Sponsors (4)
The bill makes shared-appreciation mortgage products more attractive and accessible—potentially expanding homeownership for lower-income buyers and reducing tax burdens on sale—while raising risks of higher long‑term costs for borrowers, lost federal revenue, added complexity, and potential tax‑avoidance opportunities.
Low- and moderate-income borrowers (≤140% AMI) gain access to shared-appreciation mortgage (SAM) financing that can reduce monthly housing costs and allow large subordinate liens (up to 49% of purchase price) without monthly payments, increasing access to homeownership.
Homeowners who sell their homes can exclude gain attributable to SAMs from taxable income, lowering tax liability at disposition and improving after-sale proceeds.
Lenders are encouraged to offer standardized, tax-favorable SAM products, which may increase the supply and innovation of affordable mortgage options for borrowers.
Borrowers — especially low-income homeowners — could face higher long-term costs if lenders respond by increasing shared-appreciation shares or applying stricter underwriting, shifting costs from monthly payments to larger sale-time payouts.
The tax exclusion for lenders could reduce federal tax revenue, potentially increasing deficits or requiring offsetting cuts or tax changes elsewhere.
Complex eligibility and technical rules (AMI tests, TILA first-lien requirement, subordinate lien limits) will increase transaction costs and legal/administrative complexity for lenders and borrowers.
Based on analysis of 2 sections of legislative text.
Excludes certain lender receipts and related gains from income for qualifying shared-appreciation second mortgages on owner-occupied homes for borrowers ≤140% AMI.
Introduced March 26, 2026 by Blake D. Moore · Last progress March 26, 2026
Creates a tax exclusion for certain shared appreciation second mortgages used on owner-occupied 1–4 family homes that meet income and property rules. Lenders’ receipts from qualifying shared-appreciation mortgages (amounts above original principal repaid) and gains attributable to those mortgages are excluded from gross income for federal tax purposes, with the rule applying to amounts received after December 31, 2025. Defines a qualifying shared appreciation mortgage (SAM) as a subordinate (second) lien on a principal residence that caps the lender’s share of appreciation, requires no periodic payments except the appreciation share, limits the mortgage amount to 49% of purchase price, and prohibits repayment before certain first-lien events. Borrower income and owner-occupancy tests limit which loans qualify.