II 

118TH CONGRESS 

2D SESSION S. 5196 

To amend the Internal Revenue Code of 1986 to establish the New Homes 

Tax Credit. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 25, 2024 

Mr. HEINRICH (for himself, Mr. WYDEN, Mr. WELCH, and Mr. VAN HOLLEN) 

introduced the following bill; which was read twice and referred to the 

Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to establish 

the New Homes Tax Credit. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘New Homes Tax Cred5 it Act’’. 

6 SEC. 2. ESTABLISHMENT OF NEW HOMES TAX CREDIT. 

7 (a) IN GENERAL.—Subpart D of part IV of sub8 chapter A of chapter 1 of the Internal Revenue Code of 

9 1986 is amended by inserting after section 45AA the fol10 lowing new section: 


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1 ‘‘SEC. 45BB. NEW HOMES TAX CREDIT. 

2 ‘‘(a) ALLOWANCE OF CREDIT.— 

3 ‘‘(1) IN GENERAL.—For purposes of section 38, 

4 in the case of a taxpayer who holds a qualified eq5 uity investment on a credit allowance date of such 

6 investment which occurs during the taxable year, the 

7 new homes tax credit determined under this section 

8 for such taxable year is an amount equal to the ap9 plicable percentage of the amount paid to the hous10 ing development entity for such investment at its 

11 original issue. 

12 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 

13 of paragraph (1), the applicable percentage is— 

14 ‘‘(A) 7 percent with respect to the first 

15 credit allowance date, and 

16 ‘‘(B) 8 percent with respect to the remain17 der of the credit allowance dates. 

18 ‘‘(3) CREDIT ALLOWANCE DATE.—For purposes 

19 of paragraph (1), the term ‘credit allowance date’ 

20 means, with respect to any qualified equity invest21 ment— 

22 ‘‘(A) the date on which such investment is 

23 initially made, and 

24 ‘‘(B) each of the 4 anniversary dates of 

25 such date thereafter. 

26 ‘‘(b) QUALIFIED EQUITY INVESTMENT.— 


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1 ‘‘(1) IN GENERAL.—For purposes of this sec2 tion, the term ‘qualified equity investment’ means 

3 any equity investment in a housing development en4 tity if— 

5 ‘‘(A) such investment is acquired by the 

6 taxpayer at its original issue (directly or 

7 through an underwriter) solely in exchange for 

8 cash, 

9 ‘‘(B) substantially all of such cash is used 

10 by the housing development entity to make 

11 qualified housing investments, and 

12 ‘‘(C) such investment is designated for 

13 purposes of this section by the housing develop14 ment entity. 

15 Such term shall not include any equity investment 

16 issued by a housing development entity more than 5 

17 years after the date that such entity receives an allo18 cation under subsection (e). Any allocation not used 

19 within such 5-year period may be reallocated by the 

20 Secretary under subsection (e). 

21 ‘‘(2) SPECIAL RULES.—Rules similar to the 

22 rules under paragraphs (2) through (6) of section 

23 45D(b) shall apply for purposes of this section. 


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1 ‘‘(c) HOUSING DEVELOPMENT ENTITY.—For pur2 poses of this section, the term ‘housing development enti3 ty’ means any domestic corporation or partnership if— 

4 ‘‘(1) one of the missions of the entity is to pro5 vide funding for construction of housing for low- and 

6 moderate-income individuals, and 

7 ‘‘(2) the entity is certified by the Secretary for 

8 purposes of this section as being a housing develop9 ment entity. 

10 ‘‘(d) OTHER DEFINITIONS.—For purposes of this 

11 section— 

12 ‘‘(1) QUALIFIED HOUSING INVESTMENT.— 

13 ‘‘(A) IN GENERAL.—The term ‘qualified 

14 housing investment’ means funding which is 

15 provided by a housing development entity to a 

16 qualified construction business— 

17 ‘‘(i) following completion of a qualified 

18 home project by such qualified construction 

19 business, and 

20 ‘‘(ii)(I) in the case of a home de21 scribed in clause (i) of paragraph (3)(A), 

22 after the housing development entity has 

23 confirmed (on or before the date on which 

24 ownership of the home is transferred to the 

25 buyer) that— 


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1 ‘‘(aa) the home is being sold to a 

2 qualified buyer, and 

3 ‘‘(bb) that such buyer has been 

4 provided notice with respect to the re5 quirements under subsection (g), or 

6 ‘‘(II) in the case of a home described 

7 in clause (ii) of such paragraph, after the 

8 housing development entity has confirmed 

9 (on or before the date on which renovation 

10 of the home is completed by the qualified 

11 construction business) that— 

12 ‘‘(aa) the home is owned by a 

13 qualified buyer, and 

14 ‘‘(bb) that such buyer has been 

15 provided notice with respect to the re16 quirements under subsection (g). 

17 ‘‘(B) TRANSFER OF FUNDS AT CLOSING.— 

18 With respect to any funding described in sub19 paragraph (A), such funding shall be provided 

20 by the housing development entity to the quali21 fied construction business— 

22 ‘‘(i) in the case of a home described in 

23 clause (i) of paragraph (3)(A), on the date 

24 on which ownership of the home is trans25 ferred to the qualified buyer, or 


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1 ‘‘(ii) in the case of a home described 

2 in clause (ii) of such paragraph, on the 

3 date on which renovation of the home is 

4 completed by the qualified construction 

5 business. 

6 ‘‘(C) LIMITATION.—In the case of any 

7 home constructed or renovated as part of a 

8 qualified home project, the amount of funding 

9 provided by a housing development entity to a 

10 qualified construction business with respect to 

11 such home shall not exceed an amount equal to 

12 20 percent (or, in the case of a home renovated 

13 as part of a qualified home project, 15 percent) 

14 of the median purchase price for single-family 

15 housing in the area in which such home is lo16 cated, as determined by the Secretary of Hous17 ing and Urban Development for the purpose of 

18 section 1807.402(a)(2) of title 12, Code of Fed19 eral Regulations (or any successor regulation). 

20 ‘‘(2) QUALIFIED CONSTRUCTION BUSINESS.— 

21 The term ‘qualified construction business’ means an 

22 entity engaged in the trade or business of the con23 struction or renovation of residential housing. 

24 ‘‘(3) QUALIFIED HOME PROJECTS.— 


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1 ‘‘(A) IN GENERAL.—The term ‘qualified 

2 home project’ means— 

3 ‘‘(i) the construction of entry-level 

4 homes which are sold to qualified buyers, 

5 or 

6 ‘‘(ii) the renovation of Single-family 

7 housing (as such term is used in section 

8 1807.402 of title 12, Code of Federal Reg9 ulations) which is owned by a qualified 

10 buyer. 

11 ‘‘(B) ENTRY-LEVEL HOMES.—The term 

12 ‘entry-level home’ means any residential build13 ing which— 

14 ‘‘(i) satisfies the requirement under 

15 section 1807.402(a)(1) of title 12, Code of 

16 Federal Regulations, and 

17 ‘‘(ii) is designed to be purchased by a 

18 first-time homebuyer (as defined in section 

19 104 of the Cranston-Gonzalez National Af20 fordable Housing Act (42 U.S.C. 12704)). 

21 ‘‘(4) QUALIFIED BUYER.—The term ‘qualified 

22 buyer’ means an individual or family whose income 

23 is not greater than 120 percent of area median in24 come. 


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1 ‘‘(e) NATIONAL LIMITATION ON AMOUNT OF INVEST2 MENTS DESIGNATED.— 

3 ‘‘(1) IN GENERAL.—For each of calendar years 

4 2025 through 2031, the new homes tax credit limi5 tation for each calendar year shall be— 

6 ‘‘(A) for 2025, $1,000,000,000, 

7 ‘‘(B) for 2026 and 2027, $1,500,000,000, 

8 ‘‘(C) for 2028 and 2029, $2,000,000,000, 

9 and 

10 ‘‘(D) for 2030 and 2031, $3,500,000,000. 

11 ‘‘(2) ALLOCATION OF LIMITATION.—The limita12 tion under paragraph (1) shall be allocated by the 

13 Secretary among housing development entities se14 lected by the Secretary. In making allocations under 

15 the preceding sentence, the Secretary shall— 

16 ‘‘(A) allocate not less than 50 percent of 

17 such limitation for any calendar year to housing 

18 development agencies that commit to make 

19 qualified housing investments to provide hous20 ing for individuals or families whose income is 

21 not greater than 80 percent of area median in22 come, 

23 ‘‘(B) allocate not less than 5 percent of 

24 such limitation for any calendar year to housing 

25 development agencies that commit to make 


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1 qualified housing investments to provide hous2 ing that is exclusively available to members of 

3 an Indian tribe (as such term is defined in sec4 tion 4 of the Indian Self-Determination and 

5 Education Assistance Act (25 U.S.C. 5304)), 

6 and 

7 ‘‘(C) give priority to— 

8 ‘‘(i) any community development fi9 nancial institution (as defined in section 

10 103 of the Community Development Bank11 ing and Financial Institutions Act of 1994 

12 (12 U.S.C. 4702)) which is certified as a 

13 community development financial institu14 tion under the Community Development 

15 Banking and Financial Institutions Act of 

16 1994 (12 U.S.C. 4701 et seq.), 

17 ‘‘(ii) any community development 

18 credit union, 

19 ‘‘(iii) any housing development entity 

20 with prior experience relating to other Fed21 eral programs designed to create affordable 

22 housing for low- and moderate-income indi23 viduals, such as— 

24 ‘‘(I) the low-income housing cred25 it under section 42, and 


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1 ‘‘(II) the HOME Investment 

2 Partnerships program under subtitle 

3 A of title II of the Cranston-Gonzalez 

4 National Affordable Housing Act (42 

5 U.S.C. 12741 et seq.), and 

6 ‘‘(iv) any housing development entity 

7 which— 

8 ‘‘(I) has previously worked within 

9 the community in which the proposed 

10 qualified home project is located, and 

11 ‘‘(II) can demonstrate engage12 ment with local officials and low-in13 come individuals within such commu14 nity. 

15 ‘‘(3) CARRYOVER OF UNUSED LIMITATION.—If 

16 the new homes tax credit limitation for any calendar 

17 year exceeds the aggregate amount allocated under 

18 paragraph (2) for such year, such limitation for the 

19 succeeding calendar year shall be increased by the 

20 amount of such excess. No amount may be carried 

21 under the preceding sentence to any calendar year 

22 after 2036. 

23 ‘‘(f) BASIS REDUCTION.—Rules similar to the rules 

24 under subsection (h) of section 45D shall apply for pur25 poses of this section. 


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1 ‘‘(g) LIMITATION DURING INITIAL 5-YEAR PE2 RIOD.— 

3 ‘‘(1) IN GENERAL.— 

4 ‘‘(A) PRINCIPAL RESIDENCE REQUIRE5 MENT.—Subject to subparagraph (C), with re6 spect to any qualified home project for which 

7 funding has been provided by a housing devel8 opment entity to a qualified construction busi9 ness pursuant to the provisions of this section, 

10 the housing development entity shall ensure 

11 that, during the limitation period, the home 

12 with respect to which such funding has been 

13 provided remains the principal residence of the 

14 qualified buyer. 

15 ‘‘(B) LIENS.—With respect to the require16 ment under subparagraph (A), the housing de17 velopment entity shall enforce such requirement 

18 by means of the imposition of a lien on the 

19 home constructed or renovated as part of the 

20 qualified home project, with such lien to be re21 corded with the relevant local official or agency 

22 designated to record liens. 

23 ‘‘(C) EXCEPTION FOR MEMBERS OF THE

24 ARMED FORCES.—In the case of any home con25 structed or renovated as part of a qualified 


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1 home project, if there is a disposition of such 

2 home by the qualified buyer— 

3 ‘‘(i) during the limitation period, and 

4 ‘‘(ii) which is in connection with Gov5 ernment orders received by such qualified 

6 buyer for qualified official extended duty 

7 service (as defined in section 

8 36(f)(4)(E)(ii)), 

9 subparagraph (A) shall not apply. 

10 ‘‘(2) LIMITATION PERIOD.—For purposes of 

11 this subsection, the term ‘limitation period’ means 

12 the 5-year period subsequent to— 

13 ‘‘(A) in the case of a home described in 

14 clause (i) of subsection (d)(3)(A), on the date 

15 on which ownership of the home is transferred 

16 to the qualified buyer, or 

17 ‘‘(B) in the case of a home described in 

18 clause (ii) of such subsection, on the date on 

19 which renovation of the home is completed by 

20 the qualified construction business. 

21 ‘‘(3) REGULATIONS AND GUIDANCE.—The Sec22 retary shall issue such regulations or other guidance 

23 as the Secretary determines necessary to carry out 

24 the purposes of this subsection. 

25 ‘‘(h) REPORTING.— 


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1 ‘‘(1) IN GENERAL.—Not later than January 1, 

2 2026, and annually thereafter, the Secretary shall 

3 submit a report to the Committee on Banking, 

4 Housing, and Urban Affairs of the Senate, the Com5 mittee on Financial Services of the House of Rep6 resentatives, the Committee on Ways and Means of 

7 the House of Representatives, and the Committee on 

8 Finance of the Senate, containing information re9 garding— 

10 ‘‘(A) the size and location of qualified 

11 home projects which have been financially sup12 ported by qualified equity investments for which 

13 a credit has been allowed under this section, 

14 and 

15 ‘‘(B) the income of individuals and families 

16 residing in homes constructed or renovated as 

17 part of such qualified home projects. 

18 ‘‘(2) COLLECTION OF INFORMATION.—The Sec19 retary shall develop a method to collect and stream20 line relevant data for purposes of collecting the in21 formation described in paragraph (1). 

22 ‘‘(i) REGULATIONS.—The Secretary shall prescribe 

23 such regulations as may be appropriate to carry out this 

24 section.’’. 

25 (b) CONFORMING AMENDMENTS.— 


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1 (1) Section 38(b) of such Code is amended by 

2 striking ‘‘plus’’ at the end of paragraph (40), by 

3 striking the period at the end of paragraph (41) and 

4 inserting ‘‘, plus’’, and by adding at the end the fol5 lowing new paragraph: 

6 ‘‘(42) the new homes tax credit determined 

7 under section 45BB(a).’’. 

8 (2) The table of sections for subpart D of part 

9 IV of subchapter A of chapter 1 of such Code is 

10 amended by inserting after the item relating to sec11 tion 45AA the following new item: 

‘‘Sec. 45BB. New Homes Tax Credit.’’. 

12 (c) EFFECTIVE DATE.—The amendments made by 

13 this section shall apply to investments made after Decem14 ber 31, 2024. 

Æ 


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