I 
118TH CONGRESS 
2D SESSION 
H. R. 9380 
To amend the Internal Revenue Code of 1986 to provide a credit for working 
families housing development, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
AUGUST 16, 2024 
Mr. RYAN introduced the following bill; which was referred to the Committee 
on Ways and Means, and in addition to the Committees on Transpor-
tation and Infrastructure, and Energy and Commerce, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
of such provisions as fall within the jurisdiction of the committee con-
cerned 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
a credit for working families housing development, and 
for other purposes. 
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 ‘‘Working Families 
Housing Tax Credit Act’’. 
SEC. 2. SENSE OF CONGRESS RELATING TO THE WORKING 
FAMILIES HOUSING TAX CREDIT. 
It is the sense of Congress that— 
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(1) the working family housing tax credit under 
section 42A of the Internal Revenue Code of 1986 
is a critically important Federal Government policy 
tool to encourage the production of quality housing 
for our teachers, firefighters, police officers, vet-
erans, and all hard-working Americans; and 
(2) Congress should further improve and en-
hance the working families housing tax credit by 
passing pro-housing legislation. 
SEC. 3. WORKING FAMILIES HOUSING TAX CREDIT. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 is amended by inserting after section 42 the fol-
lowing new section: 
‘‘SEC. 42A. WORKING FAMILIES HOUSING CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 38, the 
amount of the working families housing credit determined 
under this section for any taxable year in the credit period 
shall be an amount equal to— 
‘‘(1) the applicable percentage, of 
‘‘(2) the qualified basis of each qualified work-
ing families building. 
‘‘(b) APPLICABLE PERCENTAGE.— 
‘‘(1) DETERMINATION
OF
APPLICABLE
PER-
CENTAGE.—For purposes of this section— 
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‘‘(A) IN GENERAL.—The term ‘applicable 
percentage’ means, with respect to any building, 
the appropriate percentage prescribed by the 
Secretary for the earlier of— 
‘‘(i) the month in which such building 
is placed in service, or 
‘‘(ii) at the election of the taxpayer, 
the month in which the taxpayer and the 
housing credit agency enter into an agree-
ment with respect to such building (which 
is binding on such agency, the taxpayer, 
and all successors in interest) as to the 
housing credit dollar amount to be allo-
cated to such building. 
A month may be elected under clause (ii) only 
if the election is made not later than the 5th 
day after the close of such month. Such an elec-
tion, once made, shall be irrevocable. 
‘‘(B) METHOD OF PRESCRIBING PERCENT-
AGES.—The percentages prescribed by the Sec-
retary for any month shall be percentages which 
will yield over a 15-year period amounts of 
credit under subsection (a) which have a 
present value equal to— 
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‘‘(i) 50 percent of the qualified basis 
of a new building, and 
‘‘(ii) 60 percent of the qualified basis 
of a building not described in clause (i). 
‘‘(C) METHOD
OF
DISCOUNTING.—The 
present value under subparagraph (B) shall be 
determined— 
‘‘(i) as of the last day of the 1st year 
of the 15-year period referred to in sub-
paragraph (B), 
‘‘(ii) by using a discount rate equal to 
72 percent of the average of the annual 
Federal mid-term rate and the annual 
Federal long-term rate applicable under 
section 1274(d)(1) to the month applicable 
under clause (i) or (ii) of subparagraph 
(A) and compounded annually, and 
‘‘(iii) by assuming that the credit al-
lowable under this section for any year is 
received on the last day of such year. 
‘‘(2) MINIMUM CREDIT RATE.— 
‘‘(A) IN
GENERAL.—The applicable per-
centage for any building which is not Federally 
subsidized for the taxable year shall not be less 
than 5 percent. 
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‘‘(B) MINIMUM CREDIT RATE FOR FEDER-
ALLY SUBSIDIZED BUILDINGS.—In the case of 
any building to which subparagraph (A) does 
not apply, except as provided in paragraph (3), 
the applicable percentage shall not be less than 
2 percent. 
‘‘(3) EXCEPTION
FOR
CERTAIN
FEDERALLY 
SUBSIDIZED BUILDINGS.—In the case of any build-
ing to which paragraph (2)(A) does not apply, the 
applicable percentage is zero unless— 
‘‘(A) a credit is allowed under section 42 
with respect to such building for the taxable 
year, and 
‘‘(B) such building is financed by tax-ex-
empt bonds as described in section 42(h)(4). 
‘‘(4) CROSS REFERENCES.— 
‘‘(A) For treatment of certain rehabilita-
tion expenditures as separate new buildings, see 
subsection (e). 
‘‘(B) For determination of applicable per-
centage for increases in qualified basis after the 
1st year of the credit period, see subsection 
(f)(3). 
‘‘(C) For authority of housing credit agen-
cy to limit applicable percentage and qualified 
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basis which may be taken into account under 
this section with respect to any building, see 
subsection (h)(6). 
‘‘(c) QUALIFIED BASIS; QUALIFIED WORKING FAMI-
LIES BUILDING.—For purposes of this section— 
‘‘(1) QUALIFIED BASIS.— 
‘‘(A) 
DETERMINATION.—The 
qualified 
basis of any qualified working families building 
for any taxable year is an amount equal to— 
‘‘(i) the applicable fraction (deter-
mined as of the close of such taxable year) 
of 
‘‘(ii) the eligible basis of such building 
(determined under subsection (d)). 
‘‘(B) APPLICABLE
FRACTION.—For pur-
poses of subparagraph (A), the term ‘applicable 
fraction’ means the smaller of the unit fraction 
or the floor space fraction. 
‘‘(C) UNIT
FRACTION.—For purposes of 
subparagraph (B), the term ‘unit fraction’ 
means the fraction— 
‘‘(i) the numerator of which is the 
number of working families units in the 
building, and 
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‘‘(ii) the denominator of which is the 
number of residential rental units (whether 
or not occupied) in such building. 
‘‘(D) FLOOR SPACE FRACTION.—For pur-
poses of subparagraph (B), the term ‘floor 
space fraction’ means the fraction— 
‘‘(i) the numerator of which is the 
total floor space of the working families 
units in such building, and 
‘‘(ii) the denominator of which is the 
total floor space of the residential rental 
units (whether or not occupied) in such 
building. 
‘‘(2) QUALIFIED
WORKING
FAMILIES
BUILD-
ING.—The term ‘qualified working families building’ 
means any building which is part of a qualified 
working families housing project at all times during 
the period— 
‘‘(A) beginning on the 1st day in the credit 
period on which such building is part of such a 
project, and 
‘‘(B) ending on the last day of the credit 
period with respect to such building. 
‘‘(d) ELIGIBLE BASIS.—For purposes of this sec-
tion— 
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‘‘(1) NEW BUILDINGS.—The eligible basis of a 
new building is its adjusted basis as of the close of 
the 1st taxable year of the credit period. 
‘‘(2) EXISTING BUILDINGS.— 
‘‘(A) IN GENERAL.—The eligible basis of 
an existing building is— 
‘‘(i) in the case of a building which 
meets the requirements of subparagraph 
(B), its adjusted basis as of the close of 
the 1st taxable year of the credit period, 
and 
‘‘(ii) zero in any other case. 
‘‘(B) REQUIREMENTS.—A building meets 
the requirements of this subparagraph if— 
‘‘(i) the building is acquired by pur-
chase (as defined in section 179(d)(2)), 
‘‘(ii) there is a period of at least 10 
years between the date of its acquisition by 
the taxpayer and the date the building was 
last placed in service, 
‘‘(iii) the building was not previously 
placed in service by the taxpayer or by any 
person who was a related person with re-
spect to the taxpayer as of the time pre-
viously placed in service, and 
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‘‘(iv) except as provided in subsection 
(f)(5), a credit is allowable under sub-
section (a) by reason of subsection (e) with 
respect to the building. 
‘‘(C) ADJUSTED BASIS.—For purposes of 
subparagraph (A), the adjusted basis of any 
building shall not include so much of the basis 
of such building as is determined by reference 
to the basis of other property held at any time 
by the person acquiring the building. 
‘‘(D) SPECIAL RULES.— 
‘‘(i) SPECIAL
RULES
FOR
CERTAIN 
TRANSFERS.—For purposes of determining 
under subparagraph (B)(ii) when a build-
ing was last placed in service, there shall 
not be taken into account any placement in 
service— 
‘‘(I) in connection with the acqui-
sition of the building in a transaction 
in which the basis of the building in 
the hands of the person acquiring it is 
determined in whole or in part by ref-
erence to the adjusted basis of such 
building in the hands of the person 
from whom acquired, 
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‘‘(II) by a person whose basis in 
such building is determined under sec-
tion 1014(a) (relating to property ac-
quired from a decedent), 
‘‘(III) by any governmental unit 
or qualified nonprofit organization if 
the requirements of subparagraph 
(B)(ii) are met with respect to the 
placement in service by such unit or 
organization and all the income from 
such property is exempt from Federal 
income taxation, 
‘‘(IV) by any person who ac-
quired such building by foreclosure 
(or by instrument in lieu of fore-
closure) of any purchase-money secu-
rity interest held by such person if the 
requirements of subparagraph (B)(ii) 
are met with respect to the placement 
in service by such person and such 
building is resold within 12 months 
after the date such building is placed 
in service by such person after such 
foreclosure, or 
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‘‘(V) of a single-family residence 
by any individual who owned and used 
such residence for no other purpose 
than as his principal residence. 
‘‘(ii) RELATED
PERSON.—For pur-
poses of subparagraph (B)(iii), a person 
(hereinafter in this subclause referred to as 
the ‘related person’) is related to any per-
son if the related person bears a relation-
ship 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 subsections (a) and (b) of 
section 52). 
‘‘(3) SPECIAL
RULES
RELATING
TO
DETER-
MINATION OF ADJUSTED BASIS.—For purposes of 
this subsection— 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the adjusted basis of any 
building shall be determined without regard to 
the adjusted basis of any property which is not 
residential rental property. 
‘‘(B) BASIS
OF
PROPERTY
IN
COMMON 
AREAS, ETC., INCLUDED.— 
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The eligible basis of a building shall not include 
any costs financed with the proceeds of a Fed-
erally funded grant. 
‘‘(B) INCREASE IN CREDIT FOR BUILDINGS 
IN HIGH COST AREAS.— 
‘‘(i) IN GENERAL.—In the case of any 
building located in a difficult development 
area which is designated for purposes of 
this subparagraph— 
‘‘(I) in the case of a new build-
ing, the eligible basis of such building 
shall be 130 percent of such basis de-
termined without regard to this sub-
paragraph, and 
‘‘(II) in the case of an existing 
building, the rehabilitation expendi-
tures taken into account under sub-
section (e) shall be 130 percent of 
such expenditures determined without 
regard to this subparagraph. 
‘‘(ii) LIMITATION.—Clause (i) shall 
not apply to any building if paragraph (1) 
of subsection (h) does not apply to any 
portion of the eligible basis of such build-
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ing by reason of paragraph (9) of such 
subsection. 
‘‘(iii) 
DIFFICULT
DEVELOPMENT 
AREAS.— 
‘‘(I) IN
GENERAL.—The term 
‘difficult development areas’ means 
any area designated by the Secretary 
of Housing and Urban Development 
as an area which has high construc-
tion, land, or utility costs relative to 
area median gross income, any rural 
area, and any Indian area. 
‘‘(II) RURAL
AREA.—For pur-
poses of subclause (I), the term ‘rural 
area’ means any non-metropolitan 
area, or any rural area as defined by 
section 520 of the Housing Act of 
1949, which is identified by the quali-
fied allocation plan under subsection 
(m)(1)(B). 
‘‘(III) INDIAN
AREA.—For pur-
poses of subclause (I), the term ‘In-
dian area’ means any Indian area (as 
defined in section 4(11) of the Native 
American Housing Assistance and 
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Self Determination Act of 1996 (25 
U.S.C. 4103(11))). 
‘‘(IV) SPECIAL RULE FOR BUILD-
INGS IN INDIAN AREAS.—In the case 
of an area which is a difficult develop-
ment area solely because it is an In-
dian area, a building shall not be 
treated as located in such area unless 
such building is assisted or financed 
under the Native American Housing 
Assistance and Self Determination 
Act of 1996 (25 U.S.C. 4101 et seq.) 
or the project sponsor is an Indian 
tribe 
(as 
defined 
in 
section 
45A(c)(6)), a tribally designated hous-
ing entity (as defined in section 4(22) 
of such Act (25 U.S.C. 4103(22))), or 
wholly owned or controlled by such an 
Indian tribe or tribally designated 
housing entity. 
‘‘(V) LIMIT
ON
AREAS
DES-
IGNATED.—The portions of metropoli-
tan statistical areas which may be 
designated for purposes of this sub-
paragraph shall not exceed an aggre-
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gate area having 20 percent of the 
population of such metropolitan sta-
tistical areas. A comparable rule shall 
apply to nonmetropolitan areas. 
‘‘(iv) SPECIAL
RULES
AND
DEFINI-
TIONS.—For purposes of this subpara-
graph— 
‘‘(I) population shall be deter-
mined on the basis of the most recent 
decennial census for which data are 
available, 
‘‘(II) area median gross income 
shall be determined in accordance 
with subsection (g)(4), 
‘‘(III) the term ‘metropolitan sta-
tistical area’ has the same meaning as 
when used in section 143(k)(2)(B), 
and 
‘‘(IV) the term ‘nonmetropolitan 
area’ means any county (or portion 
thereof) which is not within a metro-
politan statistical area. 
‘‘(v) 
BUILDINGS
DESIGNATED
BY 
STATE
HOUSING
CREDIT
AGENCY.—Any 
building which is designated by the State 
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housing credit agency as requiring the in-
crease in credit under this subparagraph in 
order for such building to be financially 
feasible as part of a qualified working fam-
ilies housing project shall be treated for 
purposes of this subparagraph as located 
in a difficult development area which is 
designated for purposes of this subpara-
graph. 
‘‘(5) CREDIT ALLOWABLE FOR CERTAIN BUILD-
INGS ACQUIRED DURING 10-YEAR PERIOD.—On ap-
plication by the taxpayer, the Secretary may waive 
paragraph (2)(B)(ii) with respect to any building ac-
quired from an insured depository institution in de-
fault (as defined in section 3 of the Federal Deposit 
Insurance Act) or from a receiver or conservator of 
such an institution. 
‘‘(6) ACQUISITION OF BUILDING BEFORE END 
OF PRIOR CREDIT PERIOD.— 
‘‘(A) IN
GENERAL.—Under regulations 
prescribed by the Secretary, in the case of a 
building described in subparagraph (B) (or in-
terest therein) which is acquired by the tax-
payer— 
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‘‘(i) paragraph (2)(B) shall not apply, 
but 
‘‘(ii) the credit allowable by reason of 
subsection (a) to the taxpayer for any pe-
riod after such acquisition shall be equal to 
the amount of credit which would have 
been allowable under subsection (a) for 
such period to the prior owner referred to 
in subparagraph (B) had such owner not 
disposed of the building. 
‘‘(B) 
DESCRIPTION
OF
BUILDING.—A 
building is described in this subparagraph if— 
‘‘(i) a credit was allowed by reason of 
subsection (a) to any prior owner of such 
building, and 
‘‘(ii) the taxpayer acquired such build-
ing before the end of the credit period for 
such building with respect to such prior 
owner (determined without regard to any 
disposition by such prior owner). 
‘‘(e) REHABILITATION EXPENDITURES TREATED AS 
SEPARATE NEW BUILDING.— 
‘‘(1) IN GENERAL.—Rehabilitation expenditures 
paid or incurred by the taxpayer with respect to any 
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building shall be treated for purposes of this section 
as a separate building which is not a new building. 
‘‘(2) REHABILITATION
EXPENDITURES.—For 
purposes of paragraph (1)— 
‘‘(A) IN GENERAL.—The term ‘rehabilita-
tion expenditures’ means amounts chargeable to 
capital account and incurred for property (or 
additions or improvements to property) of a 
character subject to the allowance for deprecia-
tion in connection with the rehabilitation of a 
building. 
‘‘(B) COST OF ACQUISITION, ETC., NOT IN-
CLUDED.—Such term does not include the cost 
of acquiring any building (or interest therein) 
or any amount not permitted to be taken into 
account under paragraph (3) of subsection (d). 
‘‘(C) CERTAIN
RELOCATION
COSTS.—In 
the case of a rehabilitation of a building to 
which section 280B does not apply, costs relat-
ing to the relocation of occupants, including— 
‘‘(i) amounts paid to occupants, 
‘‘(ii) amounts paid to third parties for 
services relating to such relocation, and 
‘‘(iii) amounts paid for temporary 
housing for occupants, 
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shall be treated as chargeable to capital account 
and taken into account as rehabilitation ex-
penditures. 
‘‘(3) MINIMUM EXPENDITURES TO QUALIFY.— 
‘‘(A) IN
GENERAL.—Paragraph (1) shall 
apply to rehabilitation expenditures with respect 
to any building only if— 
‘‘(i) the expenditures are allocable to 
1 or more working families units or sub-
stantially benefit such units, and 
‘‘(ii) the amount of such expenditures 
during any 24-month period meets the re-
quirements of whichever of the following 
subclauses requires the greater amount of 
such expenditures: 
‘‘(I) The requirement of this sub-
clause is met if such amount is not 
less than 20 percent of the adjusted 
basis of the building (determined as of 
the 1st day of such period and with-
out regard to paragraphs (2) and (3) 
of section 1016(a)). 
‘‘(II) The requirement of this 
subclause is met if the qualified basis 
attributable to such amount, when di-
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vided by the number of working fami-
lies units in the building, is equal to 
or greater than the dollar amount in 
effect under section 42(e)(3)(A)(ii)(II) 
for the calendar year in which such 
expenditures are treated as placed in 
service under paragraph (4). 
‘‘(B) DATE OF DETERMINATION.—The de-
termination under subparagraph (A) shall be 
made as of the close of the 1st taxable year in 
the credit period with respect to such expendi-
tures. 
‘‘(4) SPECIAL RULES.—For purposes of apply-
ing this section with respect to expenditures which 
are treated as a separate building by reason of this 
subsection— 
‘‘(A) such expenditures shall be treated as 
placed in service at the close of the 24-month 
period referred to in paragraph (3)(A), and 
‘‘(B) the applicable fraction under sub-
section (c)(1) shall be the applicable fraction for 
the building (without regard to paragraph (1)) 
with respect to which the expenditures were in-
curred. 
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Nothing in subsection (d)(2) shall prevent a credit 
from being allowed by reason of this subsection. 
‘‘(5) NO
DOUBLE
COUNTING.—Rehabilitation 
expenditures may, at the election of the taxpayer, be 
taken into account under this subsection or sub-
section (d)(2)(A)(i) but not under both such sub-
sections. 
‘‘(6) REGULATIONS
TO
APPLY
SUBSECTION 
WITH RESPECT TO GROUP OF UNITS IN BUILDING.— 
The Secretary may prescribe regulations, consistent 
with the purposes of this subsection, treating a 
group of units with respect to which rehabilitation 
expenditures are incurred as a separate new build-
ing. 
‘‘(f) DEFINITION AND SPECIAL RULES RELATING TO 
CREDIT PERIOD.— 
‘‘(1) CREDIT PERIOD DEFINED.—For purposes 
of this section, the term ‘credit period’ means, with 
respect to any building, the period of 15 taxable 
years beginning with— 
‘‘(A) the taxable year in which the building 
is placed in service, or 
‘‘(B) at the election of the taxpayer, the 
succeeding taxable year, 
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but only if the building is a qualified working fami-
lies building as of the close of the 1st year of such 
period. The election under subparagraph (B), once 
made, shall be irrevocable. 
‘‘(2) SPECIAL RULE FOR 1ST YEAR OF CREDIT 
PERIOD.— 
‘‘(A) IN GENERAL.—The credit allowable 
under subsection (a) with respect to any build-
ing for the 1st taxable year of the credit period 
shall be determined by substituting for the ap-
plicable fraction under subsection (c)(1) the 
fraction— 
‘‘(i) the numerator of which is the 
sum of the applicable fractions determined 
under subsection (c)(1) as of the close of 
each full month of such year during which 
such building was in service, and 
‘‘(ii) the denominator of which is 12. 
‘‘(B) DISALLOWED 1ST-YEAR CREDIT AL-
LOWED IN 16TH YEAR.—Any reduction by rea-
son of subparagraph (A) in the credit allowable 
(without regard to subparagraph (A)) for the 
1st taxable year of the credit period shall be al-
lowable under subsection (a) for the 1st taxable 
year following the credit period. 
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‘‘(3) DETERMINATION
OF
APPLICABLE
PER-
CENTAGE WITH RESPECT TO INCREASES IN QUALI-
FIED BASIS AFTER 1ST YEAR OF CREDIT PERIOD.— 
‘‘(A) IN
GENERAL.—In the case of any 
building which was a qualified working families 
building as of the close of the 1st year of the 
credit period, if— 
‘‘(i) as of the close of any taxable year 
in the credit period (after the 1st year of 
such period) the qualified basis of such 
building, exceeds 
‘‘(ii) the qualified basis of such build-
ing as of the close of the 1st year of the 
credit period, 
the applicable percentage which shall apply 
under subsection (a) for the taxable year to 
such excess shall be the percentage equal to 2⁄3 
of the applicable percentage which (after the 
application of subsection (h)) would but for this 
paragraph apply to such basis. 
‘‘(B) 1ST YEAR COMPUTATION APPLIES.— 
A rule similar to the rule of paragraph (2)(A) 
shall apply to any increase in qualified basis to 
which subparagraph (A) applies for the 1st year 
of such increase. 
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‘‘(4) DISPOSITIONS OF PROPERTY.—If a build-
ing (or an interest therein) is disposed of during any 
year for which credit is allowable under subsection 
(a), such credit shall be allocated between the par-
ties on the basis of the number of days during such 
year the building (or interest) was held by each. 
‘‘(5) CREDIT PERIOD FOR EXISTING BUILDINGS 
NOT
TO
BEGIN
BEFORE
REHABILITATION
CREDIT 
ALLOWED.— 
‘‘(A) IN GENERAL.—The credit period for 
an existing building shall not begin before the 
1st taxable year of the credit period for reha-
bilitation expenditures with respect to the build-
ing. 
‘‘(B) ACQUISITION CREDIT ALLOWED FOR 
CERTAIN
BUILDINGS
NOT
ALLOWED
A
REHA-
BILITATION CREDIT.— 
‘‘(i) IN GENERAL.—In the case of a 
building described in clause (ii)— 
‘‘(I) 
subsection 
(d)(2)(B)(iv) 
shall not apply, and 
‘‘(II) the credit period for such 
building shall not begin before the 
taxable year which would be the 1st 
taxable year of the credit period for 
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rehabilitation expenditures with re-
spect to the building under the modi-
fications described in clause (ii)(II). 
‘‘(ii) BUILDING DESCRIBED.—A build-
ing is described in this clause if— 
‘‘(I) a waiver is granted under 
subsection (d)(4) with respect to the 
acquisition of the building, and 
‘‘(II) a credit would be allowed 
for rehabilitation expenditures with 
respect to such building if subsection 
(e)(3)(A)(ii)(I) did not apply and if 
the dollar amount in effect under sub-
section (e)(3)(A)(ii)(II) were two- 
thirds of such amount. 
‘‘(g) QUALIFIED
WORKING
FAMILIES
HOUSING 
PROJECT.—For purposes of this section— 
‘‘(1) QUALIFIED WORKING FAMILIES HOUSING 
PROJECT.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
working families housing project’ means any 
project for residential rental property if such 
project meets the low-income requirements of 
subparagraph (B) and the working families re-
quirements of subparagraph (C). 
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‘‘(B) LOW-INCOME
REQUIREMENTS.—The 
project meets the low-income requirements of 
this subparagraph if 20 percent or more of the 
residential units in such project are both rent- 
restricted and occupied by individuals whose in-
come is 60 percent or less of area median gross 
income. 
‘‘(C) 
WORKING
FAMILIES
REQUIRE-
MENTS.— 
‘‘(i) IN GENERAL.—The project meets 
the working families requirements of this 
subparagraph if 40 percent or more of the 
residential units in such project are both 
rent-restricted and occupied by individuals 
whose income does not exceed the imputed 
income limitation designated by the tax-
payer with respect to the respective unit. 
‘‘(ii) SPECIAL
RULES
RELATING
TO 
INCOME
LIMITATION.—For purposes of 
clause (i)— 
‘‘(I) 
DESIGNATION.—The 
tax-
payer shall designate the imputed in-
come limitation of each unit taken 
into account under such clause. 
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‘‘(II) AVERAGE TEST.—The aver-
age of the imputed income limitations 
designated under subclause (I) shall 
not exceed 100 percent of area me-
dian gross income. 
‘‘(III) 
PERMITTED
INCRE-
MENTS.—The designated imputed in-
come limitation of any unit under sub-
clause (I) shall be 70, 80, 90, 100, 
110, 120, 130, 140, 150, 160, 170, or 
180 percent of area median gross in-
come. 
Any designation under this paragraph, once made, 
shall be irrevocable. For purposes of this paragraph, 
any property shall not be treated as failing to be res-
idential rental property merely because part of the 
building in which such property is located is used for 
purposes other than residential rental purposes. 
‘‘(2) RENT-RESTRICTED UNITS.— 
‘‘(A) IN GENERAL.—For purposes of para-
graph (1), a residential unit is rent-restricted if 
the gross rent with respect to such unit does 
not exceed 30 percent of the imputed income 
limitation applicable to such unit. For purposes 
of the preceding sentence, the amount of the in-
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come limitation under paragraph (1) applicable 
for any period shall not be less than such limi-
tation applicable for the earliest period the 
building (which contains the unit) was included 
in the determination of whether the project is 
a qualified working families housing project. 
‘‘(B) GROSS RENT.—For purposes of sub-
paragraph (A), gross rent— 
‘‘(i) includes any utility allowance de-
termined by the Secretary after taking into 
account such determinations under section 
8 of the United States Housing Act of 
1937, 
‘‘(ii) does not include any fee for a 
supportive service which is paid to the 
owner of the unit (on the basis of the 
working families status of the tenant of the 
unit) by any governmental program of as-
sistance (or by an organization described 
in section 501(c)(3) and exempt from tax 
under section 501(a)) if such program (or 
organization) provides assistance for rent 
and the amount of assistance provided for 
rent is not separable from the amount of 
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assistance provided for supportive services, 
and 
‘‘(iii) does not include any rental pay-
ment to the owner of the unit to the extent 
such owner pays an equivalent amount to 
the Farmers’ Home Administration under 
section 515 of the Housing Act of 1949. 
For purposes of clause (ii), the term ‘supportive 
service’ means any service provided under a 
planned program of services designed to enable 
residents of a residential rental property to re-
main independent and avoid placement in a 
hospital, nursing home, or intermediate care fa-
cility for the mentally or physically handi-
capped. 
‘‘(C) IMPUTED INCOME LIMITATION APPLI-
CABLE TO UNIT.—For purposes of this para-
graph, the imputed income limitation applicable 
to a unit is the income limitation which would 
apply under paragraph (1) to individuals occu-
pying the unit if the number of individuals oc-
cupying the unit were as follows: 
‘‘(i) In the case of a unit which does 
not have a separate bedroom, 1 individual. 
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‘‘(ii) In the case of a unit which has 
1 or more separate bedrooms, 1.5 individ-
uals for each separate bedroom. 
In the case of a project with respect to which 
a credit is allowable by reason of this section 
and for which financing is provided by a bond 
described in section 142(a)(7), the imputed in-
come limitation shall apply in lieu of the other-
wise applicable income limitation for purposes 
of applying section 142(d)(4)(B)(ii). 
‘‘(D) TREATMENT OF UNITS OCCUPIED BY 
INDIVIDUALS
WHOSE
INCOMES
RISE
ABOVE 
LIMIT.— 
‘‘(i) IN
GENERAL.—Except as pro-
vided in clause (ii), notwithstanding an in-
crease in the income of the occupants of a 
working families unit above the income 
limitation applicable under paragraph (1), 
such unit shall continue to be treated as a 
working families unit if the income of such 
occupants initially met such income limita-
tion and such unit continues to be rent-re-
stricted. 
‘‘(ii) NEXT AVAILABLE UNIT MUST BE 
RENTED TO WORKING FAMILIES TENANT 
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IF INCOME RISES ABOVE 140 PERCENT OF 
INCOME LIMIT.—If the income of the occu-
pants of the unit increases above 140 per-
cent of the income limitation applicable 
under paragraph (1), clause (i) shall cease 
to apply to such unit if any residential 
rental unit in the building (of a size com-
parable to, or smaller than, such unit) is 
occupied by a new resident whose income 
exceeds such income limitation. 
‘‘(3) DATE FOR MEETING REQUIREMENTS.— 
‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, a building shall be 
treated as a qualified working families building 
only if the project (of which such building is a 
part) meets the requirements of paragraph (1) 
not later than the close of the 1st year of the 
credit period for such building. 
‘‘(B) BUILDINGS WHICH RELY ON LATER 
BUILDINGS FOR QUALIFICATION.— 
‘‘(i) IN
GENERAL.—In determining 
whether a building (hereinafter in this sub-
paragraph referred to as the ‘prior build-
ing’) is a qualified working families build-
ing, the taxpayer may take into account 1 
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or more additional buildings placed in serv-
ice during the 12-month period described 
in subparagraph (A) with respect to the 
prior building only if the taxpayer elects to 
apply clause (ii) with respect to each addi-
tional building taken into account. 
‘‘(ii) 
TREATMENT
OF
ELECTED 
BUILDINGS.—In the case of a building 
which the taxpayer elects to take into ac-
count under clause (i), the period under 
subparagraph (A) for such building shall 
end at the close of the 12-month period ap-
plicable to the prior building. 
‘‘(iii) 
DATE
PRIOR
BUILDING
IS 
TREATED
AS
PLACED
IN
SERVICE.—For 
purposes of determining the credit period 
for the prior building, the prior building 
shall be treated for purposes of this section 
as placed in service on the most recent 
date any additional building elected by the 
taxpayer (with respect to such prior build-
ing) was placed in service. 
‘‘(C) SPECIAL RULE.—A building— 
‘‘(i) other than the 1st building placed 
in service as part of a project, and 
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‘‘(ii) other than a building which is 
placed in service during the 12-month pe-
riod described in subparagraph (A) with 
respect to a prior building which becomes 
a qualified working families building, 
shall in no event be treated as a qualified work-
ing families building unless the project is a 
qualified working families housing project 
(without regard to such building) on the date 
such building is placed in service. 
‘‘(D) PROJECTS
WITH
MORE
THAN
BUILDING
MUST
BE
IDENTIFIED.—For pur-
poses of this section, a project shall be treated 
as consisting of only 1 building unless, before 
the close of the 1st calendar year in the project 
period (as defined in subsection (h)(1)(F)(ii)), 
each building which is (or will be) part of such 
project is identified in such form and manner 
as the Secretary may provide. 
‘‘(4) CERTAIN
RULES
MADE
APPLICABLE.— 
Paragraphs (2) (other than subparagraph (A) there-
of), (3), and (7) of section 142(d), and section 
6652(j), shall apply for purposes of determining 
whether any project is a qualified working families 
housing project and whether any unit is a working 
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families unit; except that, in applying such provi-
sions for such purposes— 
‘‘(A) the term ‘gross rent’ shall have the 
meaning given such term by paragraph (2)(B) 
of this subsection, and 
‘‘(B) the term ‘applicable income limit’ 
means the limitation under paragraph (1) of 
this subsection. 
‘‘(5) ELECTION
TO
TREAT
BUILDING
AFTER 
CREDIT PERIOD AS NOT PART OF A PROJECT.—For 
purposes of this section, the taxpayer may elect to 
treat any building as not part of a qualified working 
families housing project for any period beginning 
after the credit period for such building. 
‘‘(6) SPECIAL RULE WHERE DE MINIMIS EQ-
UITY CONTRIBUTION.—Property shall not be treated 
as failing to be residential rental property for pur-
poses of this section merely because the occupant of 
a residential unit in the project pays (on a voluntary 
basis) to the lessor a de minimis amount to be held 
toward the purchase by such occupant of a residen-
tial unit in such project if— 
‘‘(A) all amounts so paid are refunded to 
the occupant on the cessation of his occupancy 
of a unit in the project, and 
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‘‘(B) the purchase of the unit is not per-
mitted until after the close of the credit period 
with respect to the building in which the unit 
is located. 
Any amount paid to the lessor as described in the 
preceding sentence shall be included in gross rent 
under paragraph (2) for purposes of determining 
whether the unit is rent-restricted. 
‘‘(7) SCATTERED
SITE
PROJECTS.—Buildings 
which would (but for their lack of proximity) be 
treated as a project for purposes of this section shall 
be so treated if all of the dwelling units in each of 
the buildings are rent-restricted (within the meaning 
of paragraph (2)) residential rental units. 
‘‘(8) 
WAIVER
OF
CERTAIN
RECERTIFI-
CATIONS.—On application by the taxpayer, the Sec-
retary may waive any annual recertification of ten-
ant income for purposes of this subsection, if the en-
tire building is occupied by working families tenants. 
‘‘(9) CLARIFICATION OF GENERAL PUBLIC USE 
REQUIREMENT.—A project does not fail to meet the 
general public use requirement solely because of oc-
cupancy restrictions or preferences that favor ten-
ants— 
‘‘(A) with special needs, or 
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‘‘(B) who are members of a specified group 
under a Federal program or State program or 
policy that supports housing for such a speci-
fied group. 
‘‘(10) PREVAILING WAGE REQUIREMENTS.—No 
credit shall be determined under this section with re-
spect to any building (including any rehabilitation 
expenditures treated as a separate building under 
subsection (e)) unless such building meets require-
ments similar the requirements described in section 
45(b)(7). 
‘‘(h) LIMITATION ON AGGREGATE CREDIT ALLOW-
ABLE WITH RESPECT
TO PROJECTS LOCATED
IN
A 
STATE.— 
‘‘(1) CREDIT
MAY
NOT
EXCEED
CREDIT 
AMOUNT ALLOCATED TO BUILDING.— 
‘‘(A) IN
GENERAL.—The amount of the 
credit determined under this section for any 
taxable year with respect to any building shall 
not exceed the housing credit dollar amount al-
located to such building under this subsection. 
‘‘(B) TIME
FOR
MAKING
ALLOCATION.— 
Except in the case of an allocation which meets 
the requirements of subparagraph (C), (D), 
(E), or (F), an allocation shall be taken into ac-
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count under subparagraph (A) only if it is 
made not later than the close of the calendar 
year in which the building is placed in service. 
‘‘(C) EXCEPTION
WHERE
BINDING
COM-
MITMENT.—An allocation meets the require-
ments of this subparagraph if there is a binding 
commitment (not later than the close of the cal-
endar year in which the building is placed in 
service) by the housing credit agency to allocate 
a specified housing credit dollar amount to such 
building beginning in a specified later taxable 
year. 
‘‘(D) EXCEPTION
WHERE
INCREASE
IN 
QUALIFIED BASIS.— 
‘‘(i) 
IN
GENERAL.—An 
allocation 
meets the requirements of this subpara-
graph if such allocation is made not later 
than the close of the calendar year in 
which ends the taxable year to which it will 
1st apply but only to the extent the 
amount of such allocation does not exceed 
the limitation under clause (ii). 
‘‘(ii) 
LIMITATION.—The 
limitation 
under this clause is the amount of credit 
allowable under this section (without re-
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gard to this subsection) for a taxable year 
with respect to an increase in the qualified 
basis of the building equal to the excess 
of— 
‘‘(I) the qualified basis of such 
building as of the close of the 1st tax-
able year to which such allocation will 
apply, over 
‘‘(II) the qualified basis of such 
building as of the close of the 1st tax-
able year to which the most recent 
prior housing credit allocation with re-
spect to such building applied. 
‘‘(iii) 
HOUSING
CREDIT
DOLLAR 
AMOUNT
REDUCED
BY
FULL
ALLOCA-
TION.—Notwithstanding clause (i), the full 
amount of the allocation shall be taken 
into account under paragraph (2). 
‘‘(E) EXCEPTION WHERE 10 PERCENT OF 
COST INCURRED.— 
‘‘(i) 
IN
GENERAL.—An 
allocation 
meets the requirements of this subpara-
graph if such allocation is made with re-
spect to a qualified building which is 
placed in service not later than the close of 
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the second calendar year following the cal-
endar year in which the allocation is made. 
‘‘(ii) QUALIFIED BUILDING.—For pur-
poses of clause (i), the term ‘qualified 
building’ means any building which is part 
of a project if the taxpayer’s basis in such 
project (as of the date which is 1 year 
after the date that the allocation was 
made) is more than 10 percent of the tax-
payer’s reasonably expected basis in such 
project (as of the close of the second cal-
endar year referred to in clause (i)). Such 
term does not include any existing building 
unless a credit is allowable under sub-
section (e) for rehabilitation expenditures 
paid or incurred by the taxpayer with re-
spect to such building for a taxable year 
ending during the second calendar year re-
ferred to in clause (i) or the prior taxable 
year. 
‘‘(F) ALLOCATION
OF
CREDIT
ON
A 
PROJECT BASIS.— 
‘‘(i) IN GENERAL.—In the case of a 
project which includes (or will include) 
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more than 1 building, an allocation meets 
the requirements of this subparagraph if— 
‘‘(I) the allocation is made to the 
project for a calendar year during the 
project period, 
‘‘(II) the allocation only applies 
to buildings placed in service during 
or after the calendar year for which 
the allocation is made, and 
‘‘(III) the portion of such alloca-
tion which is allocated to any building 
in such project is specified not later 
than the close of the calendar year in 
which the building is placed in service. 
‘‘(ii) PROJECT
PERIOD.—For pur-
poses of clause (i), the term ‘project pe-
riod’ means the period— 
‘‘(I) beginning with the 1st cal-
endar year for which an allocation 
may be made for the 1st building 
placed in service as part of such 
project, and 
‘‘(II) ending with the calendar 
year the last building is placed in 
service as part of such project. 
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‘‘(2) ALLOCATED CREDIT AMOUNT TO APPLY 
TO ALL TAXABLE YEARS ENDING DURING OR AFTER 
CREDIT ALLOCATION YEAR.—Any housing credit dol-
lar amount allocated to any building for any cal-
endar year— 
‘‘(A) shall apply to such building for all 
taxable years in the credit period ending during 
or after such calendar year, and 
‘‘(B) shall reduce the aggregate housing 
credit dollar amount of the allocating agency 
only for such calendar year. 
‘‘(3) HOUSING CREDIT DOLLAR AMOUNT FOR 
AGENCIES.— 
‘‘(A) IN GENERAL.—The aggregate hous-
ing credit dollar amount which a housing credit 
agency may allocate for any calendar year is 
the portion of the State housing credit ceiling 
allocated under this paragraph for such cal-
endar year to such agency. 
‘‘(B) STATE
CEILING
INITIALLY
ALLO-
CATED
TO
STATE
HOUSING
CREDIT
AGEN-
CIES.—Except as provided in subparagraph 
(D), the State housing credit ceiling for each 
calendar year shall be allocated to the housing 
credit agency of such State. If there is more 
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than 1 housing credit agency of a State, all 
such agencies shall be treated as a single agen-
cy. 
‘‘(C) STATE HOUSING CREDIT CEILING.— 
The State housing credit ceiling applicable to 
any State for any calendar year shall be an 
amount equal to the sum of— 
‘‘(i) the unused State housing credit 
ceiling (if any) of such State for the pre-
ceding calendar year, 
‘‘(ii) the greater of— 
‘‘(I) $1.00 multiplied by the 
State population, or 
‘‘(II) $1,500,000, plus 
‘‘(iii) the amount of State housing 
credit ceiling returned in the calendar year. 
For purposes of clause (i), the unused State 
housing credit ceiling for any calendar year is 
the excess (if any) of the sum of the amounts 
described in clauses (ii) (reduced by the aggre-
gate amounts described in paragraph (10)(A)(i) 
with respect to all elections made for such cal-
endar year) and (iii) over the aggregate housing 
credit dollar amount allocated for such year. 
For purposes of clause (iii), the amount of 
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State housing credit ceiling returned in the cal-
endar year equals the housing credit dollar 
amount previously allocated within the State to 
any project which fails to meet the 10 percent 
test under paragraph (1)(E)(ii) on a date after 
the close of the calendar year in which the allo-
cation was made or which does not become a 
qualified working families housing project with-
in the period required by this section or the 
terms of the allocation or to any project with 
respect to which an allocation is cancelled by 
mutual consent of the housing credit agency 
and the allocation recipient. 
‘‘(D) STATE
MAY
PROVIDE
FOR
DIF-
FERENT
ALLOCATION.—Rules similar to the 
rules of section 146(e) (other than paragraph 
(2)(B) thereof) shall apply for purposes of this 
paragraph. 
‘‘(E) POPULATION.—For purposes of this 
paragraph, population shall be determined in 
accordance with section 146(j). 
‘‘(F) COST-OF-LIVING ADJUSTMENT.— 
‘‘(i) IN GENERAL.—In the case of a 
calendar year after 2024, the $1,500,000 
and $1.00 amounts in subparagraph (C) 
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shall each be increased by an amount equal 
to— 
‘‘(I) such dollar amount, multi-
plied by 
‘‘(II) the cost-of-living adjust-
ment determined under section 1(f)(3) 
for such calendar year by substituting 
‘calendar year 2023’ for ‘calendar 
year 2016’ in subparagraph (A)(ii) 
thereof. 
‘‘(ii) ROUNDING.— 
‘‘(I) 
In 
the 
case 
of 
the 
$1,140,000 
amount, 
any 
increase 
under clause (i) which is not a mul-
tiple of $5,000 shall be rounded to the 
next lowest multiple of $5,000. 
‘‘(II) In the case of the $1.00 
amount, any increase under clause (i) 
which is not a multiple of 5 cents 
shall be rounded to the next lowest 
multiple of 5 cents. 
‘‘(4) PORTION
OF
STATE
CEILING
SET-ASIDE 
FOR
CERTAIN
PROJECTS
INVOLVING
QUALIFIED 
NONPROFIT ORGANIZATIONS.— 
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‘‘(A) IN
GENERAL.—Not more than 90 
percent of the State housing credit ceiling (de-
termined without regard to paragraph (7)) for 
any State for any calendar year shall be allo-
cated to projects other than qualified working 
families housing projects described in subpara-
graph (B). 
‘‘(B) PROJECTS
INVOLVING
QUALIFIED 
NONPROFIT ORGANIZATIONS.—For purposes of 
subparagraph (A), a qualified working families 
housing project is described in this subpara-
graph if a qualified nonprofit organization is to 
own an interest in the project (directly or 
through a partnership) and materially partici-
pate (within the meaning of section 469(h)) in 
the development and operation of the project 
throughout the credit period. 
‘‘(C) QUALIFIED
NONPROFIT
ORGANIZA-
TION.—For purposes of this paragraph, the 
term ‘qualified nonprofit organization’ means 
any organization if— 
‘‘(i) such organization is described in 
paragraph (3) or (4) of section 501(c) and 
is exempt from tax under section 501(a), 
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‘‘(ii) such organization is determined 
by the State housing credit agency not to 
be affiliated with or controlled by a for- 
profit organization, and 
‘‘(iii) one of the exempt purposes of 
such organization includes the fostering of 
working families housing. 
‘‘(D) TREATMENT
OF
CERTAIN
SUBSIDI-
ARIES.— 
‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, a qualified nonprofit orga-
nization shall be treated as satisfying the 
ownership and material participation test 
of subparagraph (B) if any qualified cor-
poration in which such organization holds 
stock satisfies such test. 
‘‘(ii) QUALIFIED CORPORATION.—For 
purposes of clause (i), the term ‘qualified 
corporation’ means any corporation if 100 
percent of the stock of such corporation is 
held by 1 or more qualified nonprofit orga-
nizations at all times during the period 
such corporation is in existence. 
‘‘(E) STATE
MAY
NOT
OVERRIDE
SET- 
ASIDE.—Nothing in subparagraph (E) of para-
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graph (3) shall be construed to permit a State 
not to comply with subparagraph (A) of this 
paragraph. 
‘‘(5) BUILDINGS ELIGIBLE FOR CREDIT ONLY 
IF MINIMUM LONG-TERM COMMITMENT TO WORKING 
FAMILIES HOUSING.— 
‘‘(A) IN GENERAL.—No credit shall be al-
lowed by reason of this section with respect to 
any building for the taxable year unless an ex-
tended working families housing commitment is 
in effect as of the end of such taxable year. 
‘‘(B) 
EXTENDED
WORKING
FAMILIES 
HOUSING COMMITMENT.—For purposes of this 
paragraph, the term ‘extended working families 
housing commitment’ means any agreement be-
tween the taxpayer and the housing credit agen-
cy— 
‘‘(i) which requires that the applicable 
fraction (as defined in subsection (c)(1)) 
for the building for each taxable year in 
the extended use period will not be less 
than the applicable fraction specified in 
such agreement and which prohibits the 
actions described in subclauses (I) and (II) 
of subparagraph (E)(ii), 
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‘‘(ii) which allows individuals who 
meet the income limitation applicable to 
the building under subsection (g) (whether 
prospective, present, or former occupants 
of the building) the right to enforce in any 
State court the requirement and prohibi-
tions of clause (i), 
‘‘(iii) which prohibits the disposition 
to any person of any portion of the build-
ing to which such agreement applies unless 
all of the building to which such agreement 
applies is disposed of to such person, 
‘‘(iv) which prohibits the refusal to 
lease to a holder of a voucher or certificate 
of eligibility under section 8 of the United 
States Housing Act of 1937 because of the 
status of the prospective tenant as such a 
holder, 
‘‘(v) which is binding on all successors 
of the taxpayer, and 
‘‘(vi) which, with respect to the prop-
erty, is recorded pursuant to State law as 
a restrictive covenant. 
‘‘(C) ALLOCATION
OF
CREDIT
MAY
NOT 
EXCEED
AMOUNT
NECESSARY
TO
SUPPORT 
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COMMITMENT.—The 
housing 
credit 
dollar 
amount allocated to any building may not ex-
ceed the amount necessary to support the appli-
cable fraction specified in the extended working 
families housing commitment for such building, 
including any increase in such fraction pursu-
ant to the application of subsection (f)(3) if 
such increase is reflected in an amended work-
ing families housing commitment. 
‘‘(D) EXTENDED USE PERIOD.—For pur-
poses of this paragraph, the term ‘extended use 
period’ means the period— 
‘‘(i) beginning on the 1st day in the 
credit period on which such building is 
part of a qualified working families hous-
ing project, and 
‘‘(ii) ending on the later of— 
‘‘(I) the date specified by such 
agency in such agreement, or 
‘‘(II) the date which is 15 years 
after the close of the credit period. 
‘‘(E) EXCEPTIONS IF FORECLOSURE OR IF 
NO
BUYER
WILLING
TO
MAINTAIN
WORKING 
FAMILIES STATUS.— 
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‘‘(i) IN GENERAL.—The extended use 
period for any building shall terminate on 
the 61st day after the taxpayer (or a suc-
cessor in interest) provides notice to the 
Secretary and the housing credit agency 
that the building has been acquired by 
foreclosure (or instrument in lieu of fore-
closure) and that the taxpayer intends the 
termination of such period, unless, before 
such date, the Secretary or the housing 
credit agency determines that such acquisi-
tion is part of an arrangement with the 
taxpayer a purpose of which is to termi-
nate such period. 
‘‘(ii) EVICTION, ETC., OF
EXISTING 
WORKING
FAMILIES
TENANTS
NOT
PER-
MITTED.—The termination of an extended 
use period under clause (i) shall not be 
construed to permit before the close of the 
3-year period following such termination— 
‘‘(I) the eviction or the termi-
nation of tenancy (other than for good 
cause) of an existing tenant of any 
working families unit, or 
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‘‘(II) any increase in the gross 
rent with respect to such unit not oth-
erwise permitted under this section. 
‘‘(F) EFFECT
OF
NONCOMPLIANCE.—If, 
during a taxable year, there is a determination 
that an extended working families housing 
agreement was not in effect as of the beginning 
of such year, such determination shall not apply 
to any period before such year and subpara-
graph (A) shall be applied without regard to 
such determination if the failure is corrected 
within 1 year from the date of the determina-
tion. 
‘‘(G) PROJECTS WHICH CONSIST OF MORE 
THAN
BUILDING.—The application of this 
paragraph to projects which consist of more 
than 1 building shall be made under regulations 
prescribed by the Secretary. 
‘‘(6) SPECIAL RULES.— 
‘‘(A) BUILDING MUST BE LOCATED WITH-
IN JURISDICTION OF CREDIT AGENCY.—A hous-
ing credit agency may allocate its aggregate 
housing credit dollar amount only to buildings 
located in the jurisdiction of the governmental 
unit of which such agency is a part. 
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‘‘(B) AGENCY ALLOCATIONS IN EXCESS OF 
LIMIT.—If the aggregate housing credit dollar 
amounts allocated by a housing credit agency 
for any calendar year exceed the portion of the 
State housing credit ceiling allocated to such 
agency for such calendar year, the housing 
credit dollar amounts so allocated shall be re-
duced (to the extent of such excess) for build-
ings in the reverse of the order in which the al-
locations of such amounts were made. 
‘‘(C) CREDIT
REDUCED
IF
ALLOCATED 
CREDIT DOLLAR AMOUNT IS LESS THAN CREDIT 
WHICH WOULD BE ALLOWABLE WITHOUT RE-
GARD
TO
PLACED
IN
SERVICE
CONVENTION, 
ETC.— 
‘‘(i) IN
GENERAL.—The amount of 
the credit determined under this section 
with respect to any building shall not ex-
ceed the clause (ii) percentage of the 
amount of the credit which would (but for 
this subparagraph) be determined under 
this section with respect to such building. 
‘‘(ii) DETERMINATION
OF
PERCENT-
AGE.—For purposes of clause (i), the 
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clause (ii) percentage with respect to any 
building is the percentage which— 
‘‘(I) the housing credit dollar 
amount allocated to such building, 
bears to 
‘‘(II) the credit amount deter-
mined in accordance with clause (iii). 
‘‘(iii) DETERMINATION
OF
CREDIT 
AMOUNT.—The credit amount determined 
in accordance with this clause is the 
amount of the credit which would (but for 
this subparagraph) be determined under 
this section with respect to the building 
if— 
‘‘(I) this section were applied 
without regard to paragraphs (2)(A) 
and (3)(B) of subsection (f), and 
‘‘(II) subsection (f)(3)(A) were 
applied without regard to ‘the per-
centage equal to 2⁄3 of’. 
‘‘(D) HOUSING CREDIT AGENCY TO SPECI-
FY
APPLICABLE
PERCENTAGE
AND
MAXIMUM 
QUALIFIED
BASIS.—In allocating a housing 
credit dollar amount to any building, the hous-
ing credit agency shall specify the applicable 
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percentage and the maximum qualified basis 
which may be taken into account under this 
section with respect to such building. The appli-
cable percentage and maximum qualified basis 
so specified shall not exceed the applicable per-
centage and qualified basis determined under 
this section without regard to this subsection. 
‘‘(7) INCREASE IN STATE CEILING DEDICATED 
TO CERTAIN RURAL DEVELOPMENT PROJECTS.— 
‘‘(A) IN
GENERAL.—The State housing 
credit ceiling for any calendar year shall be in-
creased by an amount equal to 20 percent of 
the 
amount 
determined 
under 
paragraph 
(3)(C)(ii). 
‘‘(B) USE OF INCREASED AMOUNT.— 
‘‘(i) IN
GENERAL.—The amount of 
the increase under subparagraph (A) for 
any calendar year may only be allocated to 
buildings located in a rural area or 
exurban area. 
‘‘(ii) RURAL AREA.—For purposes of 
clause (i), the term ‘rural area’ means any 
non-metropolitan area, or any rural area 
as defined by section 520 of the Housing 
Act of 1949, which is identified by the 
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qualified allocation plan under subsection 
(l)(1)(B). 
‘‘(iii) EXURBAN AREA.—For purposes 
of clause (i), the term ‘exurban area’ has 
the meaning given such term by the Sec-
retary after consultation with the Bureau 
of the Census. 
‘‘(8) OTHER
DEFINITIONS.—For purposes of 
this subsection— 
‘‘(A) HOUSING
CREDIT
AGENCY.—The 
term ‘housing credit agency’ means any agency 
authorized to carry out this subsection. 
‘‘(B) POSSESSIONS TREATED AS STATES.— 
The term ‘State’ includes a possession of the 
United States. 
‘‘(9) CREDIT
FOR
BUILDINGS
FINANCED
BY 
TAX-EXEMPT BONDS SUBJECT TO VOLUME CAP NOT 
TAKEN INTO ACCOUNT.—Rules similar to the rules 
of subsections (h)(4), (m)(1)(D), and (m)(2)(D) of 
section 42 shall apply for purposes of this sub-
section. 
‘‘(10) ELECTION TO TRANSFER STATE HOUSING 
CREDIT CEILING FOR ALLOCATIONS TO LOW-INCOME 
BUILDINGS.— 
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‘‘(A) IN
GENERAL.—If a State housing 
credit agency makes an election under this 
paragraph with respect to a calendar year— 
‘‘(i) the State housing credit ceiling 
for such calendar year under paragraph 
(3) (determined before application of para-
graph (7)) shall be reduced by the amount 
specified in such election, 
‘‘(ii) the amount determined under 
paragraph (7) for such calendar year shall 
be reduced by the amount specified in such 
election, and 
‘‘(iii) the amount determined under 
section 42(h)(3)(C)(ii) for such calendar 
year shall be increased by the sum of the 
amounts specified in clauses (i) and (ii), 
except that any amount specified under 
clause (ii)— 
‘‘(I) may only be allocated under 
such section to qualified low-income 
buildings (as defined in section 42) lo-
cated in a rural area or exurban area 
(as defined in paragraph (7)), and 
‘‘(II) shall not be taken into ac-
count for purposes of determining the 
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unused housing credit ceiling under 
the 
second 
sentence 
of 
section 
42(h)(3)(C). 
‘‘(B) TIME
AND
MANNER
FOR
MAKING 
ELECTION.— 
‘‘(i) IN GENERAL.—An election under 
this paragraph— 
‘‘(I) shall be made before the end 
of the calendar year with respect to 
which such election applies, 
‘‘(II) shall be made in such man-
ner as specified by the Secretary, and 
‘‘(III) shall separately specify the 
amount of reductions to be made 
under paragraph (3) and paragraph 
(7). 
‘‘(ii) FREQUENCY.—A State housing 
credit agency may make more than one 
election under this section with respect to 
any calendar year, and any such election, 
once made, shall be revocable only if such 
revocation is made before the end of the 
calendar year with respect to which such 
election is made. 
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‘‘(C) LIMITATION.—The aggregate amount 
specified in elections under this paragraph with 
respect to any State housing credit agency for 
calendar year shall not exceed the sum of— 
‘‘(i) the amount determined under 
paragraph (3)(C)(ii) for such calendar 
year, plus 
‘‘(ii) the amount determined under 
paragraph (7) for such calendar year. 
‘‘(i) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) WORKING FAMILIES UNIT.— 
‘‘(A) IN
GENERAL.—The term ‘working 
families unit’ means any unit in a building if— 
‘‘(i) such unit is rent-restricted (as de-
fined in subsection (g)(2)), and 
‘‘(ii) the individuals occupying such 
unit meet the income limitation applicable 
under subsection (g)(1) to the project of 
which such building is a part. 
‘‘(B) EXCEPTIONS.— 
‘‘(i) 
EXCLUSION
OF
LOW-INCOME 
UNITS.—A unit shall not be treated as a 
working families unit if such unit is a low- 
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income unit (as defined under section 
42(i)(3)). 
‘‘(ii) UNIT MUST BE SUITABLE FOR 
PERMANENT OCCUPANCY.— 
‘‘(I) IN GENERAL.—A unit shall 
not be treated as a working families 
unit unless the unit is suitable for oc-
cupancy and used other than on a 
transient basis. 
‘‘(II) SUITABILITY
FOR
OCCU-
PANCY.—For purposes of subclause 
(I), the suitability of a unit for occu-
pancy shall be determined under regu-
lations prescribed by the Secretary 
taking into account local health, safe-
ty, and building codes. 
‘‘(III) SINGLE-ROOM OCCUPANCY 
UNITS.—For purposes of subclause 
(I), a single-room occupancy unit shall 
not be treated as used on a transient 
basis merely because it is rented on a 
month-by-month basis. 
‘‘(C) SPECIAL RULE FOR BUILDINGS HAV-
ING 4 OR FEWER UNITS.—In the case of any 
building which has 4 or fewer residential rental 
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units, no unit in such building shall be treated 
as a working families unit if the units in such 
building are owned by— 
‘‘(i) any individual who occupies a res-
idential unit in such building, or 
‘‘(ii) any person who is related (as de-
fined in subsection (d)(2)(D)(ii)) to such 
individual. 
‘‘(D) RULES RELATING TO STUDENTS.— 
‘‘(i) IN
GENERAL.—A unit occupied 
solely by individuals who— 
‘‘(I) have not attained age 24, 
and 
‘‘(II) are enrolled in a full-time 
course of study at an institution of 
higher education (as defined in section 
3304(f)), 
shall not be treated as a working families 
unit. 
‘‘(ii) EXCEPTION FOR CERTAIN FED-
ERAL PROGRAMS.—In the case of a Feder-
ally-assisted building (as defined in sub-
section (d)(6)(C)(i) of section 42), clause 
(i) shall not apply to a unit all of the occu-
pants of which meet all applicable require-
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ments under the housing program de-
scribed in such subsection through which 
the building is assisted, financed, or oper-
ated. 
‘‘(iii) OTHER
EXCEPTIONS.—Clause 
(i) shall not apply to a unit occupied by an 
individual who— 
‘‘(I) is married, if such individ-
ual’s spouse also occupies the unit, 
‘‘(II) is a person with disabilities 
(as defined in section 3(b)(3)(E) of 
the United States Housing Act of 
1937), 
‘‘(III) is a veteran (as defined in 
section 101(2) of title 38, United 
States Code), 
‘‘(IV) has one or more qualifying 
children 
(as 
defined 
in 
section 
152(c)), if such children also occupy 
the unit, the individual is not a de-
pendent (as defined in section 152, 
determined without regard to sub-
sections (b)(1), (b)(2), and (d)(1)(B) 
thereof) of another individual, and 
such children are not claimed as de-
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pendents (as so defined) of another 
individual, or 
‘‘(V) is, or was immediately prior 
to attaining the age of majority— 
‘‘(aa) an emancipated minor 
or in legal guardianship as deter-
mined by a court of competent 
jurisdiction in the individual’s 
State of legal residence, 
‘‘(bb) under the care and 
placement responsibility of the 
State agency responsible for ad-
ministering a plan under part B 
or part E of title IV of the Social 
Security Act, or 
‘‘(cc) was an unaccompanied 
youth (within the meaning of sec-
tion 725(6) of the McKinney- 
Vento Homeless Assistance Act 
(42 U.S.C. 11434a(6))) or a 
homeless child or youth (within 
the meaning of section 725(2) of 
such 
Act 
(42 
U.S.C. 
11434a(2))). 
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‘‘(E) OWNER-OCCUPIED
BUILDINGS
HAV-
ING 4 OR FEWER UNITS ELIGIBLE FOR CREDIT 
WHERE DEVELOPMENT PLAN.— 
‘‘(i) IN GENERAL.—Subparagraph (C) 
shall not apply to the acquisition or reha-
bilitation of a building pursuant to a devel-
opment plan of action sponsored by a 
State or local government or a qualified 
nonprofit organization. 
‘‘(ii) LIMITATION ON CREDIT.—In the 
case of a building to which clause (i) ap-
plies, the applicable fraction shall not ex-
ceed 80 percent of the unit fraction. 
‘‘(iii) 
CERTAIN
UNRENTED
UNITS 
TREATED
AS
OWNER-OCCUPIED.—In the 
case of a building to which clause (i) ap-
plies, any unit which is not rented for 90 
days or more shall be treated as occupied 
by the owner of the building as of the 1st 
day it is not rented. 
‘‘(2) NEW BUILDING.—The term ‘new building’ 
means a building the original use of which begins 
with the taxpayer. 
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‘‘(3) EXISTING BUILDING.—The term ‘existing 
building’ means any building which is not a new 
building. 
‘‘(4) APPLICATION TO ESTATES AND TRUSTS.— 
In the case of an estate or trust, the amount of the 
credit determined under subsection (a) shall be ap-
portioned between the estate or trust and the bene-
ficiaries on the basis of the income of the estate or 
trust allocable to each. 
‘‘(5) IMPACT OF TENANT’S OPTION TO ACQUIRE 
PROPERTY.— 
‘‘(A) IN
GENERAL.—No Federal income 
tax benefit shall fail to be allowable to the tax-
payer with respect to any qualified working 
families building merely by reason of an option 
held by the tenants (in cooperative form or oth-
erwise) or resident management corporation of 
such building or by a qualified nonprofit organi-
zation or government agency to purchase the 
property or all of the partnership interests 
(other than interests of the person exercising 
such option or a related party thereto (within 
the meaning of section 267(b) or 707(b)(1))) 
relating to the property after the close of the 
credit period for a price which is not less than 
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the minimum purchase price determined under 
subparagraph (B). 
‘‘(B) MINIMUM
PURCHASE
PRICE.—For 
purposes of subparagraph (A), the minimum 
purchase price under this subparagraph is an 
amount equal to the principal amount of out-
standing indebtedness secured by the building 
(other than indebtedness incurred within the 5- 
year period ending on the date of the sale to 
the tenants). In the case of a purchase of a 
partnership interest, the minimum purchase 
price is an amount equal to such interest’s rat-
able share of the amount determined under the 
preceding sentence. 
‘‘(6) TREATMENT OF RURAL PROJECTS.—For 
purposes of this section, in the case of any project 
for residential rental property located in a rural area 
(as defined in section 520 of the Housing Act of 
1949), any income limitation measured by reference 
to area median gross income shall be measured by 
reference to the greater of area median gross income 
or national non-metropolitan median income. 
‘‘(7) DETERMINATION OF WHETHER BUILDING 
IS FEDERALLY SUBSIDIZED.— 
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‘‘(A) IN GENERAL.—Except as otherwise 
provided in this paragraph, for purposes of this 
section, a project shall be treated as Federally 
subsidized for any taxable year if, at any time 
during such taxable year or any prior taxable 
year, there is or was outstanding any obligation 
the interest on which is exempt from tax under 
section 103 the proceeds of which are or were 
used (directly or indirectly) with respect to such 
project or the operation thereof. 
‘‘(B) SPECIAL RULE FOR SUBSIDIZED CON-
STRUCTION
FINANCING.—Subparagraph 
(A) 
shall not apply to any tax-exempt obligation 
used to provide construction financing for any 
building if— 
‘‘(i) such obligation (when issued) 
identified the building for which the pro-
ceeds of such obligation would be used, 
and 
‘‘(ii) such obligation is redeemed be-
fore such building is placed in service. 
‘‘(8) REDUCTION IN BASIS.—In the case of any 
building for which a credit is allowable under this 
section and section 42, the basis of the building shall 
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be reduced by the amount of such credit allowed 
under subsection (a). 
‘‘(j) APPLICATION OF AT-RISK RULES.—For pur-
poses of this section— 
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, rules similar to the rules of 
section 
49(a)(1) 
(other 
than 
subparagraphs 
(D)(ii)(II) and (D)(iv)(I) thereof), section 49(a)(2), 
and section 49(b)(1) shall apply in determining the 
qualified basis of any building in the same manner 
as such sections apply in determining the credit base 
of property. 
‘‘(2) SPECIAL RULES FOR DETERMINING QUALI-
FIED PERSON.—For purposes of paragraph (1)— 
‘‘(A) IN GENERAL.—If the requirements of 
subparagraphs (B), (C), and (D) are met with 
respect to any financing borrowed from a quali-
fied nonprofit organization, the determination 
of whether such financing is qualified commer-
cial financing with respect to any qualified 
working families building shall be made without 
regard to whether such organization— 
‘‘(i) is actively and regularly engaged 
in the business of lending money, or 
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‘‘(ii) is a person described in section 
49(a)(1)(D)(iv)(II). 
‘‘(B) FINANCING
SECURED
BY
PROP-
ERTY.—The requirements of this subparagraph 
are met with respect to any financing if such fi-
nancing is secured by the qualified working 
families building, except that this subparagraph 
shall not apply in the case of a federally as-
sisted building described in section 42(d)(6)(C) 
if— 
‘‘(i) a security interest in such build-
ing is not permitted by a Federal agency 
holding or insuring the mortgage secured 
by such building, and 
‘‘(ii) the proceeds from the financing 
(if any) are applied to acquire or improve 
such building. 
‘‘(C) PORTION
OF
BUILDING
ATTRIB-
UTABLE TO FINANCING.—The requirements of 
this subparagraph are met with respect to any 
financing for any taxable year in the credit pe-
riod if, as of the close of such taxable year, not 
more than 60 percent of the eligible basis of the 
qualified working families building is attrib-
utable to such financing (reduced by the prin-
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cipal and interest of any governmental financ-
ing which is part of a wrap-around mortgage 
involving such financing). 
‘‘(D) REPAYMENT OF PRINCIPAL AND IN-
TEREST.—The requirements of this subpara-
graph are met with respect to any financing if 
such financing is fully repaid on or before the 
earliest of— 
‘‘(i) the date on which such financing 
matures, 
‘‘(ii) the 90th day after the close of 
the credit period with respect to the quali-
fied working families building, or 
‘‘(iii) the date of its refinancing or the 
sale of the building to which such financ-
ing relates. 
In the case of a qualified nonprofit organization 
which 
is 
not 
described 
in 
section 
49(a)(1)(D)(iv)(II) with respect to a building, 
clause (ii) of this subparagraph shall be applied 
as if the date described therein were the 90th 
day after the earlier of the date the building 
ceases to be a qualified working families build-
ing or the date which is 15 years after the close 
of a credit period with respect thereto. 
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‘‘(3) PRESENT VALUE OF FINANCING.—If the 
rate of interest on any financing described in para-
graph (2)(A) is less than the rate which is 1 per-
centage point below the applicable Federal rate as of 
the time such financing is incurred, then the quali-
fied basis (to which such financing relates) of the 
qualified working families building shall be the 
present value of the amount of such financing, using 
as the discount rate such applicable Federal rate. 
For purposes of the preceding sentence, the rate of 
interest on any financing shall be determined by 
treating interest to the extent of government sub-
sidies as not payable. 
‘‘(4) FAILURE TO FULLY REPAY.— 
‘‘(A) IN GENERAL.—To the extent that the 
requirements of paragraph (2)(D) are not met, 
then the taxpayer’s tax under this chapter for 
the taxable year in which such failure occurs 
shall be increased by an amount equal to the 
applicable portion of the credit under this sec-
tion with respect to such building, increased by 
an amount of interest for the period— 
‘‘(i) beginning with the due date for 
the filing of the return of tax imposed by 
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chapter 1 for the 1st taxable year for 
which such credit was allowable, and 
‘‘(ii) ending with the due date for the 
taxable year in which such failure occurs, 
determined by using the underpayment rate and 
method under section 6621. 
‘‘(B) APPLICABLE
PORTION.—For pur-
poses of subparagraph (A), the term ‘applicable 
portion’ means the aggregate decrease in the 
credits allowed to a taxpayer under section 38 
for all prior taxable years which would have re-
sulted if the eligible basis of the building were 
reduced by the amount of financing which does 
not meet requirements of paragraph (2)(D). 
‘‘(C) CERTAIN
RULES
TO
APPLY.—Rules 
similar to the rules of subparagraphs (A) and 
(D) of section 42(j)(4) shall apply for purposes 
of this subsection. 
‘‘(k) CERTIFICATIONS AND OTHER REPORTS TO SEC-
RETARY.— 
‘‘(1) CERTIFICATION
WITH
RESPECT
TO
1ST 
YEAR OF CREDIT PERIOD.—Following the close of 
the 1st taxable year in the credit period with respect 
to any qualified working families building, the tax-
payer shall certify to the Secretary (at such time 
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and in such form and in such manner as the Sec-
retary prescribes)— 
‘‘(A) the taxable year, and calendar year, 
in which such building was placed in service, 
‘‘(B) the adjusted basis and eligible basis 
of such building as of the close of the 1st year 
of the credit period, 
‘‘(C) the maximum applicable percentage 
and qualified basis permitted to be taken into 
account by the appropriate housing credit agen-
cy under subsection (h), and 
‘‘(D) such other information as the Sec-
retary may require. 
In the case of a failure to make the certification re-
quired by the preceding sentence on the date pre-
scribed therefor, unless it is shown that such failure 
is due to reasonable cause and not to willful neglect, 
no credit shall be allowable by reason of subsection 
(a) with respect to such building for any taxable 
year ending before such certification is made. 
‘‘(2) ANNUAL REPORTS TO THE SECRETARY.— 
The Secretary may require taxpayers to submit an 
information return (at such time and in such form 
and manner as the Secretary prescribes) for each 
taxable year setting forth— 
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‘‘(A) the qualified basis for the taxable 
year of each qualified working families building 
of the taxpayer, 
‘‘(B) the information described in para-
graph (1)(C) for the taxable year, and 
‘‘(C) such other information as the Sec-
retary may require. 
The penalty under section 6652(j) shall apply to any 
failure to submit the return required by the Sec-
retary under the preceding sentence on the date pre-
scribed therefor. 
‘‘(3) ANNUAL REPORTS FROM HOUSING CREDIT 
AGENCIES.—Each agency which allocates any hous-
ing credit amount to any building for any calendar 
year shall submit to the Secretary (at such time and 
in such manner as the Secretary shall prescribe) an 
annual report specifying— 
‘‘(A) the amount of housing credit amount 
allocated to each building for such year, 
‘‘(B) sufficient information to identify each 
such building and the taxpayer with respect 
thereto, and 
‘‘(C) such other information as the Sec-
retary may require. 
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The penalty under section 6652(j) shall apply to any 
failure to submit the report required by the pre-
ceding sentence on the date prescribed therefor. 
‘‘(l) RESPONSIBILITIES OF HOUSING CREDIT AGEN-
CIES.— 
‘‘(1) PLANS
FOR
ALLOCATION
OF
CREDIT 
AMONG PROJECTS.— 
‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of this section, the housing cred-
it dollar amount with respect to any building 
shall be zero unless— 
‘‘(i) such amount was allocated pursu-
ant to a qualified allocation plan of the 
housing credit agency which is approved by 
the governmental unit (in accordance with 
rules similar to the rules of section 
42(m)(1)) of which such agency is a part, 
‘‘(ii) a comprehensive market study of 
the housing needs of working family indi-
viduals in the area to be served by the 
project is conducted before the credit allo-
cation is made and at the developer’s ex-
pense by a disinterested party who is ap-
proved by such agency, and 
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‘‘(iii) a written explanation is available 
to the general public for any allocation of 
a housing credit dollar amount which is 
not made in accordance with established 
priorities and selection criteria of the hous-
ing credit agency. 
‘‘(B) QUALIFIED ALLOCATION PLAN.—For 
purposes of this paragraph, the term ‘qualified 
allocation plan’ means any plan— 
‘‘(i) which sets forth selection criteria 
to be used to determine housing priorities 
of the housing credit agency which are ap-
propriate to local conditions, 
‘‘(ii) which also gives preference in al-
locating housing credit dollar amounts 
among selected projects to— 
‘‘(I) projects obligated to serve 
qualified tenants for the longest peri-
ods, 
‘‘(II) projects in areas with insuf-
ficient supply of housing affordable to 
median income households, 
‘‘(III) projects which target hous-
ing to tenants at a range of incomes 
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between 60 and 100 percent of area 
median gross income, and 
‘‘(IV) projects located near tran-
sit hubs, and 
‘‘(iii) which provides a procedure that 
the agency (or an agent or other private 
contractor of such agency) will follow in 
monitoring for noncompliance with the 
provisions of this section and in notifying 
the Internal Revenue Service of such non-
compliance which such agency becomes 
aware of and in monitoring for noncompli-
ance with habitability standards through 
regular site visits. 
‘‘(C) CERTAIN SELECTION CRITERIA MUST 
BE USED.—The selection criteria set forth in a 
qualified allocation plan must include— 
‘‘(i) project location, 
‘‘(ii) housing needs characteristics, 
‘‘(iii) project characteristics, including 
whether the project includes the use of ex-
isting housing as part of a community revi-
talization plan, 
‘‘(iv) sponsor characteristics, 
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‘‘(v) tenant populations with special 
housing needs, 
‘‘(vi) tenant populations of individuals 
with children, 
‘‘(vii) projects intended for eventual 
tenant ownership, 
‘‘(viii) the energy efficiency of the 
project, and 
‘‘(ix) the historic nature of the 
project. 
‘‘(D) CERTAIN SELECTION CRITERIA PRO-
HIBITED.—The selection criteria set forth in a 
qualified allocation plan shall not include a re-
quirement of local approval or local contribu-
tions, either as a threshold qualification re-
quirement or as part of a point system to be 
considered for allocations of housing credit dol-
lar amount. 
‘‘(2) CREDIT ALLOCATED TO BUILDING NOT TO 
EXCEED AMOUNT NECESSARY TO ASSURE PROJECT 
FEASIBILITY.— 
‘‘(A) IN
GENERAL.—The housing credit 
dollar amount allocated to a project shall not 
exceed the amount the housing credit agency 
determines is necessary for the financial feasi-
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bility of the project and its viability as a quali-
fied working families housing project through-
out the credit period. 
‘‘(B) AGENCY
EVALUATION.—In making 
the determination under subparagraph (A), the 
housing credit agency shall consider— 
‘‘(i) the sources and uses of funds and 
the total financing planned for the project, 
‘‘(ii) any proceeds or receipts expected 
to be generated by reason of tax benefits, 
‘‘(iii) the percentage of the housing 
credit dollar amount used for project costs 
other than the cost of intermediaries, and 
‘‘(iv) the reasonableness of the devel-
opmental and operational costs of the 
project. 
Clause (iii) shall not be applied so as to impede 
the development of projects in hard-to-develop 
areas. Such a determination shall not be con-
strued to be a representation or warranty as to 
the feasibility or viability of the project. 
‘‘(C) DETERMINATION MADE WHEN CRED-
IT AMOUNT APPLIED FOR AND WHEN BUILDING 
PLACED IN SERVICE.— 
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‘‘(i) IN
GENERAL.—A determination 
under subparagraph (A) shall be made as 
of each of the following times: 
‘‘(I) The application for the 
housing credit dollar amount. 
‘‘(II) The allocation of the hous-
ing credit dollar amount. 
‘‘(III) The date the building is 
placed in service. 
‘‘(ii) CERTIFICATION AS TO AMOUNT 
OF OTHER SUBSIDIES.—Prior to each de-
termination under clause (i), the taxpayer 
shall certify to the housing credit agency 
the full extent of all Federal, State, and 
local subsidies which apply (or which the 
taxpayer expects to apply) with respect to 
the building. 
‘‘(m) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be necessary or appropriate to 
carry out the purposes of this section, including— 
‘‘(1) regulations dealing with— 
‘‘(A) projects which include more than 1 
building or only a portion of a building, or 
‘‘(B) buildings which are placed in service 
in portions, 
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‘‘(2) regulations providing for the application of 
this section to short taxable years, 
‘‘(3) regulations preventing the avoidance of the 
rules of this section, 
‘‘(4) regulations providing the opportunity for 
housing credit agencies to correct administrative er-
rors and omissions with respect to allocations and 
record keeping within a reasonable period after their 
discovery, taking into account the availability of reg-
ulations and other administrative guidance from the 
Secretary, and 
‘‘(5) in consultation with the Secretary of 
Housing and Urban Development, regulations or 
guidance to promote uniform definitions and to 
streamline requirements for with respect to qualified 
working families buildings which receive funding 
from programs administrated by the Department of 
Housing and Urban Development, including pro-
grams authorized by Native American Housing As-
sistance and Self-Determination Act of 1996.’’. 
(b) TREATMENT AS PART OF GENERAL BUSINESS 
CREDIT.—Section 38(b) of the Internal Revenue Code of 
1986 is amended by striking ‘‘plus’’ at the end of para-
graph (40), by striking the period at the end of paragraph 
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(41) and inserting ‘‘, plus’’, and by adding at the end the 
following new paragraph: 
‘‘(42) the working families housing credit deter-
mined under section 42A(a).’’. 
(c) REDUCTION IN BASIS.—Section 1016(a) of the 
Internal Revenue Code of 1986 is amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(37); 
(2) by redesignating paragraph (38) as para-
graph (39); and 
(3) by inserting after paragraph (37) the fol-
lowing new paragraph: 
‘‘(38) to the extent provided in section 
42A(i)(8), and’’. 
(d) TREATMENT UNDER BASE EROSION MINIMUM 
TAX.—Section 59A(b)(4) of he Internal Revenue Code of 
1986 is amended by redesignating subparagraphs (B) and 
(C) as subparagraphs (C) and (D), respectively, and by 
inserting after subparagraphs (A) the following new sub-
paragraph: 
‘‘(B) the working families housing credit 
determined under section 42A(a),’’. 
(e) CONFORMING AMENDMENTS RELATING TO LOW- 
INCOME HOUSING TAX CREDIT.—Section 42(n) of the In-
ternal Revenue Code of 1986 is amended— 
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(1) by striking ‘‘regulations’’ in the matter pre-
ceding paragraph (1), 
(2) by inserting ‘‘regulations’’ before ‘‘dealing 
with’’ in paragraph (1), 
(3) by inserting ‘‘regulations’’ before ‘‘pro-
viding’’ in paragraphs (2) and (4), 
(4) by inserting ‘‘regulations’’ before ‘‘pre-
venting’’ in paragraph (3), 
(5) by striking ‘‘and’’ at the end of paragraph 
(3), 
(6) by striking the period at the end of para-
graph (4) and inserting ‘‘, and’’, and 
(7) by adding at the end the following new 
paragraph: 
‘‘(5) in consultation with the Secretary of 
Housing and Urban Development, regulations or 
guidance to promote uniform definitions and to 
streamline requirements with respect to qualified 
low-income buildings which receive funding from 
programs administrated by the Department of Hous-
ing and Urban Development, including programs au-
thorized by Native American Housing Assistance 
and Self-Determination Act of 1996.’’. 
(f) CONFORMING AMENDMENTS.— 
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(1) Section 45L(e) of the Internal Revenue 
Code of 1986 is amended by inserting ‘‘or 42A’’ 
after ‘‘42’’. 
(2) Section 50(c)(3)(C) of such Code is amend-
ed by inserting ‘‘or 42A’’ after ‘‘42’’. 
(3) Section 55(c)(1) of such Code is amended 
by inserting ‘‘42A(j),’’ before ‘‘45(e)(11)(C)’’. 
(4) Subsections (i)(3)(C), (i)(6)(B)(i), and 
(k)(1) of section 469 of such Code are each amended 
by inserting ‘‘or 42A’’ after ‘‘42’’. 
(5) The table of sections for subpart D of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 42 the following new item: 
‘‘Sec. 42A. Working families housing credit.’’. 
(g) EFFECTIVE DATE.—The amendments made by 
this section shall apply to buildings placed in service after 
December 31, 2024, in taxable years ending after such 
date. 
SEC. 4. LOANS AND GRANTS FOR INFRASTRUCTURE 
PROJECTS IN CONNECTION WITH QUALIFIED 
WORKING FAMILIES HOUSING PROJECTS. 
(a) IN GENERAL.—The Secretary shall make grants 
and below-market-rate loans (as the Secretary determines 
appropriate) to local governments in rural and exurban 
areas for covered infrastructure projects carried out in 
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connection with the development of qualified working fam-
ilies housing projects. 
(b) COVERED INFRASTRUCTURE PROJECTS.—For 
purposes of this section— 
(1) IN
GENERAL.—The term ‘‘covered infra-
structure project’’ means projects for electricity, 
waters, sewers, local access roads, and such other 
projects as the Secretary determines appropriate. 
(2) CLEAN ENERGY PRIORITIZATION.—With re-
spect to any infrastructure project for electricity, the 
Secretary shall give priority to clean energy projects. 
(c) OTHER DEFINITIONS AND SPECIAL RULES.— 
Terms used in this section which are also used in section 
42A of the Internal Revenue Code of 1986 shall have the 
same meaning when used in this section as when used in 
such section of such Code. Requirements similar to the 
requirements of section 45(b)(7) of such Code shall apply 
with respect to infrastructure projects with respect to 
which grants or loans are made under this section. 
(d) AUTHORIZATION
OF APPROPRIATIONS.—There 
are authorized to be appropriated $100,000,000 to carry 
out the purposes of this section. 
Æ 
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