A bipartisan bill has been introduced in the U.S. House of Representatives that would create a tax incentive designed to produce 500,000 starter homes over the next decade.
Reps. Mike Kelly (R-PA) and Brian Higgins (D-NY) authored the Neighborhood Homes Investment Act, which would be aimed in areas where affordable homeownership opportunities are limited. The legislation addressed a key problem in housing creation – the cost to build or renovate a property often exceeds the price at which the home could be sold once completed – by filling the so-called “value gap” with a tax credit covering to 35% of eligible development costs for new homes. As a result, the developer’s risk of loss is reduced and investments in new and rehabbed housing could be encouraged.
The legislation also designated tax credits to be awarded to project sponsors through statewide competitions administered by state housing finance agencies. The credits can only be claimed for homes developed or rehabilitated in eligible low-income communities, and only after the homes are sold and occupied by lower or middle-income families.
“For too long, the cost of rehabilitating a home has been more expensive than simply starting from scratch,” said Kelly. “Now, the Neighborhood Homes Investment Act will allow homeowners and developers to more affordably restore beautiful homes and create more affordable housing in communities that need it the most. This legislation creates stronger homes, stronger families, and stronger neighborhoods.”
“The United States is experiencing an affordable housing crisis and my community of Western New York is not immune,” said Higgins. “Older communities like Buffalo and Niagara Falls have aging homes with good bones, but the high cost to rehab these properties, compared to their value, causes them to fall into disrepair. As a result, neighborhoods are plagued by blighted homes and vacant lots. I am proud to join my colleagues in leading the bipartisan Neighborhood Homes Investment Act, which closes the value gap these neighborhoods face with a tax credit that encourages investments in single family homes and leads to community revitalization. For the families whose dreams of homeownership feel unattainable, this legislation can be a gamechanger.”
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