Affordable and Homeless Housing Incentives Act of 2023

To amend the Internal Revenue Code of 1986 to allow for nonrecognition of gain on real property sold for use as affordable housing. 1. Short title This Act may be cited as the Affordable and Homeless Housing Incentives Act of 2023 2. Nonrecognition of gain on property sold for use as affordable housing (a) In general Section 1033 (k) Sales for use as affordable housing (1) In general For purposes of this subtitle, if real property is sold or otherwise transferred to a qualified housing operator for use or development by such operator as affordable housing and such property meets the requirements of paragraphs (3) and (4), such sale or transfer shall be treated as an involuntary conversion to which this section applies. (2) Qualified housing operator For purposes of this section, the term qualified housing operator (A) A State or local government, or any political subdivision or instrumentality thereof. (B) A tribally designated housing entity (as such term is defined in section 4 of the Native American Housing Assistance and Self-Determination Act of 1996). (C) A community housing development organization (as such term is defined in section 104 of the Cranston-Gonzalez National Affordable Housing Act). (D) An organization— (i) described in section 501(c) and exempt from taxation under section 501(a), (ii) the purpose of which includes providing affordable housing, and (iii) which— (I) has received Federal, State, or local grant funds to develop or operate affordable housing, or (II) is described in section 42(h)(5)(B) with respect to a qualified low-income housing project that is allocated housing credit dollar amounts under section 42. (3) Affordable housing requirement The requirements of this paragraph are met with respect to property if such property has, as of the date of the sale or transfer referred to in paragraph (1), a covenant or other binding legal restriction sufficient to— (A) obligate, at all times during the 30-year period beginning on such date, each owner of such property with respect to the portion of such period during which such owner owns such property, to maintain such property as either— (i) residential rental property (within the meaning of section 168) not less than 75 percent of the units of which are affordable to low-income families and either occupied by or available for use by low-income residents, or (ii) a shelter eligible for assistance under title IV of the McKinney-Vento Homeless Assistance Act, and (B) provide any person a right to obtain injunctive relief to enforce the obligations described in subparagraph (A). (4) Notification of Department of Housing and Urban Development The requirements of this paragraph are met with respect to any property if, not later than 90 days after the date of the sale or transfer referred to in paragraph (1), the transferor notifies the Secretary of Housing and Urban Development of such transfer in such manner as such Secretary may provide. (5) Special rule with respect to period within which property must be replaced In the case of a sale or transfer described in paragraph (1), subsection (a)(2)(B)(i) shall be applied by substituting 3 years 2 years (6) Special rule for real property held for productive use in trade or business For purposes of subsection (a), if the real property described in paragraph (1) is held for productive use in a trade or business or for investment, property of a like kind to be held either for productive use in a trade or business or for investment shall be treated as property similar or related in service or use to the property so described. . (b) Enforcement obligations of the Department of Housing and Urban Development With respect to each property with respect to which the Secretary of Housing and Urban Development receives notification under paragraph (4) of section 1033(k) (c) Effective date The amendment made by this section shall apply to sales and transfers after the date of the enactment of this Act.

Summary: Affordable and Homeless Housing Incentives Act of 2023 This bill allows nonrecognition of gain, for income tax purposes, from the sale of real property to a qualified housing operator for use or development by such operator as affordable housing. The bill defines qualified housing operator to include a state or local government, a tribally designated housing entity, a community housing development organization, or a tax-exempt entity organized to provide affordable housing and which receives federal, state, or local grants to develop or operate such housing. To be eligible for nonrecognition of gain, the seller must make the property either (1) residential rental property, not less than 75% of the units of which are affordable to low-income families; or (2) a homeless shelter. The Departmental Enforcement Center of the Department of Housing and Urban Development must ensure that sales of real property under this bill meet certain involuntary conversion requirements.