tirety of such rehabilitation, the cost 
of the substantial rehabilitation, and 
‘‘(VII) the income of the quali-
fied homeowner (expressed as a per-
centage of the applicable area median 
family income for the location of the 
qualified residence), and 
‘‘(iii) such other information as the 
Secretary may require. 
‘‘(2) QUALIFIED ALLOCATION PLAN.—For pur-
poses of this subsection, the term ‘qualified alloca-
tion plan’ means any plan which— 
‘‘(A) sets forth the selection criteria to be 
used to prioritize qualified projects for alloca-
tions of State neighborhood homes credit dollar 
amounts, including— 
‘‘(i) the need for new or substantially 
rehabilitated owner-occupied homes in the 
area addressed by the project, 
‘‘(ii) the expected contribution of the 
project to neighborhood stability and revi-
talization, 
‘‘(iii) the capability of the project 
sponsor, and 
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‘‘(iv) the likelihood the project will re-
sult in long-term homeownership, 
‘‘(B) has been made available for public 
comment, and 
‘‘(C) provides a procedure that the neigh-
borhood homes credit agency (or any agent or 
contractor of such agency) shall follow for pur-
poses of— 
‘‘(i) identifying noncompliance with 
any provisions of this section, and 
‘‘(ii) notifying the Internal Revenue 
Service of any such noncompliance of 
which the agency becomes aware. 
‘‘(i) POSSESSIONS TREATED AS STATES.—For pur-
poses of this section, the term ‘State’ includes the District 
of Columbia and a possession of the United States. 
‘‘(j) REPAYMENT.— 
‘‘(1) IN GENERAL.— 
‘‘(A) SOLD DURING 5-YEAR PERIOD.—If a 
qualified residence is sold during the 5-year pe-
riod beginning on the date of the qualified com-
pletion event described in subsection (a) with 
respect to such qualified residence, the seller 
shall transfer an amount equal to the repay-
ment amount from the amount realized on such 
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sale to the relevant neighborhood homes credit 
agency. 
‘‘(B) USE OF REPAYMENTS.—A neighbor-
hood homes credit agency shall use any amount 
received pursuant to subparagraph (A) only for 
purposes of qualified projects. 
‘‘(2) REPAYMENT AMOUNT.—For purposes of 
paragraph (1)(A), the repayment amount is an 
amount equal to 50 percent of the gain from such 
resale, reduced by 20 percent for each year of the 
5-year period referred to in paragraph (1)(A) which 
ends before the date of the sale referred to in such 
paragraph. 
‘‘(3) LIEN
FOR
REPAYMENT
AMOUNT.—A 
neighborhood homes credit agency receiving an allo-
cation under this section shall place a lien on each 
qualified residence that is built or rehabilitated as 
part of a qualified project for an amount such agen-
cy deems necessary to ensure potential repayment 
pursuant to paragraph (1)(A). 
‘‘(4) DENIAL OF DEDUCTIONS IF CONVERTED 
TO RENTAL HOUSING.—If, during the 5-year period 
beginning on the date of the qualified completion 
event described in subsection (a), an individual who 
owns a qualified residence fails to use such qualified 
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residence as such individual’s principal residence for 
any period of time, no deduction shall be allowed for 
expenses paid or incurred by such individual with re-
spect to renting, during such period of time, such 
qualified residence. 
‘‘(5) WAIVER.—The neighborhood homes credit 
agency may waive the repayment required under 
paragraph (1)(A) in the case of homeowner experi-
encing a hardship. 
‘‘(k) REPORT.— 
‘‘(1) IN GENERAL.—The Secretary shall annu-
ally issue a report, to be made available to the pub-
lic, which contains the information submitted pursu-
ant to subsection (h)(1)(E). 
‘‘(2) DE-IDENTIFICATION.—The Secretary shall 
ensure that any information made public pursuant 
to paragraph (1) excludes any information that 
would allow for the identification of qualified home-
owners. 
‘‘(l) INFLATION ADJUSTMENT.— 
‘‘(1) IN GENERAL.—In the case of a calendar 
year after 2022, the dollar amounts in this section 
shall be increased by an amount equal to— 
‘‘(A) such dollar amount, multiplied by 
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‘‘(B) the cost-of-living adjustment deter-
mined under section 1(f)(3) for such calendar 
year by substituting ‘calendar year 2021’ for 
‘calendar year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(2) ROUNDING.— 
‘‘(A) SUBSTANTIAL REHABILITATION.—In 
the case of the dollar amount in subsection 
(f)(4), any increase under the preceding sen-
tence which is not a multiple of $1,000 shall be 
rounded to the nearest multiple of $1,000. 
‘‘(B) In the case of the dollar amount in 
subsection (g)(1)(A), any increase under the 
preceding sentence which is not a multiple of 
$0.01 shall be rounded to the nearest multiple 
of $0.01. 
‘‘(C) In the case of the dollar amount in 
subsection (g)(1)(B), any increase under the 
preceding sentence which is not a multiple of 
$100,000 shall be rounded to the nearest mul-
tiple of $100,000.’’. 
(b) CURRENT YEAR BUSINESS CREDIT CALCULA-
TION.—Section 38(b) of the Internal Revenue Code of 
1986 is amended by redesignating paragraphs (6) through 
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(33) as paragraphs (7) through (34), respectively, and by 
inserting after paragraph (5) the following new paragraph: 
‘‘(6) the neighborhood homes credit determined 
under section 42A(a),’’. 
(c) LIMITATION ON CARRYBACK.—Section 39 of the 
Internal Revenue Code of 1986 is amended by adding at 
the end the following new subsection: 
‘‘(e) NO CARRYBACK
OF NEIGHBORHOOD HOMES 
CREDIT BEFORE EFFECTIVE DATE.—No amount of the 
unused credit attributable to section 42A may be taken 
into account under section 38(a)(3) for any taxable year 
beginning before the date of the enactment of this sub-
section.’’. 
(d) 
CONFORMING
AMENDMENTS.—Subsections 
(i)(3)(C), (i)(6)(B)(i), and (k)(1) of section 469 of the In-
ternal Revenue Code of 1986 are each amended by insert-
ing ‘‘or 42A’’ after ‘‘section 42’’. 
(e) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by in-
serting after the item relating to section 42 the following: 
‘‘Sec. 42A. Neighborhood homes credit.’’. 
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to calendar years beginning after 
December 31, 2021. 
Æ 
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