# Understanding the Neighborhood Homes Investment Act

This bill creates a new tax credit designed to help developers and homeowners build or fix up affordable homes in struggling neighborhoods. Think of it as the government offering money back on taxes to incentivize investment in lower-income communities that need housing revitalization.

Here's how it works in practice: If a developer builds a new home or substantially rehabilitates an existing one in a designated low-income neighborhood and sells it at an affordable price, they can claim a tax credit worth up to 35 percent of their development costs. Similarly, if a homeowner buys one of these affordable homes, the seller gets a tax break based on the difference between what the home cost to build or fix up and what they sold it for. The goal is to make these homes cheaper for buyers while still giving developers and sellers financial incentives to participate. The credit is capped at certain limits—for instance, homes generally can't sell for more than four times the area's median family income to qualify.

The bill targets specific neighborhoods: low-income census tracts where the median family income is below 80 percent of the area average and poverty rates are significantly higher than surrounding areas. Each state gets a pool of tax credits to allocate—roughly $6 per resident, with a minimum of $8 million annually. State housing agencies decide which projects get funded based on factors like neighborhood need, project quality, and likelihood of creating lasting homeownership. There's an important catch: if someone sells their home within five years, they have to repay part of the tax benefit they received, scaled down each year. This encourages long-term homeownership rather than quick flipping. The bill takes effect for tax years beginning after 2021.

Neighborhood Homes Investment Act

Higgins, Brian

Neighborhood Homes Investment Act This bill establishes a new business-related tax credit to finance home building and rehabilitation in neighborhoods that meet certain eligibility criteria relating to poverty rates, income, and home values. The credit is limited to 35% of the lesser of the qualified development cost (i.e., the cost of construction, substantial rehabilitation, demolition, and environmental remediation of residential properties) or 80% of the national median sale price for new homes. The credit applies to single family homes containing four or fewer residential units, condominiums, or houses or apartments owned by cooperative housing corporations.