II 

115TH CONGRESS 

1ST SESSION S. 1581 

To amend the Internal Revenue Code of 1986 to allow a business credit 

for gain from the sale of real property for use as a manufactured 

home community, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 19, 2017 

Mrs. SHAHEEN 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 allow a 

business credit for gain from the sale of real property 

for use as a manufactured home community, and for 

other purposes. 

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 ‘‘Manufactured Housing 

5 Community Sustainability Act of 2017’’. 

6 SEC. 2. FINDINGS. 

7 The Congress finds that— 


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1 (1) more than 17,000,000 people live in manu2 factured homes and benefit from high-quality afford3 able homes which provide stability; 

4 (2) owners of manufactured homes have dis5 proportionately low-income households, and in 2013, 

6 the median annual household income for living in 

7 manufactured housing was $28,400; 

8 (3) approximately 75 percent of manufactured 

9 home households earn less than $50,000 per year; 

10 (4) more than 10 percent of veterans in the 

11 United States live in manufactured homes; 

12 (5) in late 1990, manufactured housing represented 2 13 ⁄3 of the new affordable housing produced 

14 in the United States and remains the largest source 

15 of unsubsidized affordable housing in the United 

16 States; 

17 (6) in 2015, the average cost per square foot 

18 for a new manufactured home was 48 dollars, less 

19 than half of the cost per square foot for a new-site 

20 built, structure-only home, which was $101; 

21 (7) in 2009, 43 percent of all new homes that 

22 sold for less than $150,000 were manufactured 

23 homes; 

24 (8) manufactured homes account for 23 percent 

25 of new home sales under $200,000; 


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1 (9) more than 50,000 manufactured home com2 munities, also referred to as ‘‘mobile home parks’’, 

3 exist throughout the United States; 

4 (10) more than 2,900,000 manufactured homes 

5 are placed in manufactured home communities; 

6 (11) manufactured home communities provide 

7 critical affordable housing, but receive very little 

8 Federal, State, or local funds to subsidize the cost 

9 of manufactured homes; 

10 (12) manufactured home owners in such com11 munities may own the home, but they do not own 

12 the land under the home, which leaves the home 

13 owners vulnerable to rent increases, arbitrary rule 

14 enforcement, and in the case of a manufactured 

15 home community owner converting the land to some 

16 other use, community closure; 

17 (13) an eviction or closure of a manufactured 

18 home community is very disruptive to a resident who 

19 may be unable to pay the thousands of dollars it 

20 takes to move the manufactured home or find a new 

21 location for the manufactured home; 

22 (14) in an effort to preserve a crucial source of 

23 affordable housing within the past two decades, a 

24 national network of housing providers has helped 

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1 ufactured home community, and manage the manu2 factured home community; 

3 (15) nationwide, there are more than 1,000 sta4 ble, permanent ownership cooperatives or nonprofit5 owned developments in more than a dozen States; 

6 (16) members of manufactured home commu7 nities continue to own such homes individually, own 

8 an equal share of the land beneath the entire manu9 factured home community, participate in the gov10 erning of the community, and elect a board of direc11 tors who make major decisions within the manufac12 tured home community by a democratic vote; 

13 (17) in New Hampshire, more than 20 percent 

14 of manufactured home communities are owned by 

15 residents; 

16 (18) resident-owned cooperatives and nonprofit17 owned communities have flourished in Vermont, 

18 Massachusetts, Rhode Island, Washington, Oregon, 

19 and Minnesota; 

20 (19) nationwide, only 2 percent of all manufac21 tured home communities are resident- or nonprofit22 owned; 

23 (20) manufactured home community owners 

24 often prefer to devise such property tax free, rather 


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1 than selling the community, in order to avoid capital 

2 gain taxes; 

3 (21) when the owner of a manufactured home 

4 community dies, the heirs of the owner frequently 

5 sell the community to the highest bidder which re6 sults in displacement for dozens and sometimes hun7 dreds of families; and 

8 (22) in order to preserve manufactured home 

9 communities in the future, a Federal tax benefit 

10 should be established to induce manufactured home 

11 community owners to sell such properties to resi12 dents that the owners have known for decades, or to 

13 nonprofit organizations. 

14 SEC. 3. TAX CREDIT FOR MANUFACTURED HOME COMMU15 NITY SALE TO RESIDENTS OR NONPROFIT 

16 ENTITY. 

17 (a) IN GENERAL.—Subpart D of part IV of sub18 chapter A of chapter 1 of the Internal Revenue Code of 

19 1986 (relating to business related credits) is amended by 

20 adding at the end the following new section: 

21 ‘‘SEC. 45S. MANUFACTURED HOME COMMUNITY SALE TO 

22 RESIDENTS OR NONPROFIT ENTITY. 

23 ‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec24 tion 38, the manufactured home community sale credit de25 termined under this section for any taxable year is an 


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1 amount equal to 75 percent of the qualified gain received 

2 by the taxpayer during the taxable year. 

3 ‘‘(b) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) QUALIFIED GAIN.—The term ‘qualified 

5 gain’ means gain from the sale or exchange of real 

6 property to a qualified manufactured home commu7 nity cooperative or corporation if— 

8 ‘‘(A) the real property is acquired for use 

9 as a manufactured home community, 

10 ‘‘(B) the seller (or any related person) 

11 owned the property for the entire 2-year period 

12 ending on the day before the sale or exchange, 

13 and 

14 ‘‘(C) the property is transferred subject to 

15 a binding covenant that the property will be 

16 used as a manufactured home community for 

17 not less than 50 years. 

18 ‘‘(2) MANUFACTURED HOME COMMUNITY.—The 

19 term ‘manufactured home community’ means a com20 munity comprised primarily of manufactured homes 

21 used solely for residential purposes and owned by a 

22 manufactured home community cooperative or cor23 poration. 

24 ‘‘(3) QUALIFIED MANUFACTURED HOME COM25 MUNITY COOPERATIVE OR CORPORATION.— 


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

2 manufactured home community cooperative or 

3 corporation’ means a cooperative or a nonprofit 

4 corporation established pursuant to the laws of 

5 the State in which the property used as a man6 ufactured home community is located, and 

7 which— 

8 ‘‘(i) in the case of a community owned 

9 by a nonprofit corporation whose member10 ship interests are sold on a nonappre11 ciating basis, has only 1 class of member12 ship and such class consists solely of resi13 dents, and 

14 ‘‘(ii) in the case of a community 

15 owned by a cooperative, has not more than 

16 2 classes of membership, and such classes 

17 consist solely of residents and a tax-exempt 

18 organization. 

19 ‘‘(B) GOVERNANCE.—An entity shall not 

20 be treated as a qualified manufactured home 

21 community cooperative or corporation unless 

22 governance of the entity is carried out by mem23 bers elected to a board of directors with voting 

24 structured equitably among all members. 


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1 ‘‘(C) MEMBER.—The term ‘member’ 

2 means— 

3 ‘‘(i) an individual who— 

4 ‘‘(I) has attained the age of 18, 

5 ‘‘(II) is entitled to be a member 

6 by reason of— 

7 ‘‘(aa) the membership inter8 est of the individual to execute 

9 an occupancy agreement with the 

10 manufactured home community 

11 cooperative nonprofit with re12 spect to a site in the manufac13 tured home community in order 

14 to establish a manufactured 

15 home which is owned by the indi16 vidual, or 

17 ‘‘(bb) permission from the 

18 manufactured community cooper19 ative or corporation, the mem20 ber’s trust, or other entity, and 

21 ‘‘(III) is a resident of the manu22 factured home community, and 

23 ‘‘(ii) a tax exempt organization. 

24 ‘‘(4) MEMBERSHIP INTEREST.—The term 

25 ‘membership interest’ means— 


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1 ‘‘(A) an ownership interest in a manufac2 tured home community cooperative or corpora3 tion, or 

4 ‘‘(B) a membership interest in a manufac5 tured home community nonprofit corporation. 

6 ‘‘(5) MANUFACTURED HOME.—The term ‘man7 ufactured home’ means a structure which is trans8 portable in one or more sections, which— 

9 ‘‘(A) in traveling mode, is 8 body feet or 

10 more in width and 40 body feet or more in 

11 length, or, when erected on site, is 320 square 

12 feet or more, 

13 ‘‘(B) is built on a permanent chassis and 

14 designed to be used as a dwelling (with or with15 out a permanent foundation when connected to 

16 required utilities) and includes plumbing, heat17 ing, and electrical heating systems, and 

18 ‘‘(C) in the case of a structure manufac19 tured after June 15, 1976, is certified as meet20 ing the Manufactured Home Construction and 

21 Safety Standards issued under the National 

22 Manufactured Housing Construction and Safety 

23 Standards Act of 1974 (42 U.S.C. 5401 et 

24 seq.) by the Department of Housing and Urban 

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1 tification on the exterior of each transportable 

2 section. 

3 ‘‘(c) SPECIAL RULES.— 

4 ‘‘(1) RELATED PERSON.—For purposes of sub5 section (b)(1)(B), a person is related to the seller 

6 if— 

7 ‘‘(A) such person bears a relationship to 

8 the seller as specified in section 267(b) or 

9 707(b)(1), or 

10 ‘‘(B) such person and the seller are en11 gaged in trades or businesses under common 

12 control within the meanings of subsections (a) 

13 and (b) of section 52. 

14 ‘‘(2) ELECTION BY BOTH SELLER AND

15 BUYER.—The credit is allowable under this section 

16 only if— 

17 ‘‘(A) both the seller and the purchaser of 

18 the real property execute an affidavit rep19 resenting that the sale meets the requirements 

20 of subsection (b)(1), and the purchaser ac21 knowledges liability for the recapture of the 

22 credit under subsection (d) in case of any viola23 tion described in such subsection, 

24 ‘‘(B) the purchaser of the real property 

25 records the affidavit, and 


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1 ‘‘(C) the affidavit is referenced in the deed 

2 to the real property. 

3 ‘‘(3) REQUIREMENT.—The seller shall include a 

4 copy of the affidavit representing the sale with the 

5 return of tax. 

6 ‘‘(d) TAX UPON VIOLATION OF COVENANT.—There 

7 is imposed a tax on the buyer for a violation of the cov8 enant specified in subsection (b)(1)(C). The amount of 

9 such tax shall be 20 percent of the net proceeds after set10 tlement for the sale or exchange of the real property re11 ferred to in subsection (b)(1). For purposes of section 

12 501(a), the tax imposed by this subsection shall not be 

13 treated as a tax imposed by this subtitle. 

14 ‘‘(e) REGULATIONS.—The Secretary shall issue such 

15 regulations or other guidance as may be necessary to carry 

16 out this section, including the recapture under subsection 

17 (d).’’. 

18 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI19 NESS CREDIT.— 

20 Section 38(b) of the Internal Revenue Code of 

21 1986 is amended— 

22 (1) by striking ‘‘plus’’ at the end of paragraph 

23 (35), 

24 (2) by striking the period at the end of para25 graph (36) and inserting ‘‘, plus’’, and 


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1 (3) by adding at the end the following new 

2 paragraph: 

3 ‘‘(37) the manufactured home community sale 

4 credit determined under section 45S(a).’’. 

5 (c) CONFORMING AMENDMENTS.— 

6 (1) Subsection (c) of section 196 of the Internal 

7 Revenue Code of 1986 is amended— 

8 (A) by striking ‘‘and’’ at the end of para9 graph (13), 

10 (B) by striking the period at the end of 

11 paragraph (14) and inserting ‘‘, and’’, and 

12 (C) by adding at the end the following new 

13 paragraph: 

14 ‘‘(15) the manufactured home community sale 

15 credit determined under section 45S(a).’’. 

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

17 IV of subchapter A of chapter 1 of the Internal Rev18 enue Code of 1986 is amended by adding at the end 

19 the following new item: 

‘‘Sec. 45S. Manufactured home community sale to residents or nonprofit entity.’’. 

20 (d) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to taxable years beginning after 

22 December 31, 2017. 

Æ 


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