HR2854119th CongressWALLET

Neighborhood Homes Investment Act

Sponsored By: Representative Kelly (PA)

Introduced

Summary

Creates a Neighborhood Homes Credit to spur development and substantial rehabilitation of affordable, owner-occupied homes in distressed neighborhoods. It also excludes certain state energy subsidies for those qualified residences from federal gross income.

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  • Families and homebuyers would get more affordable owner-occupied homes targeted to distressed census tracts and a 5-year principal-residence rule that can trigger repayment if a home is sold early. Repayment can be up to 50% of the gain and phases down by 10 percentage points each full year.
  • Homeowners who rehabilitate their own home would be eligible for an owner-occupied rehabilitation credit capped at $50,000 and generally limited to 50% of qualifying rehab costs above amounts paid to the homeowner. The bill also covers special remediation like pyrrhotite when certified by testing.
  • States would create a Neighborhood Homes Credit Agency to allocate credits, certify projects, place liens, waive repayments for hardship, and report to the IRS. Annual state ceilings use the greater of $9 per resident or $12,000,000, plus carryover.

Bill Overview

Analyzed Economic Effects

5 provisions identified: 3 benefits, 0 costs, 2 mixed.

Homeowner credit for major repairs

If enacted, homeowners could get a tax credit for a qualified rehab of their own home. The credit would equal the smallest of: your net rehab cost, 50% of rehab costs, or $50,000. You must own and live in the home at the contract date, have income at or below the area median, and the work must meet the program’s substantial rehab test. The State agency would need to certify completion. This would apply for tax years after December 31, 2025.

Tax credit for builders selling affordable homes

If enacted, small builders could claim a new tax credit when they sell a qualified home at an affordable price. The credit would be the smallest of: extra development cost over the sale price, 40% of eligible costs, or 32% of the national median new‑home price, and it would be limited by the State’s allocation. Eligible costs would follow State standards, cap acquisition at 75% of total, and generally exclude pre‑allocation costs except property purchases within three years. Homes must be in approved census tracts; condos and co‑ops are eligible, with costs split by unit floor space. Sales to related parties (10% ownership test) would not qualify, and certain energy‑credit rules would not reduce costs for this credit. These rules would apply to sales in tax years after December 31, 2025.

Rules for buyers of affordable homes

If enacted, the sale price would be capped at 4 times the area’s median family income, with higher caps for 2‑, 3‑, and 4‑unit homes (125%, 150%, 175% of the base). Your family income must be 140% of area median or less, checked at the contract date. For five years after you buy, you would need to use the home as your main home; if you rent it out, you could not deduct rental expenses for that time. If you sell within five years, you could owe a repayment on your gain: 50%, dropping by 10 points each full year (50%, 40%, 30%, 20%, 10%). The State agency could place a lien and may waive repayment for hardship. These rules would apply in tax years after December 31, 2025.

How states would run the program

If enacted, Governors would name a state agency to set standards, certify projects, and report results. Each year, a state’s credit ceiling would be the larger of $12 million or $9 per resident, plus certain expirations and prior‑year unused amounts, with up to three years of carryforward. States would face category caps: generally no more than 20% of allocations to certain tract types, or up to 40% if the state qualified for the $12 million floor. The federal government would publish project data without identifying buyers, and HUD would post eligible tract lists. These rules would apply starting with tax years after December 31, 2025.

State energy rebates not taxed

If a state energy office gives you a subsidy for energy upgrades to a qualified home, it would not count as taxable income. This change would apply in tax years after December 31, 2025.

Sponsors & CoSponsors

Sponsor

Kelly (PA)

PA • R

Cosponsors

  • Larson (CT)

    CT • D

    Sponsored 4/10/2025

  • Carey

    OH • R

    Sponsored 4/10/2025

  • Sewell

    AL • D

    Sponsored 4/10/2025

  • Buchanan

    FL • R

    Sponsored 4/10/2025

  • Davis (IL)

    IL • D

    Sponsored 4/10/2025

  • Miller (WV)

    WV • R

    Sponsored 4/10/2025

  • Panetta

    CA • D

    Sponsored 4/10/2025

  • Feenstra

    IA • R

    Sponsored 4/10/2025

  • Kustoff

    TN • R

    Sponsored 4/10/2025

  • Malliotakis

    NY • R

    Sponsored 4/10/2025

  • Moran

    TX • R

    Sponsored 4/10/2025

  • Kelly (IL)

    IL • D

    Sponsored 4/17/2025

  • Meuser

    PA • R

    Sponsored 4/17/2025

  • Meeks

    NY • D

    Sponsored 4/17/2025

  • Correa

    CA • D

    Sponsored 4/17/2025

  • Pettersen

    CO • D

    Sponsored 4/17/2025

  • Zinke

    MT • R

    Sponsored 4/17/2025

  • Smucker

    PA • R

    Sponsored 4/17/2025

  • Houlahan

    PA • D

    Sponsored 4/17/2025

  • Nunn (IA)

    IA • R

    Sponsored 4/17/2025

  • Tonko

    NY • D

    Sponsored 4/17/2025

  • Tenney

    NY • R

    Sponsored 4/17/2025

  • Dingell

    MI • D

    Sponsored 4/17/2025

  • Chu

    CA • D

    Sponsored 4/17/2025

  • Davis (NC)

    NC • D

    Sponsored 4/28/2025

  • Vasquez

    NM • D

    Sponsored 4/28/2025

  • DeGette

    CO • D

    Sponsored 4/28/2025

  • Rulli

    OH • R

    Sponsored 4/28/2025

  • Bishop

    GA • D

    Sponsored 4/28/2025

  • Craig

    MN • D

    Sponsored 4/29/2025

  • McCollum

    MN • D

    Sponsored 4/29/2025

  • Omar

    MN • D

    Sponsored 5/1/2025

  • Mrvan

    IN • D

    Sponsored 5/7/2025

  • LaHood

    IL • R

    Sponsored 5/20/2025

  • Budzinski

    IL • D

    Sponsored 6/2/2025

  • Peters

    CA • D

    Sponsored 6/2/2025

  • Schakowsky

    IL • D

    Sponsored 6/3/2025

  • Brownley

    CA • D

    Sponsored 6/5/2025

  • Sorensen

    IL • D

    Sponsored 6/6/2025

  • Mann

    KS • R

    Sponsored 6/6/2025

  • Soto

    FL • D

    Sponsored 6/11/2025

  • Lawler

    NY • R

    Sponsored 6/11/2025

  • Evans (PA)

    PA • D

    Sponsored 6/25/2025

  • Hayes

    CT • D

    Sponsored 7/14/2025

  • Landsman

    OH • D

    Sponsored 7/14/2025

  • Strickland

    WA • D

    Sponsored 7/14/2025

  • Beatty

    OH • D

    Sponsored 7/14/2025

  • Davids (KS)

    KS • D

    Sponsored 7/15/2025

  • Neguse

    CO • D

    Sponsored 7/22/2025

  • Khanna

    CA • D

    Sponsored 8/19/2025

  • McBath

    GA • D

    Sponsored 8/19/2025

  • Hinson

    IA • R

    Sponsored 8/19/2025

  • Guest

    MS • R

    Sponsored 8/19/2025

  • Kelly (MS)

    MS • R

    Sponsored 9/3/2025

  • Rutherford

    FL • R

    Sponsored 9/3/2025

  • Krishnamoorthi

    IL • D

    Sponsored 9/3/2025

  • Bera

    CA • D

    Sponsored 11/18/2025

  • McGuire

    VA • R

    Sponsored 11/18/2025

  • Harder (CA)

    CA • D

    Sponsored 11/18/2025

  • Messmer

    IN • R

    Sponsored 11/18/2025

  • Suozzi

    NY • D

    Sponsored 1/20/2026

  • Ezell

    MS • R

    Sponsored 2/20/2026

Roll Call Votes

No roll call votes available for this bill.

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