Housing Opportunities and Preservation Enhancement Act of 2026
- Bill Number
- H.R. 9573
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Status
- Introduced
- Latest Action
- 2026-07-02: Referred to the House Committee on Ways and Means.
- Last Updated
- 2026-07-10T10:23:21Z
AI-Generated Summary
Purpose This legislation amends the Internal Revenue Code of 1986 to create new tax incentives aimed at preserving and rehabilitating older affordable rental housing. The bill establishes a framework to encourage ownership by certain nonprofit and government entities while providing tax relief to support long-term affordability for low-income residents.
Key Provisions
- Definition of Qualified Property: The bill creates a new category of buildings eligible for benefits. These must be residential rental properties at least 15 years old, owned by partnerships (such as limited liability companies or limited partnerships) where managing members or general partners are tax-exempt organizations, state or local governments, tribal housing agencies, or public housing authorities. At least 70 percent of units must be rent-restricted and occupied by people earning 80 percent or less of the area median income. The property must also undergo major rehabilitation, with spending meeting specific thresholds, verified by an independent attorney or accountant.
- Rights of First Refusal: After 10 years, certain government agencies or tax-exempt organizations may have the option to buy the property or partnership interests at a minimum price covering outstanding debt and taxes, without losing tax benefits.
- Tax Rule Exemptions: The bill exempts these properties from passive activity loss limitations, profit motive requirements, and certain debt allocation and at-risk rules. It also resets the tax basis to fair market value after 10 years for calculating gains or losses on sale. Depreciation is accelerated to a 15-year recovery period.
- Exceptions to Basis Adjustments: No reductions in basis are required for energy efficiency credits or investment tax credits. Capital grants received by eligible entities are not treated as taxable income and do not reduce the property's depreciable basis.
- Inflation Adjustment: The rehabilitation spending threshold adjusts for inflation starting in 2027.
Significant Changes to Existing Law This bill adds an entirely new Subchapter W to the tax code, introducing targeted exemptions and benefits not available under current rules for most rental properties. It modifies sections related to depreciation (section 168), passive activities (section 469), at-risk rules (section 465), and basis adjustments for credits (sections 45L, 179D, and 50). It also creates special treatment for nonrecourse financing from tax-exempt partners.
Potential Impacts
- Government Agencies: Public housing authorities, state and local governments, and tribal entities may increase involvement in owning and managing affordable housing. The Internal Revenue Service would administer the new incentives and verification requirements.
- Citizens: Low-income renters could benefit from preserved or improved housing stock, as the incentives target buildings serving people at or below 80 percent of area median income.
- International Relations: No direct effects are outlined in the legislation.
Main Stakeholders Affected
- Partnerships and their managing entities (tax-exempt organizations, governments, tribal agencies, and public housing authorities) that own eligible buildings.
- Low-income residents living in the rent-restricted units.
- Tax-exempt organizations and government bodies involved in housing development.
- The Internal Revenue Service for enforcement and compliance.
Notable Legal, Constitutional, or Political Implications The bill operates within Congress's authority to amend the tax code and does not raise apparent constitutional issues in the text. It focuses on tax treatment changes that could influence housing policy without altering other federal laws. All provisions apply to taxable years after the date of enactment.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-07-02: Referred to the House Committee on Ways and Means.
- 2026-07-02: Introduced in House
- 2026-07-02: Introduced in House
Bill Versions
- Housing Opportunities and Preservation Enhancement Act of 2026 — issued 2026-07-02 — PDF (11 pages)