New tax credit targets homebuilding in low-income areas

What does this do?

This bill creates a federal tax credit for builders and developers who build or substantially renovate homes for sale in struggling, low-income neighborhoods. The credit covers the gap between what it costs to build the home and what buyers can afford to pay. A smaller version of the credit, capped at $50,000, is available to contractors who renovate homes already owned and lived in by lower-income residents.

Who does it affect?

Builders qualify if they sell homes at affordable prices in census tracts with below-average incomes and home values, and the buyer's household income must be at or below 140% of the local median. Lower-income homeowners who already own and live in a home as their primary residence may also be covered through the contractor rehabilitation credit.

Why does it matter?

In some neighborhoods, the cost to build a home is higher than what buyers can afford, which can discourage new construction or renovation. This credit is meant to offset that gap, which may affect whether builders choose to work in those areas.

What does it cost, and who pays?

• Min $12M or $9/resident yearly budget
• State agency distributes credits
• 5-year sale triggers partial repayment