The Neighborhood Homes Investment Act establishes a new federal tax credit to help builders, developers, and homeowners make affordable housing more available in distressed communities. The "Neighborhood Homes Credit" allows developers to claim tax benefits up to 40% of development costs when building affordable homes in low-income areas, while a separate rehabilitation credit of up to $50,000 assists lower-income homeowners making improvements to their own properties. Funding is allocated to states based on population, with oversight managed through state agencies that set standards and ensure compliance with fair housing requirements, with special provisions for rural areas, disaster zones, and nonprofit projects. The program includes a repayment mechanism where homeowners who sell within five years return a portion of profits to the program (declining over time), though hardship waivers are available for situations like divorce or disability. The tax credits take effect beginning in 2026.
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