Amends the Internal Revenue Code to: (1) rename the low-income housing tax credit as the affordable housing credit; (2) revise the applicable percentage rates for the credit; (3) increase the credit for low-income buildings that are part of state-designated projects; (4) allow the credit for buildings eligible for moderate rehabilitation assistance under the U.S. Housing Act of 1937; (5) repeal certain repayment requirements for qualified mortgage revenue bond issues; (6) qualify displaced homemakers, single parents, and certain disaster victims for mortgage revenue bond-financed first-time home loans; (7) repeal rules requiring recapture of income from sales of low-income buildings that are reasonably expected to be operated on a low-income basis; (8) impose recapture reporting requirements on owners of qualified low-income buildings eligible for housing credits; (9) exempt affordable housing tax credit amounts from the alternative minimum tax; and (10) exempt interest on certain exempt private activity bonds, qualified mortgage revenue bonds, qualified veterans' mortgage bonds, and certain exempt facility bonds used for residential rental projects from the alternative minimum tax.
[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4873 Introduced in House (IH)]
109th CONGRESS
2d Session
H. R. 4873
To amend the Internal Revenue Code of 1986 to encourage investment in
affordable housing.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
March 2, 2006
Mr. Ramstad introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to encourage investment in
affordable housing.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. LOW-INCOME HOUSING CREDIT IMPROVEMENTS.
(a) Renaming the Low-Income Housing Credit as the Affordable
Housing Credit.--
(1) In general.--The heading of section 42 of the Internal
Revenue Code of 1986 (relating to low-income housing credit) is
amended by striking ``low-income'' and inserting
``affordable''.
(2) Conforming amendments.--
(A) Sections 38(b)(5), 42(a), 772(a)(7), and
772(d)(5) of such Code are each amended by striking
``low-income'' and inserting ``affordable''.
(B) The headings of subparagraphs (3)(D) and (6)(B)
of section 469(i) of such Code are each amended by
striking ``low-income'' and inserting ``affordable''.
(C) The table of sections for subpart D of part IV
of subchapter A of chapter 1 of such Code is amended by
striking the item relating to section 42 and inserting
the following:
``Sec. 42. Affordable housing credit.''.
(b) Modification of Rules for Determining Applicable Percentage.--
(1) In general.--Subsection (b) of section 42 of the
Internal Revenue Code of 1986 (relating to applicable
percentage: 70 percent present value credit for certain new
buildings; 30 percent present value credit for certain other
buildings) is amended to read as follows:
``(b) Applicable Percentage.--
``(1) In general.--For purposes of this section, the term
`applicable percentage' means--
``(A) 9 percent in the case of any building to
which subparagraph (B) does not apply, and
``(B) 4 percent in the case of--
``(i) any existing building, and
``(ii) any new building if, at any time
during the taxable year or any prior taxable
year, there is or was outstanding any
obligation--
``(I) not taken into account under
section 146,
``(II) which is exempt from tax
under section 103, and
``(III) the proceeds of which are
or were used (directly or indirectly)
with respect to such building or the
operation thereof.
``(2) Cross references.--
``(A) For treatment of certain rehabilitation
expenditures as separate new buildings, see subsection
(e).
``(B) For determination of applicable percentage
for increases in qualified basis after the 1st year of
the credit period, see subsection (f)(3).
``(C) For authority of housing credit agency to
limit applicable percentage and qualified basis which
may be taken into account under this section with
respect to any building, see subsection (h)(7).''.
(2) Modification of rules related to federal subsidies.--
Paragraph (2) of section 42(i) of such Code (relating to
determination of whether building is Federally subsidized) is
amended to read as follows:
``(2) Exceptions for certain new buildings otherwise
subject to 4 percent credit limitation.--
``(A) Election to reduce eligible basis by proceeds
of obligations.--A tax-exempt obligation shall not be
taken into account under subsection (b)(1)(B)(ii) if
the taxpayer elects to exclude the proceeds of such
obligation from the eligible basis of the building for
purposes of subsection (d).
``(B) Special rule for subsidized construction
financing.--A tax-exempt obligation used to provide
construction financing for any building shall not be
taken into account under subsection (b)(1)(B)(ii) if--
``(i) such obligation (when issued)
identified the building for which the proceeds
of such obligation would be used, and
``(ii) such obligation is redeemed before
such building is placed in service.''.
(c) Increase in Credit for Buildings in State Designated Areas.--
(1) In general.--Clause (i) of section 42(d)(5)(C) of the
Internal Revenue Code of 1986 (relating to increase in credit
for buildings in high cost areas) is amended by striking ``or
difficult development area'' and inserting ``, difficult
development area, or State designated project''.
(2) State designated project.--Subparagraph (C) of section
42(d)(5) of such Code is amended by adding at the end the
following new clause:
``(v) State designated project.--For
purposes of this subparagraph, the term `State
designated project' means any project
designated by the housing credit agency as
meeting such criteria for designation under
this clause as the State in which such project
is located may specify. The rules of clauses
(ii)(II) and (iv) shall not apply for purposes
designations made under this clause.''.
(3) Conforming amendment.--The heading of subparagraph (C)
of section 42(d)(5) of such Code is amended by striking
``buildings in high cost areas'' and inserting ``certain
buildings''.
(d) Modification of Scattered Site Rule.--Paragraph (7) of section
42(g) of the Internal Revenue Code of 1986 (relating to scattered site
projects) is amended to read as follows:
``(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 the rent-
restricted (within the meaning of paragraph (2)) residential
units of such project are distributed among such buildings in
proportion to the number of residential units in each
building.''.
(e) Affordable Housing Credits Allowed for Section 8 Moderate
Rehabilitation Developments.--Paragraph (2) of section 42(c) of the
Internal Revenue Code of 1986 (relating to qualified low-income
building) is amended by striking the last sentence.
(f) Effective Date.--The amendments made by this section shall
apply to--
(1) housing credit dollar amounts allocated after December
31, 2006, and
(2) buildings placed in service after such date to the
extent paragraph (1) of section 42(h) of the Internal Revenue
Code of 1986 does not apply to such building by reason of
paragraph (4) thereof, but only with respect to bonds issued
after such date.
SEC. 2. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL REPAYMENTS ON
QUALIFIED MORTGAGE ISSUES TO REDEEM BONDS.
(a) In General.--Subparagraph (A) of section 142(a)(2) of the
Internal Revenue Code of 1986 (relating to qualified mortgage issue
defined) is amended by inserting ``and'' at the end of clause (ii), by
striking ``, and'' at the end of clause (iii) and inserting a period,
and by striking clause (iv) and the last sentence.
(b) Conforming Amendment.--Clause (ii) of section 142(a)(2)(D) of
such Code is amended by striking ``(and clause (iv) of subparagraph
(A))''.
(c) Effective Date.--The amendments made by this section shall
apply to repayments received after the date of the enactment of this
Act.
SEC. 3. COORDINATION OF CERTAIN RULES APPLICABLE TO AFFORDABLE HOUSING
CREDIT AND QUALIFIED RESIDENTIAL RENTAL PROJECT EXEMPT
FACILITY BONDS.
(a) Determination of Next Available Unit.--Paragraph (3) of section
142(d) of the Internal Revenue Code of 1986 (relating to current income
determinations) is amended by adding at the end the following new
subparagraph:
``(C) Exception for projects with respect to which
affordable housing credit is allowed.--In the case of a
project with respect to which credit is allowed under
section 42, the second sentence of subparagraph (B)
shall be applied by substituting `building (within the
meaning of section 42)' for `project'.''.
(b) Students.--Paragraph (2) of section 142(d) of the Internal
Revenue Code of 1986 (relating to definitions and special rules) is
amended by adding at the end the following new subparagraph:
``(C) Students.--Students (as defined in section
151(c)(4)) shall not be treated as satisfying the
requirements of subparagraph (A) or (B) of paragraph
(1) except under rules similar to the rules of
42(i)(3)(D).''.
(c) Single-Room Occupancy Units.--Paragraph (2) of section 142(d)
of the Internal Revenue Code of 1986 (relating to definitions and
special rules), as amended by this Act, is further amended by adding at
the end the following new subparagraph:
``(D) Single-room occupancy units.--A unit shall
not fail to be treated as a residential unit merely
because such unit is a single-room occupancy unit
(within the meaning of section 42).''.
(d) Effective Date.--The amendments made by this section shall
apply to determinations of the status of qualified residential rental
projects for periods beginning after the date of the enactment of this
Act, with respect to bonds issued before, on, or after such date.
SEC. 4. DISPLACED HOMEMAKERS, SINGLE PARENTS, AND CERTAIN DISASTER
VICTIMS TREATED AS FIRST-TIME HOME BUYERS UNDER RULES FOR
MORTGAGE REVENUE BONDS.
(a) In General.--Paragraph (2) of section 143(d) of the Internal
Revenue Code of 1986 (relating to exceptions) is amended by striking
``and'' at the end of subparagraph (B), and by inserting after
subparagraph (C) the following new subparagraphs:
``(D) financing provided to a displaced homemaker
or a single parent, and
``(E) financing provided for the acquisition of a
residence located in an area determined by the
President to warrant assistance from the Federal
Government under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act by an individual whose
prior primary residence was in such area and was
destroyed or otherwise rendered uninhabitable as a
result of such disaster,''.
(b) Displaced Homemaker; Single Parent.--Subsection (d) of section
143 of such Code (relating to 3-year requirement) is amended by adding
at the end the following new paragraph:
``(4) Displaced homemaker; single parent.--For purposes of
paragraph (2)(D)--
``(A) Displaced homemaker.--The term `displaced
homemaker' means an individual who--
``(i) is an adult,
``(ii) has not worked full-time full-year
in the labor force for a number of years but
has, during such years, worked primarily
without remuneration to care for the home and
family, and
``(iii) is unemployed or underemployed and
is experiencing difficulty in obtaining or
upgrading employment.
``(B) Single parent.--The term `single parent'
means an individual who--
``(i) is not a married individual, and
``(ii) who has one or more dependents
(within the meaning of section 152).''.
(c) Effective Date.--The amendment made by this section shall apply
to bonds originally issued after the date of the enactment of this Act.
SEC. 5. REPEAL OF RECAPTURE BOND RULE.
(a) In General.--Paragraph (6) of section 42(j) of the Internal
Revenue Code of 1986 (relating to recapture of credit) is amended to
read as follows:
``(6) No recapture on disposition of building (or interest
therein) reasonably expected to continue as a qualified low-
income building.--
``(A) In general.--In the case of a disposition of
a building or an interest therein, the taxpayer shall
be discharged from liability for any additional tax
under this subsection by reason of such disposition if
it is reasonably expected that such building will
continue to be operated as a qualified low-income
building for the remaining compliance period with
respect to such building.
``(B) Statute of limitations.--
``(i) Extension of period.--The period for
assessing a deficiency attributable to the
application of subparagraph (A) with respect to
a building (or interest therein) during the
compliance period with respect to such building
shall not expire before the expiration of 3
years after the end of such compliance period.
``(ii) Assessment.--Such deficiency may be
assessed before the expiration of the 3-year
period referred to in clause (i)
notwithstanding the provisions of any other law
or rule of law which would otherwise prevent
such assessment.''.
(b) Information Reporting.--
(1) In general.--Subpart B of part III of subchapter A of
chapter 61 of such Code (relating to information concerning
transactions with other persons) is amended by inserting after
section 6050T the following new section:
``SEC. 6050U. RETURNS RELATING TO PAYMENT OF LOW-INCOME HOUSING CREDIT
REPAYMENT AMOUNT.
``(a) Requirement of Reporting.--Every person who, at any time
during the taxable year, is an owner of a building (or an interest
therein)--
``(1) which is in the compliance period at any time during
such year, and
``(2) with respect to which recapture is required by
section 42(j),
shall, at such time as the Secretary may prescribe, make the return
described in subsection (b).
``(b) Form and Manner of Returns.--A return is described in this
subsection if such return--
``(1) is in such form as the Secretary may prescribe, and
``(2) contains--
``(A) the name, address, and TIN of each person
who, with respect to such building or interest, was
formerly an investor in such owner at any time during
the compliance period,
``(B) the amount (if any) of any credit recapture
amount required under section 42(j), and
``(C) such other information as the Secretary may
prescribe.
``(c) Statements to Be Furnished to Persons With Respect to Whom
Information Is Required.--Every person required to make a return under
subsection (a) shall furnish to each person whose name is required to
be set forth in such return a written statement showing--
``(1) the name and address of the person required to make
such return and the phone number of the information contact for
such person, and
``(2) the information required to be shown on the return
with respect to such person.
The written statement required under the preceding sentence shall be
furnished on or before March 31 of the year following the calendar year
for which the return under subsection (a) is required to be made.
``(d) Compliance Period.--For purposes of this section, the term
`compliance period' has the meaning given such term by section
42(i).''.
(2) Assessable penalties.--
(A) Subparagraph (B) of section 6724(d)(1) of such
Code (relating to definitions) is amended by
redesignating clauses (xiii) through (xviii) as clauses
(xiv) through (xix), respectively, and by inserting
after clause (xii) the following new clause:
``(xiii) section 6050U (relating to returns
relating to payment of low-income housing
credit repayment amount),''.
(B) Paragraph (2) of section 6724(d) of such Code
is amended by striking ``or'' at the end of
subparagraph (AA), by striking the period at the end of
subparagraph (BB) and inserting ``, or'', and by adding
after subparagraph (BB) the following new subparagraph:
``(CC) section 6050U (relating to returns relating
to payment of low-income housing credit repayment
amount).''.
(C) Clerical amendment.--The table of sections for
subpart B of part III of subchapter A of chapter 61 of
such Code is amended by inserting after the item
relating to section 6050S the following new item:
``Sec. 6050U. Returns relating to payment of low-income housing credit
repayment amount.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to any liability for the credit recapture
amount under section 42(j) of the Internal Revenue Code of 1986
that arises after the date of the enactment of this Act.
(2) Special rule for low-income housing buildings sold
before date of enactment of this act.--In the case of a
building disposed of before the date of the enactment of this
Act with respect to which the taxpayer posted a bond (or
alternative form of security) under section 42(j) of the
Internal Revenue Code of 1986 (as in effect before the
enactment of this Act), the taxpayer may elect (by notifying
the Secretary of the Treasury in writing)--
(A) to cease to be subject to the bond requirements
under section 42(j)(6) of such Code, as in effect
before the enactment of this Act, and
(B) to be subject to the requirements of section
42(j) of such Code, as amended by this Act.
SEC. 6. AFFORDABLE HOUSING CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM
TAX.
(a) In General.--Subsection (c) of section 38 of the Internal
Revenue Code of 1986 (relating to limitation based on amount of tax) is
amended by redesignating paragraph (5) as paragraph (6) and by
inserting after paragraph (4) the following new paragraph:
``(5) Special rules for affordable housing credit.--
``(A) In general.--In the case of the affordable
housing credit--
``(i) this section and section 39 shall be
applied separately with respect to such credit,
and
``(ii) in applying paragraph (1) to such
credit--
``(I) the tentative minimum tax
shall be treated as being zero, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than the affordable
housing credit).
``(B) Affordable housing credit.--For purposes of
this subsection, the term `affordable housing credit'
means the portion of the credit under subsection (a)
which is attributable to the credit determined under
section 42 (relating to affordable housing credit). ''.
(b) Conforming Amendments.--
(1) Subclause (II) of section 38(c)(2)(A)(ii) of such Code
is amended by striking ``and the specified credits'' and
inserting ``the specified credits, and the affordable housing
credit''.
(2) Subclause (II) of section 38(c)(3)(A)(ii) of such Code
is amended by striking ``and the specified credits'' and
inserting ``, the specified credits, and the affordable housing
credit''.
(3) Subclause (II) of section 38(c)(4)(A)(ii) of such Code
is amended by inserting ``and the affordable housing credit''
after ``the specified credits''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2005.
SEC. 7. INTEREST ON QUALIFIED MORTGAGE BONDS, QUALIFIED VETERANS'
MORTGAGE BONDS, AND QUALIFIED RESIDENTIAL RENTAL PROJECT
EXEMPT FACILITY BONDS EXEMPT FROM ALTERNATIVE MINIMUM
TAX.
(a) In General.--Clause (ii) of section 57(a)(5)(C) of the Internal
Revenue Code of 1986 (relating to exception for qualified 501(c)(3)
bonds) is amended to read as follows:
``(ii) Exception for certain bonds.--For
purposes of clause (i), the term `private
activity bond' shall not include--
``(I) any qualified 501(c)(3) bond
(as defined in section 145),
``(II) any qualified mortgage bond
(as defined in section 143(a)),
``(III) any qualified veterans'
mortgage bond (as defined in section
143(b)), and
``(IV) any exempt facility bond (as
defined in section 142(a)) issued as
part of an issue 95 percent or more of
the net proceeds of which are to be
used to provide qualified residential
rental projects (as defined in section
142(d)).''.
(b) Effective Date.--The amendment made by this section shall apply
to bonds originally issued after the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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