I 
109TH CONGRESS 
1ST SESSION H. R. 3715 
To amend the Internal Revenue Code of 1986 to provide an incentive to 
preserve affordable housing in multifamily housing units which are sold 
or exchanged. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 8, 2005 
Mr. RAMSTAD (for himself and Mr. CARDIN) 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 provide 
an incentive to preserve affordable housing in multifamily 
housing units which are sold or exchanged. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Affordable Housing 
Preservation Tax Relief Act of 2005’’.
SEC. 2. EXCLUSION OF GAIN FROM SALES OF AFFORDABLE 
HOUSING WHICH IS ATTRIBUTABLE TO DE-
PRECIATION. 
(a) IN GENERAL.—Part I of subchapter P of chapter 
1 of the Internal Revenue Code of 1986 (relating to treat-
ment of capital gains) is amended by inserting after sec-
tion 1202 the following new section: 
‘‘SEC. 1203. EXCLUSION OF GAIN FROM QUALIFIED SALES 
OF MULTIFAMILY HOUSING. 
‘‘(a) IN GENERAL.—Gross income shall not include 
gain from the qualified sale or exchange of eligible multi-
family housing property. 
‘‘(b) EXCLUSION LIMITED TO DEPRECIATION.—The 
amount of gain excluded from gross income under sub-
section (a) with respect to any property shall not exceed 
the depreciation adjustments (as defined in section 
1250(b)(3)) in respect of such property. 
‘‘(c) QUALIFIED SALE OR EXCHANGE.—For purposes 
of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified sale or 
exchange’ means a sale of eligible multifamily hous-
ing property to or an exchange of such property with 
a preservation entity which agrees to maintain af-
fordability and use restrictions regarding the prop-
erty that are—
‘‘(A) for a term of not less than the ex-
tended use period, 
‘‘(B) legally enforceable, and 
‘‘(C) consistent with the requirements of 
paragraph (2). 
Such restrictions shall be binding on all successors 
of the preservation entity and shall be recorded as 
a restrictive covenant on the property pursuant to 
State law. 
‘‘(2) 
AFFORDABILITY
AND
USE
RESTRIC-
TIONS.— 
‘‘(A) IN GENERAL.—Affordability and use 
restrictions regarding a property are consistent 
with this paragraph if— 
‘‘(i) in the case of property with re-
spect to which assistance described in sub-
section (d) is still in effect (as determined 
by the Secretary), such property satisfies 
the affordability and use restrictions in 
connection with such assistance, or 
‘‘(ii) in the case of any other property, 
such property is maintained as affordable 
housing. 
‘‘(B) AFFORDABLE
HOUSING.—The term 
‘affordable housing’ means housing which would
be a qualified low-income housing project (as 
defined in section 42(g)) if subparagraph (A) of 
section 42(g)(1) did not apply and subpara-
graph (B) of such section were applied by sub-
stituting ‘51 percent’ for ‘40 percent’. Eligible 
multifamily housing property shall not fail to be 
treated as affordable housing solely because 
residents of such property (while such property 
was described in subparagraph (A)(i)) continue 
to reside in such property. 
‘‘(3) CERTIFICATION
BY
PROGRAM
ADMINIS-
TRATOR.—The term ‘qualified sale or exchange’ 
shall not include any sale or exchange of property 
unless the housing credit agency certifies— 
‘‘(A) that the transferee with respect to 
such property is a qualified preservation entity, 
‘‘(B) that affordability and use restrictions 
will be maintained with respect to such property 
during the extended use period, and 
‘‘(C) the amount of gain which the trans-
feror will be allowed to exclude from gross in-
come under subsection (a) (determined at the 
entity level in the case of a partnership or S 
corporation).