I 

118TH CONGRESS 

1ST SESSION H. R. 5176 

To amend the Internal Revenue Code of 1986 to allow for nonrecognition 

of gain on real property sold for use as affordable housing. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 8, 2023 

Mr. SCHIFF (for himself and Mr. PETERS) introduced the following bill; which 

was referred to the Committee on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to allow for 

nonrecognition of gain on real property sold for use 

as affordable housing. 

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 ‘‘Affordable and Home5 less Housing Incentives Act of 2023’’. 

6 SEC. 2. NONRECOGNITION OF GAIN ON PROPERTY SOLD 

7 FOR USE AS AFFORDABLE HOUSING. 

8 (a) IN GENERAL.—Section 1033 of the Internal Rev9 enue Code of 1986 is amended by redesignating subsection 


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1 (k) as subsection (l) and by inserting after subsection (j) 

2 the following new subsection: 

3 ‘‘(k) SALES FOR USE AS AFFORDABLE HOUSING.— 

4 ‘‘(1) IN GENERAL.—For purposes of this sub5 title, if real property is sold or otherwise transferred 

6 to a qualified housing operator for use or develop7 ment by such operator as affordable housing and 

8 such property meets the requirements of paragraphs 

9 (3) and (4), such sale or transfer shall be treated as 

10 an involuntary conversion to which this section ap11 plies. 

12 ‘‘(2) QUALIFIED HOUSING OPERATOR.—For 

13 purposes of this section, the term ‘qualified housing 

14 operator’ means any of the following: 

15 ‘‘(A) A State or local government, or any 

16 political subdivision or instrumentality thereof. 

17 ‘‘(B) A tribally designated housing entity 

18 (as such term is defined in section 4 of the Na19 tive American Housing Assistance and Self-De20 termination Act of 1996). 

21 ‘‘(C) A community housing development 

22 organization (as such term is defined in section 

23 104 of the Cranston-Gonzalez National Afford24 able Housing Act). 

25 ‘‘(D) An organization— 


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1 ‘‘(i) described in section 501(c) and 

2 exempt from taxation under section 

3 501(a), 

4 ‘‘(ii) the purpose of which includes 

5 providing affordable housing, and 

6 ‘‘(iii) which— 

7 ‘‘(I) has received Federal, State, 

8 or local grant funds to develop or op9 erate affordable housing, or 

10 ‘‘(II) is described in section 

11 42(h)(5)(B) with respect to a quali12 fied low-income housing project that is 

13 allocated housing credit dollar 

14 amounts under section 42. 

15 ‘‘(3) AFFORDABLE HOUSING REQUIREMENT.— 

16 The requirements of this paragraph are met with re17 spect to property if such property has, as of the date 

18 of the sale or transfer referred to in paragraph (1), 

19 a covenant or other binding legal restriction suffi20 cient to— 

21 ‘‘(A) obligate, at all times during the 30- 

22 year period beginning on such date, each owner 

23 of such property with respect to the portion of 

24 such period during which such owner owns such 

25 property, to maintain such property as either— 


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1 ‘‘(i) residential rental property (within 

2 the meaning of section 168) not less than 

3 75 percent of the units of which are af4 fordable to low-income families and either 

5 occupied by or available for use by low-in6 come residents, or 

7 ‘‘(ii) a shelter eligible for assistance 

8 under title IV of the McKinney-Vento 

9 Homeless Assistance Act, and 

10 ‘‘(B) provide any person a right to obtain 

11 injunctive relief to enforce the obligations de12 scribed in subparagraph (A). 

13 ‘‘(4) NOTIFICATION OF DEPARTMENT OF HOUS14 ING AND URBAN DEVELOPMENT.—The requirements 

15 of this paragraph are met with respect to any prop16 erty if, not later than 90 days after the date of the 

17 sale or transfer referred to in paragraph (1), the 

18 transferor notifies the Secretary of Housing and 

19 Urban Development of such transfer in such manner 

20 as such Secretary may provide. 

21 ‘‘(5) SPECIAL RULE WITH RESPECT TO PERIOD

22 WITHIN WHICH PROPERTY MUST BE REPLACED.—In 

23 the case of a sale or transfer described in paragraph 

24 (1), subsection (a)(2)(B)(i) shall be applied by sub25 stituting ‘3 years’ for ‘2 years’. 


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1 ‘‘(6) SPECIAL RULE FOR REAL PROPERTY HELD

2 FOR PRODUCTIVE USE IN TRADE OR BUSINESS.— 

3 For purposes of subsection (a), if the real property 

4 described in paragraph (1) is held for productive use 

5 in a trade or business or for investment, property of 

6 a like kind to be held either for productive use in a 

7 trade or business or for investment shall be treated 

8 as property similar or related in service or use to the 

9 property so described.’’. 

10 (b) ENFORCEMENT OBLIGATIONS OF THE DEPART11 MENT OF HOUSING AND URBAN DEVELOPMENT.—With 

12 respect to each property with respect to which the Sec13 retary of Housing and Urban Development receives notifi14 cation under paragraph (4) of section 1033(k) of the In15 ternal Revenue Code of 1986, such Secretary, acting 

16 though the Departmental Enforcement Center (DEC) of 

17 the Department of Housing and Urban Development, shall 

18 ensure (not less often than every 5 years during the 30- 

19 year period described in paragraph (3)(A) of such section) 

20 that such property complies with the requirements of such 

21 paragraph (3)(A), including if necessary by obtaining the 

22 injunctive relief described in paragraph (3)(B) of such sec23 tion. 


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1 (c) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to sales and transfers after the 

3 date of the enactment of this Act. 

Æ 


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