Sponsors (3)
The bill trades a federal cost and added compliance complexity for incentives, technical assistance, and permitting reforms intended to accelerate conversion of commercial buildings into housing and expand affordable supply—helpful for renters and local governments but uneven in who benefits and costly to implement.
Renters and prospective residents: increased housing supply as the bill combines a conversion tax credit/bonuses with technical assistance and permitting reforms that lower costs and speed projects.
Low-income renters: stronger incentives for affordable units because projects reserving ≥25% of units at income-targeted rents can receive an up-to-20% bonus and jurisdictions get help identifying public funding to finance affordability.
State and local housing agencies (and HUD): increased capacity and lower upfront planning risk through federal technical assistance, floor-plan/feasibility analyses, training, and sustained HUD funding to support conversions.
Taxpayers and the federal budget: the credit will reduce federal revenue and, together with the program operating appropriation, could increase fiscal pressure or divert funds from other priorities.
Developers, property owners, and small businesses: substantial administrative complexity and compliance burdens from certification, prevailing-wage rules, phased-conversion accounting, recapture rules, and permitting conditions.
Property owners and potential converters: several eligibility limits—exclusion of acquisition costs, exclusion for non–straight-line depreciation methods, and ineligibility when remaining short-term leases are shorter than the recovery period—will prevent some owners from claiming the credit.
Based on analysis of 3 sections of legislative text.
Creates a 15% tax credit for converting commercial buildings to housing with per-unit/building caps, bonuses for affordable units and prevailing wages, and funds HUD technical assistance.
Introduced January 16, 2025 by Mikie Sherrill · Last progress January 16, 2025
Creates a new federal tax credit to encourage converting commercial buildings into housing by giving owners a 15% credit of qualified conversion costs, subject to per-unit and per-building caps, and adds bonus increases for projects that provide rent-restricted affordable units or pay prevailing wages. Also directs the Department of Housing and Urban Development to set up a technical assistance advisory board and funds that board for five years to help state and local housing agencies plan and carry out commercial-to-residential conversions.