The Housing Opportunities and Preservation Enhancement Act of 2026 amends the federal tax code to create new tax incentives for partnerships that own and rehabilitate older affordable rental housing. The bill targets residential buildings that are at least 15 years old, have been substantially rehabilitated with costs exceeding either 20 percent of the building's value or $20,000 per unit, and maintain affordability requirements with at least 70 percent of units rented to households earning no more than 80 percent of area median income. Ownership is restricted to partnerships managed by qualified tax-exempt organizations, government agencies, tribal housing authorities, or public housing authorities. The legislation provides significant tax benefits to qualifying properties, including accelerated 15-year depreciation schedules, exemptions from passive activity loss limitations, and the ability to reset property basis to fair market value after ten years of ownership, while also allowing certain debt to be treated favorably under tax rules. The bill takes effect for tax years beginning after its enactment and includes inflation adjustments to the per-unit rehabilitation spending requirement starting in 2027.
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