Sponsors (71)
Official title: To amend the Internal Revenue Code of 1986 to establish a tax credit for neighborhood revitalization, and for other purposes.
Introduced April 10, 2025 by Mike Kelly · Last progress April 10, 2025
The bill seeks to stimulate affordable owner‑occupied housing in distressed neighborhoods and help low‑income homebuyers and small builders, but does so with federal cost, allocation limits, and substantial compliance requirements that may constrain reach and complicate implementation.
Low‑income and distressed communities stand to gain more owner‑occupied housing through new construction and rehabilitation funded by the neighborhood homes credit, increasing local housing supply and neighborhood stability.
Homebuyers with qualifying incomes can purchase newly built or rehabilitated homes at lower effective prices because developers receiving the credit can reduce development costs and pass savings to buyers.
The bill requires administration consistent with the Fair Housing Act and related outreach, which can help ensure more equitable access to the credit and reduce discriminatory barriers for racial and income‑minority households.
Developers, homeowners, and applicants face substantial compliance, certification, reporting requirements and potential recapture if affordable‑sale rules are violated within five years, increasing administrative burden and risk of penalty.
Taxpayers could shoulder meaningful federal costs or tax expenditures to finance the neighborhood homes credit, increasing the federal budgetary burden.
State allocation ceilings could limit available credits in high‑need areas, leaving eligible affordable housing projects unfunded and reducing the program's reach where demand is highest.
Based on analysis of 3 sections of legislative text.
Creates a new Neighborhood Homes tax credit to subsidize the gap between development costs and low sale prices for affordable homes in distressed communities.
Creates a new federal tax credit called the Neighborhood Homes Credit to help developers and small builders close the "value gap" that prevents construction and sale of affordable new homes in distressed urban and rural communities. The credit reimburses part of the difference between reasonable development costs and low sale prices for qualified residences sold in affordable sales, subject to limits tied to development costs and national median new-home prices. The law defines eligible and reasonable development costs, sets formula caps (including percent-of-cost and percent-of-median-price limits), requires administration through designated neighborhood homes credit agencies, and treats the credit as a general business credit against federal tax liability.