Title: Manufactured Housing Community Sustainability Act of 2019
Policy area: Taxation

Summary:
Manufactured Housing Community Sustainability Act of 2019
This bill amends the Internal Revenue Code to allow a business-related tax credit equal to 75% of the gain from the sale or exchange of real property to a qualified manufactured home community cooperative or corporation if  (1) the property is acquired for use as a manufactured home community, (2) the seller (or any related person) owned the property for the entire two-year period before the sale or exchange, and (3) the property is transferred subject to a binding covenant that the property will be used as a manufactured home community for at least 50 years or the maximum permissible term under state laws that restrict such covenants to a lesser term.. A "qualified manufactured home community cooperative or corporation" is a cooperative or a nonprofit corporation established pursuant to the laws of the state in which the property is located.
The bill specifies membership and governance requirements for the communities owned by the cooperative or nonprofit corporation. The bill also imposes a tax on buyers who violate the covenant to use the property for manufactured housing.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 2571 Introduced in Senate (IS)]

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116th CONGRESS
  1st Session
                                S. 2571

 To amend the Internal Revenue Code of 1986 to allow a business credit 
for gain from the sale of real property for use as a manufactured home 
                   community, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 26, 2019

Mrs. Shaheen (for herself and Ms. Smith) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to allow a business credit 
for gain from the sale of real property for use as a manufactured home 
                   community, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Manufactured Housing Community 
Sustainability Act of 2019''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) more than 17,000,000 people live in manufactured homes 
        and benefit from high-quality affordable homes which provide 
        stability;
            (2) owners of manufactured homes have disproportionately 
        low-income households, and in 2013, the median annual household 
        income for living in manufactured housing was $28,400;
            (3) approximately 75 percent of manufactured home 
        households earn less than $50,000 per year;
            (4) more than 10 percent of veterans in the United States 
        live in manufactured homes;
            (5) in late 1990, manufactured housing represented \2/3\ of 
        the new affordable housing produced in the United States and 
        remains a significant source of unsubsidized affordable housing 
        in the United States;
            (6) in 2015, the average cost per square foot for a new 
        manufactured home was 48 dollars, less than half of the cost 
        per square foot for a new-site built, structure-only home, 
        which was $101;
            (7) in 2009, 43 percent of all new homes that sold for less 
        than $150,000 were manufactured homes;
            (8) manufactured homes account for 23 percent of new home 
        sales under $200,000;
            (9) more than 50,000 manufactured home communities, also 
        referred to as ``mobile home parks'', exist throughout the 
        United States;
            (10) more than 2,900,000 manufactured homes are placed in 
        manufactured home communities;
            (11) manufactured home communities provide critical 
        affordable housing, but receive very little Federal, State, or 
        local funds to subsidize the cost of manufactured homes;
            (12) manufactured home owners in such communities may own 
        the home, but they do not own the land under the home, which 
        leaves the home owners vulnerable to rent increases, arbitrary 
        rule enforcement, and in the case of a manufactured home 
        community owner converting the land to some other use, 
        community closure;
            (13) an eviction or closure of a manufactured home 
        community is very disruptive to a resident who may be unable to 
        pay the thousands of dollars it takes to move the manufactured 
        home or find a new location for the manufactured home;
            (14) in an effort to preserve a crucial source of 
        affordable housing within the past two decades, a national 
        network of housing providers has helped residents purchase and 
        own the land under the manufactured home community, and manage 
        the manufactured home community;
            (15) nationwide, there are more than 1,000 stable, 
        permanent ownership cooperatives or nonprofit-owned 
        developments in more than a dozen States;
            (16) members of manufactured home communities continue to 
        own such homes individually, own an equal share of the land 
        beneath the entire manufactured home community, participate in 
        the governing of the community, and elect a board of directors 
        who make major decisions within the manufactured home community 
        by a democratic vote;
            (17) in New Hampshire, more than 30 percent of manufactured 
        home communities are owned by residents;
            (18) resident-owned cooperatives and nonprofit owned 
        communities have also flourished in Vermont, Massachusetts, 
        Rhode Island, Washington, Oregon, and Minnesota;
            (19) nationwide, only 2 percent of all manufactured home 
        communities are resident or nonprofit-owned;
            (20) manufactured home community owners often prefer to 
        devise such property tax free, rather than selling the 
        community, in order to avoid capital gain taxes;
            (21) when the owner of a manufactured home community dies, 
        the heirs of the owner frequently sell the community to the 
        highest bidder which results in displacement for dozens and 
        sometimes hundreds of families; and
            (22) in order to preserve manufactured home communities in 
        the future, a Federal tax benefit should be established to 
        induce manufactured home community owners to sell such 
        properties to residents that the owners have known for decades, 
        or to nonprofit organizations.

SEC. 3. TAX CREDIT FOR MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR 
              NONPROFIT ENTITY.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business related 
credits) is amended by adding at the end the following new section:

``SEC. 45T. MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR NONPROFIT 
              ENTITY.

    ``(a) Allowance of Credit.--For purposes of section 38, the 
manufactured home community sale credit determined under this section 
for any taxable year is an amount equal to 75 percent of the qualified 
gain received by the taxpayer during the taxable year.
    ``(b) Definitions.--For purposes of this section--
            ``(1) Qualified gain.--The term `qualified gain' means gain 
        from the sale or exchange of real property to a qualified 
        manufactured home community cooperative or corporation if--
                    ``(A) the real property is acquired for use as a 
                manufactured home community,
                    ``(B) the seller (or any related person) owned the 
                property for the entire 2-year period ending on the day 
                before the sale or exchange, and
                    ``(C) the property is transferred subject to a 
                binding covenant that the property will be used as a 
                manufactured home community for not less than 50 years 
                (or, in the case of a manufactured home community 
                located in a State the laws of which restrict such 
                covenant to a lesser term, the maximum permissible term 
                allowed under such State laws).
            ``(2) Manufactured home community.--The term `manufactured 
        home community' means a community comprised primarily of 
        manufactured homes used solely for residential purposes and 
        owned by a manufactured home community cooperative or 
        corporation.
            ``(3) Qualified manufactured home community cooperative or 
        corporation.--
                    ``(A) In general.--The term `qualified manufactured 
                home community cooperative or corporation' means a 
                cooperative or a nonprofit corporation established 
                pursuant to the laws of the State in which the property 
                used as a manufactured home community is located, and 
                which--
                            ``(i) in the case of a community owned by a 
                        nonprofit corporation whose membership 
                        interests are sold on a nonappreciating basis, 
                        has only 1 class of membership and such class 
                        consists solely of residents, and
                            ``(ii) in the case of a community owned by 
                        a cooperative, has not more than 2 classes of 
                        membership, and such classes consist solely of 
                        residents and a tax-exempt organization.
                    ``(B) Governance.--An entity shall not be treated 
                as a qualified manufactured home community cooperative 
                or corporation unless governance of the entity is 
                carried out by members elected to a board of directors 
                with voting structured equitably among all members.
                    ``(C) Member.--The term `member' means--
                            ``(i) an individual who--
                                    ``(I) has attained the age of 18,
                                    ``(II) is entitled to be a member 
                                by reason of--
                                            ``(aa) the membership 
                                        interest of the individual to 
                                        execute an occupancy agreement 
                                        with the manufactured home 
                                        community cooperative nonprofit 
                                        with respect to a site in the 
                                        manufactured home community in 
                                        order to establish a 
                                        manufactured home which is 
                                        owned by the individual, or
                                            ``(bb) permission from the 
                                        manufactured community 
                                        cooperative or corporation, the 
                                        member's trust, or other 
                                        entity, and
                                    ``(III) is a resident of the 
                                manufactured home community, and
                            ``(ii) a tax exempt organization.
            ``(4) Membership interest.--The term `membership interest' 
        means--
                    ``(A) an ownership interest in a manufactured home 
                community cooperative or corporation, or
                    ``(B) a membership interest in a manufactured home 
                community nonprofit corporation.
            ``(5) Manufactured home.--The term `manufactured home' 
        means a structure which is transportable in one or more 
        sections, which--
                    ``(A) in traveling mode, is 8 body feet or more in 
                width and 40 body feet or more in length, or, when 
                erected on site, is 320 square feet or more,
                    ``(B) is built on a permanent chassis and designed 
                to be used as a dwelling (with or without a permanent 
                foundation when connected to required utilities) and 
                includes plumbing, heating, and electrical heating 
                systems, and
                    ``(C) in the case of a structure manufactured after 
                June 15, 1976, is certified as meeting the Manufactured 
                Home Construction and Safety Standards issued under the 
                National Manufactured Housing Construction and Safety 
                Standards Act of 1974 (42 U.S.C. 5401 et seq.) by the 
                Department of Housing and Urban Development and 
                displays a label of such certification on the exterior 
                of each transportable section.
    ``(c) Special Rules.--
            ``(1) Related person.--For purposes of subsection 
        (b)(1)(B), a person is related to the seller if--
                    ``(A) such person bears a relationship to the 
                seller as specified in section 267(b) or 707(b)(1), or
                    ``(B) such person and the seller are engaged in 
                trades or businesses under common control within the 
                meanings of subsections (a) and (b) of section 52.
            ``(2) Election by both seller and buyer.--The credit is 
        allowable under this section only if--
                    ``(A) both the seller and the purchaser of the real 
                property execute an affidavit representing that the 
                sale meets the requirements of subsection (b)(1), and 
                the purchaser acknowledges liability for the recapture 
                of the credit under subsection (d) in case of any 
                violation described in such subsection,
                    ``(B) the purchaser of the real property records 
                the affidavit, and
                    ``(C) the affidavit is referenced in the deed to 
                the real property.
            ``(3) Requirement.--The seller shall include a copy of the 
        affidavit representing the sale with the return of tax.
    ``(d) Tax Upon Violation of Covenant.--There is imposed a tax on 
the buyer for a violation of the covenant specified in subsection 
(b)(1)(C). The amount of such tax shall be 20 percent of the net 
proceeds after settlement for the sale or exchange of the real property 
referred to in subsection (b)(1). For purposes of section 501(a), the 
tax imposed by this subsection shall not be treated as a tax imposed by 
this subtitle.
    ``(e) Regulations.--The Secretary shall issue such regulations or 
other guidance as may be necessary to carry out this section, including 
the recapture under subsection (d).''.
    (b) Credit Allowed as Part of General Business Credit.--
            Section 38(b) of the Internal Revenue Code of 1986 is 
        amended--
            (1) by striking ``plus'' at the end of paragraph (31);
            (2) by striking the period at the end of paragraph (32) and 
        inserting ``, plus''; and
            (3) by adding at the end the following new paragraph:
            ``(33) the manufactured home community sale credit 
        determined under section 45T(a).''.
    (c) Conforming Amendments.--
            (1) Subsection (c) of section 196 of the Internal Revenue 
        Code of 1986 is amended--
                    (A) by striking ``and'' at the end of paragraph 
                (13);
                    (B) by striking the period at the end of paragraph 
                (14) and inserting ``, and''; and
                    (C) by adding at the end the following new 
                paragraph:
            ``(15) the manufactured home community sale credit 
        determined under section 45T(a).''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such the Internal Revenue Code of 
        1986 is amended by adding at the end the following new item:

``Sec. 45T. Manufactured home community sale to residents or nonprofit 
                            entity.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2019.
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