SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Incentivizing New Con-
versions to Residential Entities to Accelerate Supply and 
Expand Housing Affordability Act’’ or the ‘‘INCREASE 
Housing Affordability Act’’. 
SEC. 2. COMMERCIAL-TO-RESIDENTIAL CREDIT. 
(a) IN GENERAL.—Section 46 of the Internal Rev-
enue Code of 1986 is amended by redesignating paragraph 
(7) as paragraph (8), by redesignating the paragraph (6) 
relating to the advanced manufacturing investment credits 
as paragraph (7), by striking ‘‘and’’ at the end of para-
graph (7) (as so redesignated), by striking the period at 
the end of paragraph (8) (as so redesignated) and insert-
ing ‘‘, and’’, and by adding at the end the following new 
paragraph: 
‘‘(9) the commercial-to-residential credit.’’. 
(b) AMOUNT OF CREDIT.—Subpart E of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code 
of 1986 is amended by inserting after section 48E the fol-
lowing new section: 
‘‘SEC. 48F. COMMERCIAL-TO-RESIDENTIAL CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
commercial-to-residential credit for any taxable year is 
equal to 15 percent of the qualified conversion expendi-
tures with respect to a qualified converted building. 
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‘‘(b) LIMITATION ON CREDIT AMOUNT.—The credit 
determined under subsection (a) may not exceed— 
‘‘(1) $200,000 per new residential housing unit, 
and 
‘‘(2) $10,000,000 per qualified converted build-
ing. 
‘‘(c) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.— 
‘‘(1) IN
GENERAL.—Qualified conversion ex-
penditures with respect to any qualified converted 
building shall be taken into account for the taxable 
year in which such qualified converted building is 
placed in service. 
‘‘(2) COORDINATION WITH SUBSECTION (e).— 
The amount which would (but for this subpara-
graph) be taken into account under subparagraph 
(A) with respect to any qualified converted building 
shall be reduced (but not below zero) by any amount 
of qualified conversion expenditures taken into ac-
count under subsection (e) by the taxpayer or a 
predecessor of the taxpayer (or, in the case of a sale 
and leaseback described in section 50(a)(2)(C), by 
the lessee), to the extent any amount so taken into 
account has not been required to be recaptured 
under section 50(a). 
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‘‘(d) BONUS CREDITS.— 
‘‘(1) AFFORDABLE HOUSING BONUS CREDIT.— 
‘‘(A) IN GENERAL.—In the case of a quali-
fied converted building which has been con-
verted to a majority rental residential use and 
which satisfies the requirements under subpara-
graph (B), the amount of the credit determined 
under subsection (a) (determined without re-
gard to this subsection) and the limitation on 
credit amount described in subsection (b) (de-
termined without regard to this subsection) 
with respect to such building shall each be in-
creased by an amount equal to— 
‘‘(i) in the case of a qualified con-
verted building 25 percent or more of the 
residential units of which are both rent-re-
stricted and occupied by individuals whose 
income does not exceed 100 percent of 
area median income, 10 percent of such 
amounts, 
‘‘(ii) in the case of a qualified con-
verted building 25 percent or more of the 
residential units of which are both rent-re-
stricted and occupied by individuals whose 
income does not exceed 80 percent of area 
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median income, 15 percent of such 
amounts, and 
‘‘(iii) in the case of a qualified con-
verted building 25 percent or more of the 
residential units of which are both rent-re-
stricted and occupied by individuals whose 
income does not exceed 60 percent of area 
median income, 20 percent of such 
amounts. 
‘‘(B) RENT
AND
INCOME
LIMITATION.— 
For purposes of subparagraph (A), rules similar 
to the rules of section 42(g) shall apply to de-
termine whether a unit is rent-restricted, treat-
ment of units occupied by individuals whose in-
comes rise above the limit, and treatment of 
units where Federal rental assistance is reduced 
as tenant’s income increases. 
‘‘(2) PREVAILING WAGE BONUS CREDIT.— 
‘‘(A) IN
GENERAL.—In the case of any 
qualified converted building with respect to 
which the taxpayer certifies to the Secretary 
that the taxpayer satisfied the requirement of 
subparagraph (B) with respect to the conver-
sion process, the amount of the credit deter-
mined under subsection (a) (determined without 
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regard to this subsection) and the limitation on 
the credit amount described in subsection (b) 
(determined without regard to this subsection) 
with respect to such building shall each be in-
creased by an amount equal to 15 percent of 
such amounts. 
‘‘(B) PREVAILING WAGE REQUIREMENT.— 
The requirement described in this subparagraph 
is satisfied with respect to any conversion if all 
laborers or mechanics employed by the taxpayer 
or any contractor or subcontractor of the tax-
payer to carry out the conversion were paid 
wages at rates not less than the prevailing rates 
for construction, alteration, or repair of a simi-
lar character in the locality in which such 
project is located as most recently determined 
by the Secretary of Labor, in accordance with 
subchapter IV of chapter 31 of title 40, United 
States Code. 
‘‘(e) DEFINITIONS.— 
‘‘(1) QUALIFIED CONVERTED BUILDING.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
converted building’ means any building (and its 
structural components) if— 
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‘‘(i) prior to conversion, such building 
was nonresidential real property (as de-
fined in section 168) which was leased, or 
available for lease, to office tenants, 
‘‘(ii) such building has been substan-
tially converted from an office use to a res-
idential or residential-retail mixed use, 
‘‘(iii) such building was initially 
placed in service at least 15 years before 
the beginning of the conversion, and 
‘‘(iv) depreciation (or amortization in 
lieu of depreciation) is allowable with re-
spect to such building. 
‘‘(B) SUBSTANTIALLY
CONVERTED
DE-
FINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
paragraph (1)(A)(ii), a building shall be 
treated as having been substantially con-
verted only if the qualified conversion ex-
penditures during the 24-month period se-
lected by the taxpayer (at the time and in 
the manner prescribed by regulation) and 
ending with or within the taxable year ex-
ceed the greater of— 
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