Sponsors (6)
Official title: To amend the Internal Revenue Code of 1986 to provide tax credits for the conversion of commercial buildings to residential units, to provide support and technical assistance to State and local housing agencies to identify and advance housing conversion opportunities for underutilized commercial buildings, and for other purposes.
Introduced January 16, 2025 by Mikie Sherrill · Last progress January 16, 2025
The bill uses tax credits, bonuses, and technical assistance to accelerate conversion of vacant commercial space into housing—boosting affordable units, wages, and urban revitalization—but raises federal costs, increases administrative complexity, and tends to favor better‑resourced developers while creating potential local fiscal trade‑offs.
Owners converting office/commercial buildings to housing receive a nonrefundable tax credit (15% of qualified conversion expenditures), lowering project costs and making more conversions financially viable.
Low- and moderate-income renters are more likely to get new affordable rental units because the credit is increased (10–20% bonus) when projects reserve ≥25% of units at specified AMI levels.
Paying prevailing wages on conversion projects is incentivized with a 15% bonus, supporting higher pay for construction workers and improving job quality on these projects.
The package reduces federal revenue (tax credit) and authorizes additional spending (technical assistance program), increasing federal budgetary pressures and potentially adding to the deficit or crowding out other spending unless offset.
Complex eligibility, certification, interactions with other credits, and recapture rules create higher compliance costs for owners and administrative burden for the IRS and local partners.
Smaller developers or owners who cannot meet prevailing‑wage or rent‑restriction requirements may be excluded from bonus increases, concentrating benefits with larger firms and disadvantaging small owners.
Based on analysis of 3 sections of legislative text.
Adds a federal tax credit for converting commercial buildings to rental housing and creates a HUD advisory board with $5M/year to support conversions.
Creates a new federal tax credit to encourage converting commercial buildings into rental housing and sets up a HUD advisory board to help states and localities speed up such projects. The credit is generally 15% of qualified conversion expenditures, capped per unit and per building, with bonus increases for affordable-rent units and for projects that pay prevailing wages. HUD must form a technical-assistance advisory board and is authorized $5 million per year for 2025–2029 to support state and local conversion efforts.