2658 
HR 2 RDS
to the qualified supportive housing reserve fund 
are maintained on an annual basis, and are 
available for inspection upon request by the 
housing credit agency. 
‘‘(2) DENIAL OF DOUBLE BENEFIT.—The de-
ductions otherwise allowed under this chapter for the 
taxable year shall be reduced by the amount of the 
credit allowed under this section for such taxable 
year. 
‘‘(h) DEFINITIONS.—Any term used in this section 
which is also used in section 42 shall have the same mean-
ing as when used in such section.’’. 
(b) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.— 
(1) IN GENERAL.—Section 38(b), as amended 
by the preceding provisions of this Act, is amended 
by striking ‘‘plus’’ at the end of paragraph (34), by 
striking the period at the end of paragraph (35) and 
inserting ‘‘, plus’’, and by adding at the end the fol-
lowing new paragraph: 
‘‘(36) the low-income housing supportive serv-
ices credit determined under section 42A(a).’’. 
(2) TREATMENT
AS
SPECIFIED
CREDIT.— 
Clause (iii) of section 38(c)(4)(B) is amended by in-
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02658
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2659 
HR 2 RDS
serting ‘‘, and the credit determined under section 
42A’’ after ‘‘2007’’. 
(c) TREATMENT FOR PURPOSES OF TAX ON BASE 
EROSION PAYMENTS.—Paragraph (4) of section 59A(b) 
is amended by redesignating subparagraphs (B) and (C) 
as subparagraphs (C) and (D), respectively, and by insert-
ing after subparagraph (A) the following new subpara-
graph: 
‘‘(B) the low-income housing supportive 
services 
credit 
determined 
under 
section 
42A(a),’’. 
(d) PASSIVE ACTIVITY CREDITS.— 
(1) IN GENERAL.—Section 469 is amended by 
striking ‘‘42’’ each place it appears in subsections 
(i)(3)(C), (i)(6)(B)(i), and (k)(1) and inserting ‘‘42 
or 42A’’. 
(2) CONFORMING
AMENDMENTS.—The head-
ings of subsections (i)(3)(C) and (i)(6)(B) of section 
469 are each amended by striking ‘‘CREDIT’’ and in-
serting ‘‘CREDITS’’. 
(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 
new item: 
‘‘Sec. 42A. Credit for contributions to low-income housing supportive services.’’. 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02659
Fmt 6652
Sfmt 6211
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2660 
HR 2 RDS
(f) EFFECTIVE DATE.—The amendments made by 
this section shall apply to buildings placed in service after 
December 31, 2020. 
Subtitle B—Neighborhood Homes 
Credit 
SEC. 90621. NEIGHBORHOOD HOMES CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1, as amended by the preceding pro-
visions of this Act, is amended by inserting after section 
42A the following new section: 
‘‘SEC. 42B. NEIGHBORHOOD HOMES CREDIT. 
‘‘(a) ALLOWANCE OF CREDIT.—For purposes of sec-
tion 38, the amount of the neighborhood homes credit de-
termined under this section for a taxable year for a quali-
fied project shall be, with respect to each qualified resi-
dence that is part of such qualified project and that expe-
riences a qualified completion event during such taxable 
year, an amount equal to— 
‘‘(1) in the case of an affordable sale, with re-
spect to the seller, the excess of— 
‘‘(A) the qualified development cost in-
curred by such seller for such qualified resi-
dence, over 
‘‘(B) the sale price of such qualified resi-
dence, or 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02660
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2661 
HR 2 RDS
‘‘(2) in the case of any other qualified comple-
tion event, with respect to a taxpayer other than the 
owner of the qualified residence (or a related person 
with respect to such owner), the excess of— 
‘‘(A) the development cost incurred by 
such taxpayer for such qualified residence, over 
‘‘(B) the amount received by such taxpayer 
as payment for such rehabilitation. 
‘‘(b) LIMITATIONS.— 
‘‘(1) AMOUNT.—The amount determined under 
subsection (a) with respect to a qualified residence 
shall not exceed 35 percent of the lesser of— 
‘‘(A) the qualified development cost, or 
‘‘(B) 80 percent of the national median 
sale price for new homes (as determined pursu-
ant to the most recent census data available as 
of the date on which the neighborhood homes 
credit agency makes an allocation for the quali-
fied project). 
‘‘(2) ALLOCATIONS.— 
‘‘(A) IN
GENERAL.—The amount deter-
mined under subsection (a) with respect to a 
qualified residence that is part of a qualified 
project and that experiences a qualified comple-
tion event shall not exceed the excess of— 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02661
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2662 
HR 2 RDS
‘‘(i) the amount determined under 
subparagraph (B), over 
‘‘(ii) the amounts previously deter-
mined under subsection (a) with respect to 
such qualified project. 
‘‘(B) ALLOCATION AMOUNT.—The amount 
determined under this paragraph with respect 
to a qualified residence that is part of a quali-
fied project and that experiences a qualified 
completion event is the least of— 
‘‘(i) the amount allocated to such 
project by the neighborhood homes credit 
agency under this section, 
‘‘(ii) pursuant to subparagraph (C), 
the amount such agency determines at the 
time of the qualified completion event is 
necessary to ensure the financial feasibility 
of the project, or 
‘‘(iii) in the case of a qualified com-
pletion event that occurs after the 5-year 
period beginning on the date of the alloca-
tion referred to in clause (i), $0. 
‘‘(C) FINANCIAL FEASABILITY.—For pur-
poses of subparagraph (B)(ii), the neighborhood 
homes credit agency shall consider— 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02662
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2663 
HR 2 RDS
‘‘(i) the sources and uses of funds and 
the total financing planned for the quali-
fied project, 
‘‘(ii) any proceeds or receipts expected 
to be generated by reason of tax benefits, 
‘‘(iii) the percentage of the amount al-
located to such project under this section 
used for project costs other than the cost 
of intermediaries, and 
‘‘(iv) the reasonableness of the devel-
opmental costs and fees of the qualified 
project. 
‘‘(c) QUALIFIED DEVELOPMENT COST.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—The term ‘qualified devel-
opment cost’ means, with respect to a qualified resi-
dence, so much of the allowable development cost as 
the neighborhood homes credit agency certifies, at 
the time of the completion event, meets the stand-
ards promulgated under subsection (h)(1)(C). 
‘‘(2) ALLOWABLE
DEVELOPMENT
COST.—The 
term ‘allowable development cost’ means— 
‘‘(A) the cost of construction, substantial 
rehabilitation, demolition of any structure, and 
environmental remediation, and 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02663
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2664 
HR 2 RDS
‘‘(B) in the case of an affordable sale, so 
much of the cost of acquiring buildings and 
land as does not exceed an amount equal to 75 
percent of the costs described in subparagraph 
(A). 
‘‘(3) CONDOMINIUM AND COOPERATIVE HOUS-
ING UNITS.—In the case of a qualified residence de-
scribed in subparagraph (B) or (C) of subsection 
(f)(1), the allowable development cost of such quali-
fied residence shall be an amount equal to the total 
allowable development cost of the entire condo-
minium or cooperative housing property in which 
such qualified residence is located, multiplied by a 
fraction— 
‘‘(A) the numerator of which is the total 
floor space of such qualified residence, and 
‘‘(B) the denominator of which is the total 
floor space of all residences within such prop-
erty. 
‘‘(d) QUALIFIED PROJECT.—For purposes of this 
section, the term ‘qualified project’ means a project that— 
‘‘(1) a neighborhood homes credit agency cer-
tifies will build or substantially rehabilitate one or 
more qualified residences located in one or more 
qualified census tracts, and 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02664
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2665 
HR 2 RDS
‘‘(2) is designated by such agency as a qualified 
project under this section and is allocated (before 
such building or substantial rehabilitation begins) a 
portion of the amount allocated to such agency 
under subsection (g). 
‘‘(e) QUALIFIED CENSUS TRACT.—For purposes of 
this section— 
‘‘(1) IN GENERAL.—The term ‘qualified census 
tract’ means a census tract— 
‘‘(A) with— 
‘‘(i) a median gross income which 
does not exceed 80 percent of the applica-
ble area median gross income, 
‘‘(ii) a poverty rate that is not less 
than 130 percent of the applicable area 
poverty rate, and 
‘‘(iii) a median value for owner-occu-
pied homes that does not exceed applicable 
area median value for owner-occupied 
homes, 
‘‘(B) which is located in a city with a pop-
ulation of not less than 50,000 and a poverty 
rate that is not less than 150 percent of the ap-
plicable area poverty rate, and which has— 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02665
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2666 
HR 2 RDS
‘‘(i) a median gross income which 
does not exceed the applicable area median 
gross income, and 
‘‘(ii) a median value for owner-occu-
pied homes that does not exceed 80 per-
cent of the applicable area median value 
for owner-occupied homes, or 
‘‘(C) which is located in a nonmetropolitan 
county and which has— 
‘‘(i) a median gross income which 
does not exceed the applicable area median 
gross income, and 
‘‘(ii) been designated by a neighbor-
hood homes credit agency under this 
clause. 
‘‘(2) ADDITIONAL
CENSUS
TRACTS
FOR
SUB-
STANTIAL REHABILITATION.—In the case of a quali-
fied residence that is intended for substantial reha-
bilitation described in subsection (f)(5)(B), the term 
‘qualified census tract’ includes a census tract that 
meets the requirements of paragraph (1)(A), without 
regard to clause (iii), and that is designated by the 
neighborhood homes credit agency under this para-
graph. 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02666
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2667 
HR 2 RDS
‘‘(3) LIST
OF
QUALIFIED
CENSUS
TRACTS.— 
The Secretary of Housing and Urban Development 
shall, for each year, make publicly available a list of 
qualified census tracts under— 
‘‘(A) on a combined basis, subparagraphs 
(A) and (B) of paragraph (1), 
‘‘(B) subparagraph (C) of such paragraph, 
and 
‘‘(C) paragraph (2). 
‘‘(f) OTHER DEFINITIONS.—For purposes of this sec-
tion— 
‘‘(1) QUALIFIED RESIDENCE.—The term ‘quali-
fied residence’ means a residence that consists of— 
‘‘(A) a single-family home containing 4 or 
fewer residential units, 
‘‘(B) a condominium unit, or 
‘‘(C) a house or an apartment owned by a 
cooperative housing corporation (as defined in 
section 216(b)). 
‘‘(2) AFFORDABLE SALE.— 
‘‘(A) IN GENERAL.— 
‘‘(i) IN GENERAL.—The term ‘afford-
able sale’ means a sale to a qualified home-
owner of a qualified residence that the 
neighborhood homes credit agency certifies 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02667
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2668 
HR 2 RDS
as meeting the standards promulgated 
under subsection (h)(1)(D) for a price that 
does not exceed— 
‘‘(I) in the case of any qualified 
residence not described in subclause 
(II), (III), or (IV), the amount equal 
to the product of 4 multiplied by the 
applicable area median gross income, 
‘‘(II) in the case of a single-fam-
ily home containing two residential 
units, 125 percent of the amount de-
scribed in subclause (I), 
‘‘(III) in the case of a single-fam-
ily home containing three residential 
units, 150 percent of the amount de-
scribed in subclause (I), or 
‘‘(IV) in the case of a single-fam-
ily home containing four residential 
units, 175 percent of the amount de-
scribed in subclause (I). 
‘‘(ii) RELATED PERSONS.— 
‘‘(I) IN
GENERAL.—A sale be-
tween related persons shall not be 
treated as an affordable sale. 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02668
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2669 
HR 2 RDS
‘‘(II) 
DEFINITION.—For 
pur-
poses of this section, a person (in this 
clause referred to as the ‘related per-
son’) is related to any person if the 
related person bears a relationship to 
such 
person 
specified 
in 
section 
267(b) or 707(b)(1), or the related 
person and such person are engaged 
in trades or businesses under common 
control (within the meaning of sub-
sections (a) and (b) of section 52). 
For purposes of the preceding sen-
tence, in applying section 267(b) or 
707(b)(1), ‘10 percent’ shall be sub-
stituted for ‘50 percent’. 
‘‘(3) APPLICABLE AREA.—The term ‘applicable 
area’ means— 
‘‘(A) in the case of a metropolitan census 
tract, the metropolitan area in which such cen-
sus tract is located, and 
‘‘(B) in the case of a census tract other 
than a census tract described in subparagraph 
(A), the State. 
‘‘(4) 
SUBSTANTIAL
REHABILITATION.—The 
term ‘substantial rehabilitation’ means rehabilitation 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02669
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2670 
HR 2 RDS
efforts involving qualified development costs that are 
not less than the greater of— 
‘‘(A) $20,000, or 
‘‘(B) 20 percent of the cost of acquiring 
buildings and land. 
‘‘(5) QUALIFIED
COMPLETION
EVENT.—The 
term ‘qualified completion event’ means— 
‘‘(A) in the case of a qualified residence 
that is built or substantially rehabilitated as 
part of a qualified project and sold, an afford-
able sale, or 
‘‘(B) in the case of a qualified residence 
that is substantially rehabilitated as part of a 
qualified project and owned by the same quali-
fied homeowner throughout such rehabilitation, 
the completion of such rehabilitation (as deter-
mined by the neighborhood homes credit agen-
cy) to the standards promulgated under sub-
section (h)(1)(D). 
‘‘(6) QUALIFIED HOMEOWNER.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
homeowner’ means, with respect to a qualified 
residence, an individual— 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02670
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2671 
HR 2 RDS
‘‘(i) who owns and uses such qualified 
residence as the principal residence of such 
individual, and 
‘‘(ii) whose income is 140 percent or 
less of the applicable area median gross in-
come for the location of the qualified resi-
dence. 
‘‘(B) OWNERSHIP.—For purposes of a co-
operative housing corporation (as such term is 
defined in section 216(b)), a tenant-stockholder 
shall be treated as owning the house or apart-
ment which such person is entitled to occupy. 
‘‘(C) INCOME.—For purposes of this para-
graph, income shall be a determined in accord-
ance with sections 143(f)(2) and 143(f)(4). 
‘‘(D) TIMING.—For purposes of this para-
graph, the income of a taxpayer shall be deter-
mined— 
‘‘(i) in the case of a qualified resi-
dence that is built or substantially rehabili-
tated as part of a qualified project and 
sold, at the time a binding contract for 
purchase is made, or 
‘‘(ii) in the case of a qualified resi-
dence that is occupied by a qualified home-
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02671
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2672 
HR 2 RDS
owner and intended to be substantially re-
habilitated as part of a qualified project, at 
the time a binding contract to undertake 
such rehabilitation is made. 
‘‘(7) NEIGHBORHOOD
HOMES
CREDIT
AGEN-
CY.—The term ‘neighborhood homes credit agency’ 
means the agency designated by the governor of a 
State as the neighborhood homes credit agency of 
the State. 
‘‘(g) ALLOCATION.— 
‘‘(1) STATE
NEIGHBORHOOD
HOMES
CREDIT 
CEILING.—The State neighborhood homes credit 
amount for a State for a calendar year is an amount 
equal to the greater of— 
‘‘(A) the product of $6, multiplied by the 
State population (determined in accordance 
with section 146(j)), or 
‘‘(B) $8,000,000. 
‘‘(2) UNUSED AMOUNT.—The State neighbor-
hood homes credit amount for a calendar year shall 
be increased by the sum of— 
‘‘(A) any amount certified by the neighbor-
hood homes credit agency of the State as hav-
ing been previously allocated to a qualified 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02672
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2673 
HR 2 RDS
project and not used during the 5-year period 
described in subsection (b)(2)(B)(iii), plus 
‘‘(B) sum of the amount by which the 
amount determined under paragraph (1) (with-
out application of this paragraph) exceeded the 
amount allocated to qualified projects in each of 
the three immediately preceding calendar years. 
‘‘(3) PORTION OF STATE CREDIT CEILING FOR 
CERTAIN
PROJECTS
INVOLVING
QUALIFIED
NON-
PROFIT ORGANIZATIONS.—Rules similar to the rules 
of section 42(h)(5) shall apply. 
‘‘(h) RESPONSIBILITIES OF NEIGHBORHOOD HOMES 
CREDIT AGENCIES.— 
‘‘(1) IN GENERAL.—Notwithstanding subsection 
(g), the State neighborhood homes credit dollar 
amount shall be zero for a calendar year unless the 
neighborhood homes credit agency of the State— 
‘‘(A) allocates such amount pursuant to a 
qualified allocation plan of the neighborhood 
homes credit agency, 
‘‘(B) allocates not more than 20 percent of 
such amount for the previous year to projects 
with respect to qualified residences in census 
tracts under subsection (e)(1)(C) or (e)(2), 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02673
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2674 
HR 2 RDS
‘‘(C) promulgates standards with respect 
to reasonable qualified development costs and 
fees, 
‘‘(D) promulgates standards with respect 
to construction quality, and 
‘‘(E) submits to the Secretary (at such 
time and in such manner as the Secretary may 
prescribe) an annual report specifying— 
‘‘(i) the amount of the neighborhood 
homes credits allocated to each qualified 
project for the previous year, 
‘‘(ii) with respect to each qualified 
residence completed in the preceding cal-
endar year— 
‘‘(I) the census tract in which 
such qualified residence is located, 
‘‘(II) with respect to the qualified 
project that includes such qualified 
residence, the year in which such 
project received an allocation under 
this section, 
‘‘(III) whether such qualified res-
idence was new or substantially reha-
bilitated, 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02674
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2675 
HR 2 RDS
‘‘(IV) the eligible basis of such 
qualified residence, 
‘‘(V) the amount of the neighbor-
hood homes credit with respect to 
such qualified residence, 
‘‘(VI) the sales price of such 
qualified residence or, in the case of a 
qualified residence that is substan-
tially rehabilitated as part of a quali-
fied project and is owned by the same 
qualified homeowner during the en-
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 
gross 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-
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02675
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS
2676 
HR 2 RDS
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 
‘‘(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. 
VerDate Sep 11 2014 
22:38 Jan 04, 2021
Jkt 019200
PO 00000
Frm 02676
Fmt 6652
Sfmt 6201
E:\BILLS\H2.RDS
H2
TKELLEY on DSKBCP9HB2PROD with BILLS