

    (2) Residential clean energy credit.--

Section 25D

    (f) of 
 such Code is amended by adding after the first sentence the 
 following new sentence: ``This subsection shall not apply for 
 purposes of determining the eligible development costs or 
 adjusted basis of any building under 

section 42A.''.

    (3) New energy efficient home credit.--

Section 45L

    (e) of 
 such Code is amended by inserting ``or for purposes of 
 determining the eligible development costs or adjusted basis of 
 any building under 

section 42A'' after ``

section 42''.

    (e) Exclusion From Gross Income.--Part III of subchapter B of 
chapter 1 of the Internal Revenue Code of 1986 is amended by inserting 
before 

section 140 the following new section:

``

SEC. 139J. STATE ENERGY SUBSIDIES FOR QUALIFIED RESIDENCES.

 ``

    (a) Exclusion From Gross Income.--Gross income shall not include 
the value of any subsidy provided to a taxpayer (whether directly or 
indirectly) by any State energy office (as defined in 

section 124

    (a) of 
the Energy Policy Act of 2005 (42 U.S.C. 15821

    (a) )) for purposes of any 
energy improvements made to a qualified residence (as defined in 

section 42A
            (c) (1) ).''.

    (f) Conforming Amendments.--

    (1) Subsections
            (i) (3)
            (C) ,
            (i) (6)
        (B)
            (i) , and

    (k)

    (1) of 
 

section 469 of the Internal Revenue Code of 1986 are each 
 amended by inserting ``or 42A'' after ``

section 42''.

    (2) The table of sections for subpart D of part IV of 
 subchapter A of chapter 1 of such Code is amended by inserting 
 after the item relating to 

section 42 the following new item:

``

Sec. 42A. Neighborhood homes credit.''.

    (3) The table of sections for part III of subchapter B of 
 chapter 1 of such Code is amended by inserting before the item 
 relating to 

section 140 the following new item:

``

Sec. 139J. State energy subsidies for qualified residences.''.

    (g) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2025.
 <all>