Sponsors (6)
Excludes certain shared-appreciation mortgage receipts and related sale gains from gross income for qualifying borrowers and homes.
Official title: To amend the Internal Revenue Code of 1986 to exclude from gross income certain proceeds of shared appreciation mortgage contracts.
Introduced March 26, 2026 by Blake D. Moore · Last progress March 26, 2026
The bill makes shared-appreciation mortgage financing more attractive and widely available—potentially expanding affordable paths to homeownership for low- and moderate-income buyers—while creating risks of reduced federal revenue, added complexity, and higher long-term costs for some borrowers and potential tax-code gaming.
Potential homebuyers, including low- and moderate-income households: can use shared-appreciation second liens (up to 49% of purchase price) to finance purchases with little or no monthly payment, materially expanding access to homeownership for buyers who cannot afford higher monthly mortgages.
Low- and moderate-income borrowers (≤140% AMI): benefit from tax-favored treatment that encourages lenders to offer shared-appreciation mortgage (SAM) products, which can lower effective housing costs and make equity-sharing financing more available.
Homeowners who later sell: can exclude SAM-attributable gain on disposition from taxable income, reducing tax liability when they sell and improving net proceeds from a sale that used SAM financing.
Borrowers, especially low-income homeowners: may face higher long-term costs because lenders could shift costs into larger appreciation shares or stricter underwriting, resulting in bigger payouts at sale or reduced eligibility.
Taxpayers and the federal budget: lose revenue from the tax exclusion for SAM-related returns, which could increase deficits or require offsets that affect other programs or taxes.
Borrowers and lenders: face added transaction costs and complexity because eligibility and technical rules (AMI tests, first-lien requirements, subordinate-lien limits) increase legal and administrative burdens and could limit program uptake.
Based on analysis of 2 sections of legislative text.
Creates a new federal tax exclusion for certain shared-appreciation mortgages (SAMs) used on owner-occupied 1–4 family homes: amounts a lender receives that exceed the original principal repaid under a qualifying SAM, and gains attributable to those SAMs on sale, are excluded from the borrower’s gross income if the borrower met area median income limits at loan origination. The rule applies to amounts received after December 31, 2025. The bill defines detailed eligibility rules for what counts as a qualifying SAM, borrower income limits (140% of tract AMI), property type (principal residence), lien position (subordinate second lien), and repayment triggers tied to events affecting the first lien.