[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2571 Introduced in Senate (IS)]
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116th CONGRESS
1st Session
S. 2571
To amend the Internal Revenue Code of 1986 to allow a business credit
for gain from the sale of real property for use as a manufactured home
community, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
September 26, 2019
Mrs. Shaheen (for herself and Ms. Smith) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a business credit
for gain from the sale of real property for use as a manufactured home
community, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Manufactured Housing Community
Sustainability Act of 2019''.
SEC. 2. FINDINGS.
The Congress finds that--
(1) more than 17,000,000 people live in manufactured homes
and benefit from high-quality affordable homes which provide
stability;
(2) owners of manufactured homes have disproportionately
low-income households, and in 2013, the median annual household
income for living in manufactured housing was $28,400;
(3) approximately 75 percent of manufactured home
households earn less than $50,000 per year;
(4) more than 10 percent of veterans in the United States
live in manufactured homes;
(5) in late 1990, manufactured housing represented \2/3\ of
the new affordable housing produced in the United States and
remains a significant source of unsubsidized affordable housing
in the United States;
(6) in 2015, the average cost per square foot for a new
manufactured home was 48 dollars, less than half of the cost
per square foot for a new-site built, structure-only home,
which was $101;
(7) in 2009, 43 percent of all new homes that sold for less
than $150,000 were manufactured homes;
(8) manufactured homes account for 23 percent of new home
sales under $200,000;
(9) more than 50,000 manufactured home communities, also
referred to as ``mobile home parks'', exist throughout the
United States;
(10) more than 2,900,000 manufactured homes are placed in
manufactured home communities;
(11) manufactured home communities provide critical
affordable housing, but receive very little Federal, State, or
local funds to subsidize the cost of manufactured homes;
(12) manufactured home owners in such communities may own
the home, but they do not own the land under the home, which
leaves the home owners vulnerable to rent increases, arbitrary
rule enforcement, and in the case of a manufactured home
community owner converting the land to some other use,
community closure;
(13) an eviction or closure of a manufactured home
community is very disruptive to a resident who may be unable to
pay the thousands of dollars it takes to move the manufactured
home or find a new location for the manufactured home;
(14) in an effort to preserve a crucial source of
affordable housing within the past two decades, a national
network of housing providers has helped residents purchase and
own the land under the manufactured home community, and manage
the manufactured home community;
(15) nationwide, there are more than 1,000 stable,
permanent ownership cooperatives or nonprofit-owned
developments in more than a dozen States;
(16) members of manufactured home communities continue to
own such homes individually, own an equal share of the land
beneath the entire manufactured home community, participate in
the governing of the community, and elect a board of directors
who make major decisions within the manufactured home community
by a democratic vote;
(17) in New Hampshire, more than 30 percent of manufactured
home communities are owned by residents;
(18) resident-owned cooperatives and nonprofit owned
communities have also flourished in Vermont, Massachusetts,
Rhode Island, Washington, Oregon, and Minnesota;
(19) nationwide, only 2 percent of all manufactured home
communities are resident or nonprofit-owned;
(20) manufactured home community owners often prefer to
devise such property tax free, rather than selling the
community, in order to avoid capital gain taxes;
(21) when the owner of a manufactured home community dies,
the heirs of the owner frequently sell the community to the
highest bidder which results in displacement for dozens and
sometimes hundreds of families; and
(22) in order to preserve manufactured home communities in
the future, a Federal tax benefit should be established to
induce manufactured home community owners to sell such
properties to residents that the owners have known for decades,
or to nonprofit organizations.
SEC. 3. TAX CREDIT FOR MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR
NONPROFIT ENTITY.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45T. MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR NONPROFIT
ENTITY.
``(a) Allowance of Credit.--For purposes of section 38, the
manufactured home community sale credit determined under this section
for any taxable year is an amount equal to 75 percent of the qualified
gain received by the taxpayer during the taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Qualified gain.--The term `qualified gain' means gain
from the sale or exchange of real property to a qualified
manufactured home community cooperative or corporation if--
``(A) the real property is acquired for use as a
manufactured home community,
``(B) the seller (or any related person) owned the
property for the entire 2-year period ending on the day
before the sale or exchange, and
``(C) the property is transferred subject to a
binding covenant that the property will be used as a
manufactured home community for not less than 50 years
(or, in the case of a manufactured home community
located in a State the laws of which restrict such
covenant to a lesser term, the maximum permissible term
allowed under such State laws).
``(2) Manufactured home community.--The term `manufactured
home community' means a community comprised primarily of
manufactured homes used solely for residential purposes and
owned by a manufactured home community cooperative or
corporation.
``(3) Qualified manufactured home community cooperative or
corporation.--
``(A) In general.--The term `qualified manufactured
home community cooperative or corporation' means a
cooperative or a nonprofit corporation established
pursuant to the laws of the State in which the property
used as a manufactured home community is located, and
which--
``(i) in the case of a community owned by a
nonprofit corporation whose membership
interests are sold on a nonappreciating basis,
has only 1 class of membership and such class
consists solely of residents, and
``(ii) in the case of a community owned by
a cooperative, has not more than 2 classes of
membership, and such classes consist solely of
residents and a tax-exempt organization.
``(B) Governance.--An entity shall not be treated
as a qualified manufactured home community cooperative
or corporation unless governance of the entity is
carried out by members elected to a board of directors
with voting structured equitably among all members.
``(C) Member.--The term `member' means--
``(i) an individual who--
``(I) has attained the age of 18,
``(II) is entitled to be a member
by reason of--
``(aa) the membership
interest of the individual to
execute an occupancy agreement
with the manufactured home
community cooperative nonprofit
with respect to a site in the
manufactured home community in
order to establish a
manufactured home which is
owned by the individual, or
``(bb) permission from the
manufactured community
cooperative or corporation, the
member's trust, or other
entity, and
``(III) is a resident of the
manufactured home community, and
``(ii) a tax exempt organization.
``(4) Membership interest.--The term `membership interest'
means--
``(A) an ownership interest in a manufactured home
community cooperative or corporation, or
``(B) a membership interest in a manufactured home
community nonprofit corporation.
``(5) Manufactured home.--The term `manufactured home'
means a structure which is transportable in one or more
sections, which--
``(A) in traveling mode, is 8 body feet or more in
width and 40 body feet or more in length, or, when
erected on site, is 320 square feet or more,
``(B) is built on a permanent chassis and designed
to be used as a dwelling (with or without a permanent
foundation when connected to required utilities) and
includes plumbing, heating, and electrical heating
systems, and
``(C) in the case of a structure manufactured after
June 15, 1976, is certified as meeting the Manufactured
Home Construction and Safety Standards issued under the
National Manufactured Housing Construction and Safety
Standards Act of 1974 (42 U.S.C. 5401 et seq.) by the
Department of Housing and Urban Development and
displays a label of such certification on the exterior
of each transportable section.
``(c) Special Rules.--
``(1) Related person.--For purposes of subsection
(b)(1)(B), a person is related to the seller if--
``(A) such person bears a relationship to the
seller as specified in section 267(b) or 707(b)(1), or
``(B) such person and the seller are engaged in
trades or businesses under common control within the
meanings of subsections (a) and (b) of section 52.
``(2) Election by both seller and buyer.--The credit is
allowable under this section only if--
``(A) both the seller and the purchaser of the real
property execute an affidavit representing that the
sale meets the requirements of subsection (b)(1), and
the purchaser acknowledges liability for the recapture
of the credit under subsection (d) in case of any
violation described in such subsection,
``(B) the purchaser of the real property records
the affidavit, and
``(C) the affidavit is referenced in the deed to
the real property.
``(3) Requirement.--The seller shall include a copy of the
affidavit representing the sale with the return of tax.
``(d) Tax Upon Violation of Covenant.--There is imposed a tax on
the buyer for a violation of the covenant specified in subsection
(b)(1)(C). The amount of such tax shall be 20 percent of the net
proceeds after settlement for the sale or exchange of the real property
referred to in subsection (b)(1). For purposes of section 501(a), the
tax imposed by this subsection shall not be treated as a tax imposed by
this subtitle.
``(e) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary to carry out this section, including
the recapture under subsection (d).''.
(b) Credit Allowed as Part of General Business Credit.--
Section 38(b) of the Internal Revenue Code of 1986 is
amended--
(1) by striking ``plus'' at the end of paragraph (31);
(2) by striking the period at the end of paragraph (32) and
inserting ``, plus''; and
(3) by adding at the end the following new paragraph:
``(33) the manufactured home community sale credit
determined under section 45T(a).''.
(c) Conforming Amendments.--
(1) Subsection (c) of section 196 of the Internal Revenue
Code of 1986 is amended--
(A) by striking ``and'' at the end of paragraph
(13);
(B) by striking the period at the end of paragraph
(14) and inserting ``, and''; and
(C) by adding at the end the following new
paragraph:
``(15) the manufactured home community sale credit
determined under section 45T(a).''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such the Internal Revenue Code of
1986 is amended by adding at the end the following new item:
``Sec. 45T. Manufactured home community sale to residents or nonprofit
entity.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
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