Sponsors (10)
The bill uses a new Neighborhood Homes Credit to drive locally targeted production and rehabilitation of affordable housing (and clean-energy upgrades), benefitting low- and moderate-income buyers and small builders, but does so at federal fiscal cost and with administrative complexity that could delay delivery, concentrate benefits with larger developers, and impose resale restrictions on short-term beneficiaries.
Low- and moderate-income homebuyers and householders in designated distressed/qualified tracts gain access to more newly built or substantially rehabilitated homes at below-market or AMI-capped prices because the Neighborhood Homes Credit subsidizes development in those tracts.
Residents of low-income and distressed communities receive increased rehab opportunities and financing support for repairs and improvements that help preserve property values and neighborhood stabilization.
Small and state/local residential builders face lower barriers and targeted support and outreach, encouraging local housing production and participation by smaller developers.
Federal taxpayers would shoulder fiscal costs from creating and expanding this credit (reducing federal revenue beginning in the 2026 tax year), increasing the deficit or requiring offsets elsewhere.
The credit risks being captured by larger or nonlocal developers rather than flowing to neighborhood residents, which would limit the statute’s intended local stabilization and affordable-housing outcomes.
Implementation and administrative design (allocation, reporting, and compliance rules) could be complex and discretionary, delaying benefit delivery, raising developers’ project costs, and slowing overall housing production.
Based on analysis of 3 sections of legislative text.
Establishes a new tax credit to subsidize development or substantial rehab of homes sold at affordable prices in distressed neighborhoods, with credit limits tied to costs and median new-home prices.
Introduced May 8, 2025 by Todd Young · Last progress May 8, 2025
Creates a new federal tax credit for developers and investors who build or substantially rehabilitate houses that are sold at affordable prices in distressed urban and rural neighborhoods. The credit is calculated per home and is limited by several tests tied to development costs, eligible costs, and a share of the national median new-home price, with rules about what counts as development costs and when costs are eligible. The rule gives a designated neighborhood homes credit agency authority to allocate credits and to determine reasonable development costs (including allowing up to 120% of certain cost gaps if necessary), aims to reduce financing gaps that block starter-home construction, and directs administration consistent with fair housing law while encouraging low application burden for small businesses.