The “Neighborhood Homes Investment Act” Would Create New Federal Tax Credit to Offset Cost to Build or Renovate Affordable Housing
WASHINGTON, D.C. — U.S. Representative Abigail Spanberger backed bipartisan, bicameral legislation to create a new federal tax incentive to address the needs of Virginians facing financial barriers to buying a home.
The cost to build or rehab a home in many areas exceeds the price at which the home could be sold once completed — leading to a lack of private development. The Spanberger-backed Neighborhood Homes Investment Act would create a federal tax credit to cover eligible development costs in urban, suburban, and rural areas that can benefit from new or rehabbed affordable homes. These credits would offset the cost between building or renovating a home and the price at which the home can be sold — reducing a developer’s risk, encouraging investments in new and rehabbed housing, and expanding home ownership opportunities for Virginia families. Specifically, these credits would be awarded to project sponsors — developers, lenders, or local governments — by each state’s housing finance agency and received only after rehabilitation is completed and the property is occupied by an eligible homeowner. This legislation would also help current homeowners in these areas renovate and stay in their homes.
“Virginia remains a place where people want to live, work and retire, and raise their families — but the high cost of housing is keeping many Virginians locked out of home ownership,” said Spanberger. “This bipartisan legislation would incentivize developers to build and rehabilitate more affordable housing and help many Virginians own their own home. When we spur investment in communities facing a shortage of houses their residents can afford, more Virginians can be handed keys and a deed.”
The bipartisan Neighborhood Homes Investment Act is endorsed by the National Association of Realtors, Independent Community Bankers of America, National Urban League, UnidosUS, Habitat for Humanity, Habitat for Humanity Virginia, and local Habitat for Humanity affiliates in Virginia’s Seventh District.
“The Greater Fredericksburg Habitat for Humanity believes affordable housing plays a critical role in strong and stable communities. That is why we are thrilled that Representative Spanberger is sponsoring this new tax credit proposal, the Neighborhood Homes Investment Act (NHIA),” said Jayne Johnson, Executive Director, Greater Fredericksburg Habitat for Humanity, Inc. “The lack of move-in ready homes makes it difficult to attract or retain homebuyers, causing property values to decline. The NHIA could solve this problem by bridging the gap when the cost of building or renovating homes surpasses the price at which they can be sold, thus making renovation and new home construction possible.”
“Communities across the nation face critical housing shortages. New construction is critical, but just as vital is maintaining and preserving our current housing stock,” said Jason Tickle, President & CEO, Habitat for Humanity of Caroline County. “The Neighborhood Homes Investment Act provides critical tax incentives that will provide incentive for contractors and investors to rehabilitate our aging housing stock. This housing stock is critical to meet our housing needs for millions of low- and moderate-income families. I am grateful for Rep. Spanberger’s leadership in the commonwealth and across the nation on this critical bipartisan issue.”
Specifically, the Neighborhood Homes Investment Act would:
- Establish a federal tax credit for certain development costs for the acquisition, rehabilitation, or remediation of qualified owner-occupied homes, administered by state housing finance agencies.
- Require the U.S. Department of the Treasury to provide an annual report on the performance of the program.
- Calculate the maximum allowable credit as the lesser of the excess of development costs over the sales price, 35 percent of eligible development costs, or 28 percent of the national median price for new homes.
- Require that credits go to areas with poverty rates that are 130 percent or greater than the metro-area or state poverty rate, incomes that are 80 percent or less than the area’s median income, and home values that are below the metro-area or state median value.
- Require that homes constructed using the tax credit be sold only to homeowners making less than 140 percent of the area’s median income, that construction of the home be completed and sold to the homeowner before the credit becomes available, and that homes be sold at a price no more than four times the area’s median income.
The legislation is led in the U.S. House by U.S. Representatives Mike Kelly (R-PA-16) and Brian Higgins (D-NY-26). Companion legislation is led in the U.S. Senate by U.S. Senators Ben Cardin (D-MD) and Todd Young (R-IN).
Click here for the full bill text.
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