Last month, Rep. Mike Kelly (R-PA) and Rep. Brian Higgins (D-NY) reintroduced the Neighborhood Homes Investment Act (H.R. 2854) in the House. Companion legislation is expected to be introduced in the Senate in the coming weeks. This bill would create a federal tax credit to encourage rehabilitation of distressed homes. The bill aims to help address the housing supply crisis, while also revitalizing distressed communities. 

In many parts of the country, the cost of purchasing and renovating a home is greater than the value of the home's sale price. The bill would create a tax credit to cover the cost between building or rehabilitating a home in these areas and the price at which they can be sold. The tax credit would cover up to 40% of the costs of building a new home and up to 50% of the costs of rehabilitating owner occupied homes. The credit can be applied to "reasonable development costs" which includes acquisition of buildings, construction, substantial rehabilitation, demolition of structures, or environmental remediation. Similar legislation was introduced during the last Congress and garnered significant bipartisan support.

The bill focuses on communities with the greatest need, by targeting distressed areas. This includes neighborhoods with high poverty rates, incomes below the area median income; and home values that are below the metro or state median value. An estimated 67% of the homes in these identified areas were built before 1980. Proponents estimate that the bill could lead to 500,000 homes over 10 years being rehabilitated or constructed.

Preservation Action will continue to monitor this legislation. Stay tuned fore more.

Learn More: https://www.congress.gov/bill/119th-congress/house-bill/2854