Affordable Housing Credit Improvement Act of 2016

Bill: 114-s-2962
Sponsor: full_name: Sen. Cantwell, Maria [D-WA]
Introduced: 2016-05-19
Policy area: Taxation
Subjects: Income tax credits

Inflation and prices

Low- and moderate-income housing
Latest action: action_date: 2016-05-19
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2016-05-19
action_desc: Introduced in Senate
text: <p><b>Affordable Housing Credit Improvement Act of 2016 </b></p> <p>This bill amends the Internal Revenue Code, with respect to the low-income housing tax credit, to: (1) expand the credit by increasing the state housing credit ceiling, (2) modify the cost-of-living adjustment required for the state housing credit ceiling, (3) establish a new average income test which may be used to determine if a low-income housing project qualifies for the credit, and (4) establish a minimum credit rate of 4% for certain new or existing buildings. </p>

tv_txt: II 114th CONGRESS 2d Session S. 2962 IN THE SENATE OF THE UNITED STATES May 19, 2016 Ms. Cantwell (for herself, Mr. Hatch , Mr. Schumer , and Mr. Wyden ) 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 reform the low-income housing credit, and for other purposes.

1. Short title This Act may be cited as the Affordable Housing Credit Improvement Act of 2016 . 2. Increases in State allocations (a) Phase-In of increases (1) In general Clause (ii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986 is amended— (A) by striking $1.75 in subclause (I) and inserting the per capita dollar amount , and (B) by striking $2,000,000 in subclause (II) and inserting the minimum ceiling amount . (2) Per capita dollar amount; minimum ceiling amount Subparagraph (I) of section 42(h)(3) of such Code is amended to read as follows: (I) Per capita dollar amount; minimum ceiling amount For purposes of this paragraph— (i) Per capita dollar amount The per capita dollar amount is— (I) for calendar year 2016, $2.35, (II) for calendar year 2017, $2.59, (III) for calendar year 2018, $2.82, (IV) for calendar year 2019, $3.06, (V) for calendar year 2020, $3.29, and (VI) $3.53 thereafter. (ii) Minimum ceiling amount The minimum ceiling amount is— (I) for calendar year 2016, $2,690,000, (II) for calendar year 2017, $2,959,000, (III) for calendar year 2018, $3,228,000, (IV) for calendar year 2019, $3,497,000, (V) for calendar year 2020, $3,766,000, and (VI) $4,035,000 thereafter. . (3) Modification of cost-of-living adjustment Subparagraph (H) of section 42(h)(3) of such Code is amended— (A) by striking 2002 in clause (i) and inserting 2016 , (B) by striking the $2,000,000 and $1.75 amounts in subparagraph (C) in clause (i) and inserting the dollar amounts applicable to such calendar year under clauses (i) and (ii) of subparagraph (I) , (C) by striking 2001 in clause (i)(II) and inserting 2015 , (D) by striking $2,000,000 in clause (ii)(I) and inserting minimum ceiling , and (E) by striking $1.75 in clause (ii)(II) and inserting per capita dollar . (4) Effective date The amendments made by this subsection shall apply to calendar years beginning after December 31, 2016. (b) Permanent increases (1) In general Clause (ii) of section 42(h)(3)(C) of the Internal Revenue Code of 1986, as amended by subsection (a)(1), is amended— (A) by striking the per capita dollar amount in subclause (I) and inserting $3.53 , and (B) by striking the minimum ceiling amount in subclause (II) and inserting $4,035,000 . (2) Conforming amendment Paragraph (3) of section 42(h) of such Code is amended by striking subparagraph (I), as amended by subsection (a)(2). (3) Cost-of-living adjustment Subparagraph (H) of section 42(h)(3) of such Code, as amended by subsection (a)(3), is amended— (A) by striking the dollar amounts applicable to such calendar year under clauses (i) and (ii) of subparagraph (I) in clause (i) and inserting the $4,035,000 and $3.53 amounts in subparagraph (C) , (B) by striking minimum ceiling in clause (ii)(I) and inserting $4,035,000 , and (C) by striking per capita dollar in clause (ii)(II) and inserting $3.53 . (4) Effective date The amendments made by this subsection shall apply to calendar years beginning after December 31, 2021. 3. Average income test (a) In general Paragraph (1) of section 42(g) of the Internal Revenue Code of 1986 is amended— (1) by striking subparagraph (A) or (B) and inserting subparagraph (A), (B), or (C) , and (2) by inserting after subparagraph (B) the following new subparagraph: (C) Average income test (i) In general The project meets the minimum requirements of this subparagraph if 40 percent or more (25 percent or more in the case of a project described in section 142(d)(6)) 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 taxpayer with respect to the respective unit. (ii) Special rules relating to income limitation For purposes of clause (i)— (I) Designation The taxpayer shall designate the imputed income limitation of each unit taken into account under such clause. (II) Average test The average of the imputed income limitations designated under subclause (I) shall not exceed 60 percent of area median gross income. (III) 10-percent increments The designated imputed income limitation of any unit under subclause (I) shall be 20 percent, 30 percent, 40 percent, 50 percent, 60 percent, 70 percent, or 80 percent of area median gross income. . (b) Conforming amendments Subparagraph (C) of section 42(g)(2) of the Internal Revenue Code of 1986 is amended— (1) by redesignating clauses (i) and (ii) as subclauses (I) and (II), respectively, and by moving such subclauses 2 ems to the right, (2) by moving the flush language 2 ems to the right, (3) by striking For purposes of this paragraph, the and inserting “For purposes of this paragraph— (i) General rule Except as provided in clause (ii), the , and (4) by adding at the end the following new clause: (ii) Special rule for average income test In the case of a project with respect to which the taxpayer elects the requirements of subparagraph (C) of paragraph (1), the imputed income limitation applicable to a unit is the imputed income limitation designated with respect to such unit under paragraph (1)(C)(ii)(I). . (c) Effective date The amendments made by this section shall apply to elections made under section 42(g)(1) of the Internal Revenue Code of 1986 after the date of the enactment of this Act. 4. Minimum credit rate (a) In general Subsection (b) of section 42 of the Internal Revenue Code of 1986 is amended— (1) by redesignating paragraph (3) as paragraph (4), and (2) by inserting after paragraph (2) the following new paragraph: (3) Minimum credit rate In the case of any new or existing building to which paragraph (2) does not apply and which is placed in service by the taxpayer after December 31, 2015, the applicable percentage shall not be less than 4 percent. . (b) Effective date The amendments made by this section shall apply to buildings placed in service after December 31, 2015.