Sponsors (2)
The bill trades easier, tax-favored transfers to qualified public/nonprofit housing operators to expand long-term affordable rental housing for increased compliance, long-term monitoring costs, and constraints (price caps and limited eligible buyers) that may reduce sellers' proceeds or deter some transactions.
Low-income renters and communities: easier preservation and creation of long-term (30-year) affordable rental housing because sellers can defer capital gains tax when transferring property to qualified public/nonprofit housing operators, making conversions to affordable units more financially feasible.
Sellers (taxpayers) and nonprofit buyers: sellers can defer capital gains tax and reinvest proceeds with flexibility because replacement property may include business or investment real estate, reducing immediate tax burdens and giving sellers more options for rollovers.
Nonprofit and public housing providers: the benefit is targeted to experienced, capacity-proven organizations (PHAs, TDHEs, CHDOs, qualified nonprofits), which helps direct resources to entities likely to successfully operate and maintain affordable units.
Sellers (taxpayers/homeowners): must obtain a qualified appraisal and notify the IRS within 90 days, increasing upfront paperwork, time, and compliance costs for property transfers under the program.
Taxpayers and government budgets: the IRS is required to audit and monitor compliance every 5 years for 30 years, creating ongoing administrative and enforcement costs that are borne by taxpayers and add long-term oversight burden.
Sellers (homeowners/taxpayers): the 30-year affordability covenant and appraisal-based price cap can reduce sale proceeds or deter some owners from selling under the program, slowing transactions or lowering compensation to sellers.
Based on analysis of 2 sections of legislative text.
Allows sellers to defer capital gains when selling property to qualified housing operators if a 30-year affordability covenant and reporting/compliance rules are met.
Creates a tax rule that lets sellers defer capital gain recognition when they sell real property to qualified housing operators for use as affordable housing or homeless shelters, if the property is bound by a 30-year affordability covenant and certain procedural requirements are met. The buyer must be an eligible public or nonprofit housing actor, the seller must notify the Treasury within 90 days and attach a qualified appraisal, and the IRS is authorized to audit compliance at least every five years during the 30-year period. Like-kind replacement treatment is expanded to include property held for productive business use or investment; the Treasury Secretary may issue regulations. The rule applies to sales and transfers after the law goes into effect.
Official title: To amend the Internal Revenue Code of 1986 to allow for nonrecognition of gain on real property sold for use as affordable housing.
Introduced July 22, 2026 by Scott Peters · Last progress July 22, 2026