Federal

Affordable Housing Equity Act of 2023

Source: Congress.gov · 738 words in original text

What This Bill Does

This bill changes how states distribute housing tax credits. It requires states to set aside a portion of their housing credits for buildings that serve households with very low incomes, and it increases the tax credit amount for these buildings to help make them financially viable.

Who It Affects

Housing credit agencies (government organizations that distribute tax credits to housing projects), building owners and developers who create low-income housing, and households earning at or below 30 percent of the area median gross income (the midpoint income for the region).

Key Provisions

* States cannot allocate more than 90 percent of a portion of their housing credit ceiling amount to buildings that do not serve extremely low-income households (Sec. 2(a)(1)(B)). * A building qualifies if at least 20 percent of its residential units have rent restrictions and serve households earning no more than 30 percent of area median gross income or 100 percent of the federal poverty line, whichever is greater (Sec. 2(a)(1)(B)). * Housing credit agencies can increase the eligible basis (the amount used to calculate tax credits) to 150 percent for buildings serving extremely low-income households if needed to make the project financially feasible (Sec. 2(b)). * This requirement ends after December 31, 2033 (Sec. 2(a)(1)(D)).

What Changes

States will have to ensure that a specific portion of their annual housing tax credits go to projects serving extremely low-income households instead of being available for other housing projects.

Important Definitions

* Area median gross income: the midpoint income in a geographic region. * Eligible basis: the cost amount used to calculate housing tax credits. * Rent-restricted: apartments where the rent is limited based on tenant income.

Effective Date

The changes apply to housing credit allocations and determinations after December 31, 2023 (Sec. 2(c)).

I 118TH CONGRESS 1ST SESSION H. R. 418 To amend the Internal Revenue Code of 1986 to designate projects serving extremely low-income households for purposes of allocating the State housing credit ceiling and determining an increased amount of low- income housing tax credit. IN THE HOUSE OF REPRESENTATIVES JANUARY 20, 2023 Mr. GOMEZ introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to designate projects serving extremely low-income households for pur- poses of allocating the State housing credit ceiling and determining an increased amount of low-income housing tax credit. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Affordable Housing 4 Equity Act of 2023’’. 5 VerDate Sep 11 2014 03:20 Jan 31, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H418.IH H418 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 418 IH SEC. 2. BUILDINGS DESIGNATED TO SERVE EXTREMELY 1 LOW-INCOME HOUSEHOLDS. 2 (a) RESERVED STATE ALLOCATION.— 3 (1) IN GENERAL.—Section 42(h) of the Internal 4 Revenue Code of 1986 is amended— 5 (A) by redesignating paragraphs (6), (7), 6 and (8) as paragraphs (7), (8), and (9), respec- 7 tively; and 8 (B) by inserting after paragraph (5) the 9 following new paragraph: 10 ‘‘(6) PORTION OF STATE CEILING SET-ASIDE 11 FOR PROJECTS DESIGNATED TO SERVE EXTREMELY 12 LOW-INCOME HOUSEHOLDS.— 13 ‘‘(A) IN GENERAL.—Not more than 90 14 percent of the portion of the State housing 15 credit ceiling amount described in paragraph 16 (3)(C)(ii) for any State for any calendar year 17 shall be allocated to buildings other than build- 18 ings described in subparagraph (B). 19 ‘‘(B) BUILDINGS DESCRIBED.—A building 20 is described in this subparagraph if 20 percent 21 or more of the residential units in such building 22 are rent-restricted (determined as if the im- 23 puted income limitation applicable to such units 24 were 30 percent of area median gross income) 25 and are designated by the taxpayer for occu- 26 VerDate Sep 11 2014 03:20 Jan 31, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H418.IH H418 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 418 IH pancy by households the aggregate household 1 income of which does not exceed the greater 2 of— 3 ‘‘(i) 30 percent of area median gross 4 income, or 5 ‘‘(ii) 100 percent of an amount equal 6 to the Federal poverty line (within the 7 meaning of section 36B(d)(3)). 8 ‘‘(C) STATE MAY NOT OVERRIDE SET- 9 ASIDE.—Nothing in subparagraph (F) of para- 10 graph (3) shall be construed to permit a State 11 not to comply with subparagraph (A) of this 12 paragraph. 13 ‘‘(D) TERMINATION.—This paragraph 14 shall not apply to allocations after December 15 31, 2033.’’. 16 (2) CONFORMING AMENDMENT.—Section 17 42(b)(4)(C) of such Code is amended by striking 18 ‘‘(h)(7)’’ and inserting ‘‘(h)(8)’’. 19 (b) INCREASE IN CREDIT.—Section 42(d)(5) of such 20 Code is amended by adding at the end the following new 21 subparagraph: 22 ‘‘(C) INCREASE IN CREDIT FOR PROJECTS 23 DESIGNATED TO SERVE EXTREMELY LOW-IN- 24 COME HOUSEHOLDS.— 25 VerDate Sep 11 2014 03:20 Jan 31, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H418.IH H418 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 418 IH ‘‘(i) IN GENERAL.—In the case of any 1 building— 2 ‘‘(I) which is described in sub- 3 section (h)(6)(B), and 4 ‘‘(II) which is designated by the 5 housing credit agency as requiring the 6 increase in credit under this subpara- 7 graph in order for such building to be 8 financially feasible as part of a quali- 9 fied low-income housing project, 10 subparagraph (B) shall not apply to the 11 portion of such building which is comprised 12 of such units, and the eligible basis of such 13 portion of the building shall be 150 per- 14 cent of such basis determined without re- 15 gard to this subparagraph.’’. 16 (c) EFFECTIVE DATE.—The amendments made by 17 this section shall apply to allocations, and determinations, 18 of housing credit dollar amount after December 31, 2023. 19 Æ VerDate Sep 11 2014 03:20 Jan 31, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H418.IH H418 kjohnson on DSK79L0C42PROD with BILLS

Important: This plain English summary was generated by AI and is provided for informational purposes only. It is not legal advice. Always consult the official bill text on Congress.gov or a qualified attorney for legal matters.