Congressmen Mike Kelly (R-PA) and Brian Higgins (D-NY) today introduced the Neighborhood Homes Investment Act (H.R. 3940). The legislation, one of NCSHA’s top priorities, seeks to increase the supply of affordable for-sale housing through a new tax credit. Senators Ben Cardin (D-MD) and Todd Young (R-IN) introduced similar legislation (S. 657) in March.

The bill establishes the Neighborhood Homes Credit (NHC) to promote new construction or substantial rehabilitation of affordable, owner‐occupied housing located in distressed neighborhoods. Modeled after the Housing Credit, the NHC would allow project sponsors to claim a credit to cover the difference between the costs to rehabilitate a home in a distressed neighborhood, or build a new home on an empty lot, and the price for which the home is sold. The maximum credit amount would be the lesser of the excess of development costs over the sales price, 35 percent of development costs, or 28 percent of the national median price for new homes.

As with the Housing Credit, the program would be overseen by the Treasury Department and Internal Revenue Service, which would allocate credit authority to each state. Each state would be required to designate a single agency to award the credits, and each agency would be expected to develop a Qualified Allocation Plan for their NHC program.

Each state’s NHC allocation would be equal to its state population times $7, with a small-state minimum of $9 million. States would be allowed to carry forward unused credits for three additional years.

In addition to Kelly and Higgins, the legislation is cosponsored by Reps. Claudia Tenney (R-NY), Dale Kildee (D-MI), Randy Feenstra (R-IA), and Dwight Evans (D-PA). All cosponsors are members of the House Ways and Means Committee, which has jurisdiction over all tax legislation.