[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9246 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 9246
To amend the Internal Revenue Code of 1986 to disallow the deduction of
certain expenses relating to ownership of single-family homes by
specified large investors, to impose an excise tax on the sale of such
homes by such investors, to establish the neighborhood homes tax
credit, and to prohibit Federal mortgage assistance relating to certain
large investors.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
October 28, 2022
Mr. Khanna (for himself, Ms. Porter, and Mr. Takano) introduced the
following bill; which was referred to the Committee on Ways and Means,
and in addition to the Committee on Financial Services, for a period to
be subsequently determined by the Speaker, in each case for
consideration of such provisions as fall within the jurisdiction of the
committee concerned
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to disallow the deduction of
certain expenses relating to ownership of single-family homes by
specified large investors, to impose an excise tax on the sale of such
homes by such investors, to establish the neighborhood homes tax
credit, and to prohibit Federal mortgage assistance relating to certain
large investors.
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 ``Stop Wall Street Landlords Act of
2022''.
SEC. 2. DISALLOWANCE OF DEDUCTION OF CERTAIN EXPENSES RELATED TO
SINGLE-FAMILY HOMES HELD BY SPECIFIED LARGE INVESTORS.
(a) In General.--Part IX of subchapter B of Chapter 1 of subtitle A
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 280I. CERTAIN EXPENSES RELATED TO SINGLE-FAMILY HOMES HELD BY
SPECIFIED LARGE INVESTORS.
``(a) In General.--In the case of a specified large investor, no
deduction shall be allowed under this chapter for the following
expenses relating to the ownership of a single-family home:
``(1) Amounts paid or incurred for the interest on a
mortgage relating to such single-family home or to insure such
single-family home.
``(2) Depreciation of such single-family home.
``(b) Specified Large Investor.--For purposes of this section--
``(1) In general.--The term `specified large investor'
means any person for any taxable year if the aggregate fair
market value of all assets of such person (reduced by the
aggregate debts of the taxpayer) exceeds $100,000,000 at any
time during such taxable year.
``(2) Treatment of controlled groups.--For purposes of this
subsection--
``(A) In general.--All persons which are part of a
controlled group (within the meaning of section 1563(a)
applied by substituting `more than 50 percent' for `at
least 80 percent' each place it appears) shall be
treated as 1 person.
``(B) Nonincorporated persons under common
control.--Under regulations or other guidance provided
by the Secretary, principles similar to the principles
of subparagraph (A) shall apply to a group of persons
under common control where 1 or more of such persons is
not a corporation.
``(3) Government entities and certain tax-exempt
entities.--Such term shall not include either of the following:
``(A) Any governmental entity.
``(B) Any organization which is described in
section 501(c)(3) and exempt from tax under section
501(a).
``(c) Single-Family Home.--
``(1) In general.--For purposes of this section, the term
`single-family home' means any real property located in the
United States if such property includes at least 1 dwelling
unit and not more than 4 dwelling units.
``(2) Exception for federally-assisted buildings.--For
purposes of this section--
``(A) In general.--Such term shall not include any
federally-assisted building.
``(B) Federally-assisted building.--The term
`federally-assisted building' means any building--
``(C) which is substantially assisted, financed, or
operated under section 8 of the United States Housing
Act of 1937, section 221(d)(3), 221(d)(4), or 236 of
the National Housing Act, section 515 of the Housing
Act of 1949, or any other housing program administered
by the Department of Housing and Urban Development or
by the Rural Housing Service of the Department of
Agriculture,
``(D) with respect to which a credit is allowed to
the taxpayer under section 42, or
``(E) for which financing is provided by a
qualified bond (within the meaning of section 141).
``(d) Exceptions.--
``(1) Principal residence.--In the case of a specified
large investor who is an individual, subsection (a) shall not
apply to any single-family home if such home is used as the
principal residence of such investor.
``(2) Original construction or substantial
rehabilitation.--Subsection (a) shall not apply with respect to
a single-family home originally constructed or substantially
rehabilitated (as defined in section 47(c)) by the taxpayer.''.
(b) Clerical Amendment.--The table of sections for part IX of
subchapter B of chapter 1 of such Code is amended by inserting after
the item relating to section 280H the following new item:
``Sec. 280I. Certain expenses related to single-family homes held by
specified large investors.''.
(c) Effective Date.--The amendments made by this section shall
apply to amounts paid or incurred and depreciation that occurs after
the date that is 18 months after the date of the enactment of this Act.
SEC. 3. EXCISE TAX ON TRANSFERS OF SINGLE-FAMILY HOMES BY SPECIFIED
LARGE INVESTORS.
(a) In General.--Subchapter C of chapter 36 of subtitle D of the
Internal Revenue Code of 1986 is amended to read as follows:
``Subchapter C--Tax on Transfers of Single-family Homes by Specified
Large Investors
``Sec. 4471. Tax on transfers of single-family homes by specified large
investors.
``SEC. 4471. TAX ON TRANSFERS OF SINGLE-FAMILY HOMES BY SPECIFIED LARGE
INVESTORS.
``(a) In General.--There is hereby imposed a tax on the sale or
transfer of a single-family home by a specified large investor in an
amount equal to the sale price of the single-family home.
``(b) Specified Large Investor; Single Family Home.--For purposes
of this section, the terms `specified large investor' and `single-
family home' shall have the respective meanings given such terms in
section 280I.
``(c) Special Rules.--Rules similar to the rules of subsections
(b)(2), (d)(1), and (d)(2) of 280I shall apply for purposes of this
section.''.
(b) Clerical Amendment.--The table of subchapters for chapter 36 of
subtitle D of such Code is amended by adding after the item relating to
subchapter B the following new item:
``Subchapter C. Tax on Transfers of Single-Family Homes by Specified
Large Investors.''.
(c) Effective Date.--The amendments made by this section shall
apply to sales and transfers occurring after the date that is 18 months
after the date of the enactment of this Act.
SEC. 4. NEIGHBORHOOD HOMES CREDIT.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by inserting after
section 42 the following new section:
``SEC. 42A. NEIGHBORHOOD HOMES CREDIT.
``(a) Allowance of Credit.--For purposes of section 38, the
neighborhood homes credit determined under this section for the taxable
year is, with respect to each qualified residence sold by the taxpayer
during such taxable year in an affordable sale, the lesser of--
``(1) the excess (if any) of--
``(A) the reasonable development costs paid or
incurred by the taxpayer with respect to such qualified
residence, over
``(B) the sale price of such qualified residence
(reduced by any reasonable expenses paid or incurred by
the taxpayer in connection with such sale), or
``(2) 35 percent of the lesser of--
``(A) the eligible development costs paid or
incurred by the taxpayer with respect to such qualified
residence, or
``(B) 80 percent of the national median sale price
for new homes (as determined pursuant to the most
recent census data available as of the date on which
the neighborhood homes credit agency makes an
allocation for the qualified project).
``(b) Development Costs.--For purposes of this section--
``(1) Reasonable development costs.--
``(A) In general.--The term `reasonable development
costs' means amounts paid or incurred for the
acquisition of buildings and land, construction,
substantial rehabilitation, demolition of structures,
or environmental remediation, to the extent that the
neighborhood homes credit agency determines that such
amounts meet the standards specified pursuant to
subsection (f)(1)(C) (as of the date on which
construction or substantial rehabilitation is
substantially complete, as determined by such agency)
and are necessary to ensure the financial feasibility
of such qualified residence.
``(B) Considerations in making determination.--In
making the determination under subparagraph (A), the
neighborhood homes credit agency shall consider--
``(i) the sources and uses of funds and the
total financing,
``(ii) any proceeds or receipts generated
or expected to be generated by reason of tax
benefits, and
``(iii) the reasonableness of the
developmental costs and fees.
``(2) Eligible development costs.--The term `eligible
development costs' means the amount which would be reasonable
development costs if the amounts taken into account as paid or
incurred for the acquisition of buildings and land did not
exceed 75 percent of such costs determined without regard to
any amount paid or incurred for the acquisition of buildings
and land.
``(3) Substantial rehabilitation.--The term `substantial
rehabilitation' means amounts paid or incurred for
rehabilitation of a qualified residence if such amounts exceed
the greater of--
``(A) $20,000, or
``(B) 20 percent of the amounts paid or incurred by
the taxpayer for the acquisition of buildings and land
with respect to such qualified residence.
``(4) Construction and rehabilitation only after allocation
taken into account.--
``(A) In general.--The terms `reasonable
development costs' and `eligible development costs'
shall not include any amount paid or incurred before
the date on which an allocation is made to the taxpayer
under subsection (e) with respect to the qualified
project of which the qualified residence is part unless
such amount is paid or incurred for the acquisition of
buildings or land.
``(B) Land and building acquisition costs.--Amounts
paid or incurred for the acquisition of buildings or
land shall be included under paragraph (A) only if paid
or incurred not more than 3 years before the date on
which the allocation referred to in subparagraph (A) is
made. If the taxpayer acquired any building or land
from an entity (or any related party to such entity)
that holds an ownership interest in the taxpayer, then
such entity must also have acquired such property
within such 3-year period, and the acquisition cost
included under subparagraph (A) with respect to the
taxpayer shall not exceed the amount such entity paid
or incurred to acquire such property.
``(c) Qualified Residence.--For purposes of this section--
``(1) In general.--The term `qualified residence' means a
residence that--
``(A) is real property affixed on a permanent
foundation,
``(B) is--
``(i) a house which is comprised of 4 or
fewer residential units,
``(ii) a condominium unit, or
``(iii) a house or an apartment owned by a
cooperative housing corporation (as defined in
section 216(b)),
``(C) is part of a qualified project with respect
to the neighborhood homes credit agency has made an
allocation under subsection (e), and
``(D) is located in a qualified census tract
(determined as of the date of such allocation).
``(2) Qualified census tract.--
``(A) In general.--The term `qualified census
tract' means a census tract--
``(i) which--
``(I) has a median family income
which does not exceed 80 percent of the
median family income for the applicable
area,
``(II) has a poverty rate that is
not less than 130 percent of the
poverty rate of the applicable area,
and
``(III) has a median value for
owner-occupied homes that does not
exceed the median value for owner-
occupied homes in the applicable area,
``(ii) which--
``(I) is located in a city which
has a population of not less than
50,000 and such city has a poverty rate
that is not less than 150 percent of
the poverty rate of the applicable
area,
``(II) has a median family income
which does not exceed the median family
income for the applicable area, and
``(III) has a median value for
owner-occupied homes that does not
exceed 80 percent of the median value
for owner-occupied homes in the
applicable area,
``(iii) which--
``(I) is located in a
nonmetropolitan county,
``(II) has a median family income
which does not exceed the median family
income for the applicable area, and
``(III) has been designated by a
neighborhood homes credit agency under
this clause, or
``(iv) which is not otherwise a qualified
census tract and is located in a disaster area
(as defined in section 7508A(d)(3)), but only
with respect to credits allocated in any period
during which the President of the United States
has determined that such area warrants
individual or individual and public assistance
by the Federal Government under the Robert T.
Stafford Disaster Relief and Emergency
Assistance Act.
``(B) Applicable area.--The term `applicable area'
means--
``(i) in the case of a metropolitan census
tract, the metropolitan area in which such
census tract is located, and
``(ii) in the case of a census tract other
than a census tract described in clause (i),
the State.
``(d) Affordable Sale.--For purposes of this section--
``(1) In general.--The term `affordable sale' means a sale
to a qualified homeowner of a qualified residence that the
neighborhood homes credit agency certifies as meeting the
standards promulgated under subsection (f)(1)(D) for a price
that does not exceed--
``(A) in the case of any qualified residence not
described in subparagraph (B), (C), or (D), the amount
equal to the product of 4 multiplied by the median
family income for the applicable area (as determined
pursuant to the most recent census data available as of
the date of the contract for such sale),
``(B) in the case of a house comprised of 2
residential units, 125 percent of the amount described
in subparagraph (A),
``(C) in the case of a house comprised of 3
residential units, 150 percent of the amount described
in subparagraph (A), or
``(D) in the case of a house comprised of 4
residential units, 175 percent of the amount described
in subparagraph (A).
``(2) Qualified homeowner.--The term `qualified homeowner'
means, with respect to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as
the principal residence of such individual, and
``(B) whose family income (determined as of the
date that a binding contract for the affordable sale of
such residence is entered into) is 140 percent or less
of the median family income for the applicable area in
which the qualified residence is located.
``(e) Credit Ceiling and Allocations.--
``(1) Credit limited based on allocations to qualified
projects.--
``(A) In general.--The credit allowed under
subsection (a) to any taxpayer for any taxable year
with respect to one or more qualified residences which
are part of the same qualified project shall not exceed
the excess (if any) of--
``(i) the amount allocated by the
neighborhood homes credit agency under this
paragraph to such taxpayer with respect to such
qualified project, over
``(ii) the aggregate amount of credit
allowed under subsection (a) to such taxpayer
with respect to qualified residences which are
a part of such qualified project for all prior
taxable years.
``(B) Deadline for completion.--No credit shall be
allowed under subsection (a) with respect to any
qualified residence unless the affordable sale of such
residence is during the 5-year period beginning on the
date of the allocation to the qualified project of
which such residence is a part (or, in the case of a
qualified residence to which subsection (i) applies,
the rehabilitation of such residence is completed
during such 5-year period).
``(2) Limitations on allocations to qualified projects.--
``(A) Allocations limited by state neighborhood
homes credit ceiling.--The aggregate amount allocated
to taxpayers with respect to qualified projects by the
neighborhood homes credit agency of any State for any
calendar year shall not exceed the State neighborhood
homes credit amount of such State for such calendar
year.
``(B) Set-aside for certain projects involving
qualified nonprofit organizations.--Rules similar to
the rules of section 42(h)(5) shall apply for purposes
of this section.
``(3) Determination of state neighborhood homes credit
ceiling.--
``(A) In general.--The State neighborhood homes
credit amount for a State for a calendar year is an
amount equal to the sum of--
``(i) the greater of--
``(I) the product of $3 ($6 in the
case of calendar year 2025), multiplied
by the State population (determined in
accordance with section 146(j)), or
``(II) $4,000,000 ($8,000,000 in
the case of calendar year 2025), and
``(ii) any amount previously allocated to
any taxpayer with respect to any qualified
project by the neighborhood homes credit agency
of such State which can no longer be allocated
to any qualified residence because the 5-year
period described in paragraph (1)(B) expires
during calendar year.
``(B) Termination of additional amounts.--The
amount determined under subparagraph (A)(i) shall be
zero with respect to any calendar year beginning after
December 31, 2025.
``(C) 3-year carryforward of unused limitation.--
The State neighborhood homes credit amount for a State
for a calendar year shall be increased by the excess
(if any) of the State neighborhood homes credit amount
for such State for the preceding calendar year over the
aggregate amount allocated by the neighborhood homes
credit agency of such State during such preceding
calendar year. Any amount carried forward under the
preceding sentence shall not be carried past the third
calendar year after the calendar year in which such
credit amount originally arose, determined on a first-
in, first-out basis.
``(f) Responsibilities of Neighborhood Homes Credit Agencies.--
``(1) In general.--Notwithstanding subsection (e), the
State neighborhood homes credit dollar amount shall be zero for
a calendar year unless the neighborhood homes credit agency of
the State--
``(A) allocates such amount pursuant to a qualified
allocation plan of the neighborhood homes credit
agency,
``(B) allocates not more than 20 percent of amounts
allocated in the previous year (or for allocations made
in 2022, not more than 20 percent of the neighborhood
homes credit ceiling for such year) to projects with
respect to qualified residences which--
``(i) are located in census tracts
described in subsection (c)(2)(A)(iii),
(c)(2)(A)(iv), (i)(5), or
``(ii) are not located in a qualified
census tract but meet the requirements of
(i)(8),
``(C) promulgates standards with respect to
reasonable qualified development costs and fees,
``(D) promulgates standards with respect to
construction quality,
``(E) in the case of any neighborhood homes credit
agency which makes an allocation to a qualified project
which includes any qualified residence to which
subsection (i) applies, promulgates standards with
respect to protecting the owners of such residences,
including the capacity of such owners to pay
rehabilitation costs not covered by the credit provided
by this section and providing for the disclosure to
such owners of their rights and responsibilities with
respect to the rehabilitation of such residences, and
``(F) submits to the Secretary (at such time and in
such manner as the Secretary may prescribe) an annual
report specifying--
``(i) the amount of the neighborhood homes
credits allocated to each qualified project for
the previous year,
``(ii) with respect to each qualified
residence completed in the preceding calendar
year--
``(I) the census tract in which
such qualified residence is located,
``(II) with respect to the
qualified project that includes such
qualified residence, the year in which
such project received an allocation
under this section,
``(III) whether such qualified
residence was new, substantially
rehabilitated and sold to a qualified
homeowner, or substantially
rehabilitated pursuant to subsection
(i),
``(IV) the eligible development
costs of such qualified residence,
``(V) the amount of the
neighborhood homes credit with respect
to such qualified residence,
``(VI) the sales price of such
qualified residence, if applicable, and
``(VII) the family income of the
qualified homeowner (expressed as a
percentage of the applicable area
median family income for the location
of the qualified residence), and
``(iii) such other information as the
Secretary may require.
``(2) Qualified allocation plan.--For purposes of this
subsection, the term `qualified allocation plan' means any plan
which--
``(A) sets forth the selection criteria to be used
to prioritize qualified projects for allocations of
State neighborhood homes credit dollar amounts,
including--
``(i) the need for new or substantially
rehabilitated owner-occupied homes in the area
addressed by the project,
``(ii) the expected contribution of the
project to neighborhood stability and
revitalization, including the impact on
neighborhood residents,
``(iii) the capability and prior
performance of the project sponsor, and
``(iv) the likelihood the project will
result in long-term homeownership,
``(B) has been made available for public comment,
and
``(C) provides a procedure that the neighborhood
homes credit agency (or any agent or contractor of such
agency) shall follow for purposes of--
``(i) identifying noncompliance with any
provisions of this section, and
``(ii) notifying the Internal Revenue
Service of any such noncompliance of which the
agency becomes aware.
``(g) Repayment.--
``(1) In general.--
``(A) Sold during 5-year period.--If a qualified
residence is sold during the 5-year period beginning
immediately after the affordable sale of such qualified
residence referred to in subsection (a), the seller
(with respect to the sale during such 5-year period)
shall transfer an amount equal to the repayment amount
to the relevant neighborhood homes credit agency.
``(B) Use of repayments.--A neighborhood homes
credit agency shall use any amount received pursuant to
subparagraph (A) only for purposes of qualified
projects.
``(2) Repayment amount.--For purposes of paragraph (1)(A),
the repayment amount is an amount equal to 50 percent of the
gain from the sale to which the repayment relates, reduced by
20 percent for each year of the 5-year period referred to in
paragraph (1)(A) which ends before the date of such sale.
``(3) Lien for repayment amount.--A neighborhood homes
credit agency receiving an allocation under this section shall
place a lien on each qualified residence that is built or
rehabilitated as part of a qualified project for an amount such
agency deems necessary to ensure potential repayment pursuant
to paragraph (1)(A).
``(4) Denial of deductions if converted to rental
housing.--If, during the 5-year period described in paragraph
(1), an individual who owns a qualified residence fails to use
such qualified residence as such individual's principal
residence for any period of time, no deduction shall be allowed
for expenses paid or incurred by such individual with respect
to renting, during such period of time, such qualified
residence.
``(5) Waiver.--The neighborhood homes credit agency may
waive the repayment required under paragraph (1)(A) in the case
of homeowner experiencing a hardship.
``(h) Other Definitions and Special Rules.--For purposes of this
section--
``(1) Neighborhood homes credit agency.--The term
`neighborhood homes credit agency' means the agency designated
by the governor of a State as the neighborhood homes credit
agency of the State.
``(2) Qualified project.--The term `qualified project'
means a project that a neighborhood homes credit agency
certifies will build or substantially rehabilitate one or more
qualified residences.
``(3) Determinations of family income.--Rules similar to
the rules of section 143(f)(2) shall apply for purposes of this
section.
``(4) Possessions treated as states.--The term `State'
includes the District of Columbia and the possessions of the
United States.
``(5) Special rules related to condominiums and cooperative
housing corporations.--
``(A) Determination of development costs.--In the
case of a qualified residence described in clause (ii)
or (iii) of subsection (c)(1)(A), the reasonable
development costs and eligible development costs of
such qualified residence shall be an amount equal to
such costs, respectively, of the entire condominium or
cooperative housing property in which such qualified
residence is located, multiplied by a fraction--
``(i) the numerator of which is the total
floor space of such qualified residence, and
``(ii) the denominator of which is the
total floor space of all residences within such
property.
``(B) Tenant-stockholders of cooperative housing
corporations treated as owners.--In the case of a
cooperative housing corporation (as such term is
defined in section 216(b)), a tenant-stockholder shall
be treated as owning the house or apartment which such
person is entitled to occupy.
``(6) Related party sales not treated as affordable
sales.--
``(A) In general.--A sale between related persons
shall not be treated as an affordable sale.
``(B) Related persons.--For purposes of this
paragraph, a person (in this subparagraph referred to
as the `related person') is related to any person if
the related person bears a relationship to such person
specified in section 267(b) or 707(b)(1), or the
related person and such person are engaged in trades or
businesses under common control (within the meaning of
subsections (a) and (b) of section 52). For purposes of
the preceding sentence, in applying section 267(b) or
707(b)(1), `10 percent' shall be substituted for `50
percent'.
``(7) Inflation adjustment.--
``(A) In general.--In the case of a calendar year
after 2022, the dollar amounts in subsections
(b)(3)(A), (e)(3)(A)(i)(I), (e)(3)(A)(i)(II), and
(i)(2)(C) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year by substituting `calendar year
2021' for `calendar year 2016' in subparagraph
(A)(ii) thereof.
``(B) Rounding.--
``(i) In the case of the dollar amounts in
subsection (b)(3)(A) and (i)(2)(C), any
increase under paragraph (1) which is not a
multiple of $1,000 shall be rounded to the
nearest multiple of $1,000.
``(ii) In the case of the dollar amount in
subsection (e)(3)(A)(i)(I), any increase under
paragraph (1) which is not a multiple of $0.01
shall be rounded to the nearest multiple of
$0.01.
``(iii) In the case of the dollar amount in
subsection (e)(3)(A)(i)(II), any increase under
paragraph (1) which is not a multiple of
$100,000 shall be rounded to the nearest
multiple of $100,000.
``(8) Report.--
``(A) In general.--The Secretary shall annually
issue a report, to be made available to the public,
which contains the information submitted pursuant to
subsection (f)(1)(F).
``(B) De-identification.--The Secretary shall
ensure that any information made public pursuant to
paragraph (1) excludes any information that would allow
for the identification of qualified homeowners.
``(9) List of qualified census tracts.--The Secretary of
Housing and Urban Development shall, for each year, make
publicly available a list of qualified census tracts under--
``(A) on a combined basis, clauses (i) and (ii) of
subsection (c)(2)(A),
``(B) clause (iii) of such subsection, and
``(C) subsection (i)(5)(A).
``(i) Application of Credit With Respect to Owner-Occupied
Rehabilitations.--
``(1) In general.--In the case of a qualified
rehabilitation by the taxpayer of any qualified residence which
is owned (as of the date that the written binding contract
referred to in paragraph (3) is entered into) by a specified
homeowner, the rules of paragraphs (2) through (7) shall apply.
``(2) Alternative credit determination.--In the case of any
qualified residence described in paragraph (1), the
neighborhood homes credit determined under subsection (a) with
respect to such residence shall (in lieu of any credit
otherwise determined under subsection (a) with respect to such
residence) be allowed in the taxable year during which the
qualified rehabilitation is completed (as determined by the
neighborhood homes credit agency) and shall be equal to the
least of--
``(A) the excess (if any) of--
``(i) the amounts paid or incurred by the
taxpayer for the qualified rehabilitation of
the qualified residence to the extent that such
amounts are certified by the neighborhood homes
credit agency (at the time of the completion of
such rehabilitation) as meeting the standards
specified pursuant to subsection (f)(1)(C),
over
``(ii) any amounts paid to such taxpayer
for such rehabilitation,
``(B) 50 percent of the amounts described in
subparagraph (A)(i), or
``(C) $50,000.
``(3) Qualified rehabilitation.--
``(A) In general.--For purposes of this subsection,
the term `qualified rehabilitation' means a
rehabilitation or reconstruction performed pursuant to
a written binding contract between the taxpayer and the
qualified homeowner if the amount paid or incurred by
the taxpayer in the performance of such rehabilitation
or reconstruction exceeds the dollar amount in effect
under subsection (b)(3)(A).
``(B) Application of limitation to expenses paid or
incurred after allocation.--A rule similar to the rule
of section (b)(4) shall apply for purposes of this
subsection.
``(4) Specified homeowner.--For purposes of this
subsection, the term `qualified homeowner' means, with respect
to a qualified residence, an individual--
``(A) who owns and uses such qualified residence as
the principal residence of such individual as of the
date that the written binding contract referred to in
paragraph (3) is entered into, and
``(B) whose family income (determined as of such
date) does not exceed the median family income for the
applicable area (with respect to the census tract in
which the qualified residence is located).
``(5) Additional census tracts in which owner-occupied
residences may be located.--In the case of any qualified
residence described in paragraph (1), the term `qualified
census tract' includes any census tract which--
``(A) meets the requirements of subsection
(c)(2)(A)(i) without regard to subclause (III) thereof,
and
``(B) is designated by the neighborhood homes
credit agency for purposes of this paragraph.
``(6) Modification of repayment requirement.--In the case
of any qualified residence described in paragraph (1),
subsection (g) shall be applied by beginning the 5-year period
otherwise described therein on the date on which the qualified
owner acquired the residence.
``(7) Related parties.--Paragraph (1) shall not apply if
the taxpayer is the owner of the qualified residence described
in paragraph (1) or is related (within the meaning of
subsection (h)(6)(B)) to such owner.
``(8) Pyrrhotite remediation.--The requirement of
subsection (c)(1)(C) shall not apply to a qualified
rehabilitation under this subsection of a qualified residence
that is documented by an engineer's report and core testing to
have a foundation that is adversely impacted by pyrrhotite or
other iron sulfide minerals.
``(j) Regulations.--The Secretary shall prescribe such regulations
as may be necessary or appropriate to carry out the purposes of this
section, including regulations that prevent avoidance of the rules, and
abuse of the purposes, of this section.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) is amended by striking ``plus'' at the end of paragraph (39), by
striking the period at the end of paragraph (40) and inserting ``,
plus'', and by adding at the end the following new paragraph:
``(41) the neighborhood homes credit determined under
section 42A(a),''.
(c) Credit Allowed Against Alternative Minimum Tax.--Section
38(c)(4)(B), as amended by the preceding provisions of this Act, is
amended by redesginating clauses (iv) through (xiii) as clauses (v)
through (xiv), respectively, and by inserting after clause (iii) the
following new clause:
``(iv) the credit determined under section
42A,''.
(d) Conforming Amendments.--
(1) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of
section 469 are each amended by inserting ``or 42A'' after
``section 42''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 is amended by inserting after the
item relating to section 42 the following new item:
``Sec. 42A. Neighborhood homes credit.''.
(e) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
SEC. 5. PROHIBITIONS ON FEDERAL MORTGAGE ASSISTANCE.
(a) Fannie Mae and Freddie Mac.--Subpart A of part 2 of subtitle A
of title XIII of the Housing and Community Development Act of 1992 (12
U.S.C. 4541 et seq.) is amended by adding at the end the following new
section:
``SEC. 1329. PROHIBITION RELATING TO SPECIFIED LARGE INVESTORS.
``The Director shall, by regulation, prohibit the enterprises from
newly purchasing any mortgage on a single family housing or any portion
thereof (or any interest in such a mortgage), and from newly lending on
the security of or securitizing any such mortgage under which the
mortgagee is a specified large investor (as such term is defined in
section 280I of the Internal Revenue Code of 1986).''.
(b) Ginnie Mae.--Section 302(c) of the National Housing Act (12
U.S.C. 1717(c)) is amended by adding at the end the following new
paragraph:
``(6) The Association may not newly guarantee the payment
of principal of or interest on any trust certificate or other
security based or backed by a trust or pool that contains, or
purchase or acquire, any mortgage under which the mortgagee is
a specified large investor (as such term is defined in section
280I of the Internal Revenue Code of 1986).''.
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