Manufactured Housing Community Sustainability Act of 2026
- Bill Number
- S. 4613
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-05-20: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-03T17:25:47Z
AI-Generated Summary
Summary of S. 4613: Manufactured Housing Community Sustainability Act of 2026
Purpose
This legislation aims to preserve affordable housing options by offering a federal tax incentive for owners to sell manufactured home communities to residents or nonprofit groups committed to long-term affordability. It addresses vulnerabilities faced by low-income homeowners who rent land under their homes, such as rent hikes or community closures, by encouraging resident-owned cooperatives or nonprofit ownership.
Key Provisions
- Tax Credit Creation: Establishes a new business tax credit equal to 75% of the gain from selling eligible real property to a qualified buyer for use as a manufactured home community.
- Eligibility Requirements:
- The property must be sold to a resident-owned cooperative or nonprofit corporation.
- The seller must have owned the property for at least 2 years prior to sale.
- The sale must include a binding covenant ensuring the land remains a manufactured home community for at least 50 years (or the maximum allowed by state law).
- Qualified Buyers: Limited to entities with governance by elected boards, where membership is restricted to residents (and in some cases, tax-exempt organizations), with non-appreciating shares.
- Compliance Rules: Both seller and buyer must sign and record an affidavit confirming the sale meets criteria; the seller attaches it to their tax return.
- Penalty for Violations: Imposes a 20% tax on the buyer based on net proceeds if the 50-year covenant is broken.
- Integration into Tax Code: Adds the credit to the general business credit under Section 38 and allows for carryover treatment under Section 196.
- Effective Date: Applies to tax years beginning after December 31, 2026.
Significant Changes to Existing Law
- Introduces Section 45BB to the Internal Revenue Code, creating a novel tax credit for real property sales tied to manufactured housing preservation.
- Amends Section 38(b) to incorporate this credit into the broader business credit framework.
- Updates Section 196(c) to include the new credit for purposes of unused credit carryovers.
- These modifications expand tax incentives beyond existing business credits without altering core income tax structures.
Potential Impacts
- On Citizens: May stabilize housing for over 22 million residents in manufactured homes, particularly low-income and rural households, by enabling land ownership and limiting rent increases (e.g., cooperatives have historically seen 0.9% annual fee hikes versus 5.9% in commercial parks).
- On Government Agencies: The Internal Revenue Service would administer the credit, including oversight of affidavits and recapture taxes; it could reduce federal tax revenue through claimed credits.
- On International Relations: No direct effects identified.
- Broader Effects: Could increase resident-owned communities (currently only 2.4% of total), supporting wealth-building in affordable housing while interacting with existing state laws on property sales and covenants in 19 states.
Main Stakeholders Affected
- Sellers of manufactured home communities (property owners seeking tax benefits).
- Residents of manufactured home communities (potential buyers forming cooperatives).
- Nonprofit organizations involved in housing preservation.
- State and local governments (due to interplay with state laws on covenants and property transfers).
- The federal government, including Congress and the IRS (for tax policy implementation).
Notable Legal, Constitutional, or Political Implications
- Legal: Creates a conditional tax benefit linked to long-term land use covenants, with recapture mechanisms enforceable via tax liability; it respects state variations in covenant terms but requires federal affidavits and recordings.
- Constitutional: Operates within Congress's taxing authority under the Constitution, potentially raising issues around property rights or equal protection if eligibility criteria are challenged, though it applies uniformly to qualifying transactions.
- Political: Focuses on affordable housing preservation without direct subsidies, building on state-level resident purchase rights; sponsors from multiple states suggest emphasis on rural and low-income support, with no apparent conflicts with existing federal housing programs.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. King, Angus S., Jr. [I-ME], Sen. Blumenthal, Richard [D-CT]
Recent Actions
- 2026-05-20: Read twice and referred to the Committee on Finance.
- 2026-05-20: Introduced in Senate
Bill Versions
- Manufactured Housing Community Sustainability Act of 2026 — issued 2026-05-20 — PDF (13 pages)