HouseH.R. 9573119th Congress
Housing Opportunities and Preservation Enhancement Act of 2026
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[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 9573 Introduced in House (IH)]
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119th CONGRESS
2d Session
H. R. 9573
To amend the Internal Revenue Code of 1986 to provide incentives for
certain residential rental property.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 2, 2026
Mr. Carey 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 provide incentives for
certain residential rental property.
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 ``Housing Opportunities and
Preservation Enhancement Act of 2026''.
SEC. 2. TAX INCENTIVES FOR CERTAIN RESIDENTIAL RENTAL PROPERTY.
(a) In General.--Chapter 1 of the Internal Revenue Code of 1986 is
amended by inserting after subchapter V the following new subchapter:
``Subchapter W--Certain Residential Rental Property
``Sec. 1400W-1. Qualified property.
``Sec. 1400W-2. Rights of first refusal.
``Sec. 1400W-3. Exemption from passive activity rules.
``Sec. 1400W-4. Exemption from profit motive requirement.
``Sec. 1400W-5. Application of debt allocation and at-risk rules.
``Sec. 1400W-6. Determination of gain or loss on disposition of
qualified property.
``Sec. 1400W-7. Accelerated depreciation.
``Sec. 1400W-8. Exception from certain basis adjustment rules.
``SEC. 1400W-1. QUALIFIED PROPERTY.
``(a) In General.--For purposes of this subchapter, the term
`qualified property' means, with respect to any taxable year, any
building which--
``(1) is residential rental property (as defined in section
168(e)(2)(A)),
``(2) in the case of a qualified low-income building (as
defined in section 42(c)(2)), is not within the compliance
period (as defined in section 42(i)(1)) with respect to such
building,
``(3) is owned by a partnership which is a limited
liability company or a limited partnership in which every
managing member or general partner is a qualified tax-exempt
organization, a State or local government, a qualified tribal
housing agency, or a public housing authority,
``(4) as of the close of such taxable year, at least 70
percent of the residential units in such building are both
rent-restricted (within the meaning of section 42(g)(2)) and
occupied by individuals whose income is 80 percent or less of
the area median income (determined under the rules of section
42),
``(5) as of the close of such taxable year, such building
bound by restrictions enforcing paragraph (4) which otherwise
meet the requirements of clauses (ii) through (vi) of section
42(h)(6)(B),
``(6) during any 24-month period, rehabilitation
expenditures (as defined in section 42(e)(2)) with respect to
such building paid or incurred by such partnership equal or
exceed the greater of--
``(A) 20 percent of the adjusted basis of such
building (as of the beginning of such period), or
``(B) $20,000 per residential unit, and
``(7) was originally placed in service more than 15 years
before the date on the which the rehabilitation referred to in
paragraph (6) began.
``(b) Verification of Rehabilitation Expenditures.--The requirement
of subsection (a)(6) shall not be treated as satisfied unless an
independent attorney or certified public accountant has issued a
written certification that such attorney or accountant has examined the
expenditures incurred with respect to such building and, based upon
such examination, it is such attorney's or accountant's belief that
such requirement has been satisfied.
``(c) Definitions.--For purposes of this section--
``(1) Public housing authority.--The term `public housing
authority' means any State, county, municipality, or other
governmental entity or public body, or agency or
instrumentality of the foregoing, that is authorized to engage
or assist in the development or operation of low-income housing
under the United States Housing Act of 1937.
``(2) Qualified tax-exempt organization.--
``(A) In general.--The term `qualified tax-exempt
organization' means, with respect to any qualified
property, any organization exempt from the tax imposed
under this chapter that, for the 5 years preceding the
date on which such qualified property was placed in
service--
``(i) met the requirements of section
42(h)(5)(C)(i) and (ii),
``(ii) had an ownership interest in
residential rental property serving low-income
persons, and
``(iii) materially participated (within the
meaning of section 469(h)) in the development
and operation of residential rental property.
``(B) Application of requirements to tiered
organizations.--For purposes of this paragraph, an
organization shall be treated as satisfying the
requirements of clause (ii) or (iii) of subparagraph
(A) if--
``(i) any organization in which such
organization holds stock satisfies such
requirements, or
``(ii) all of the stock of such
organization is held by 1 or more tax-exempt
organizations at all times during the period
such organization is in existence and such
organizations satisfy such requirements.
``(3) Qualified tribal housing authority.--The term
`qualified tribal housing authority' means, with respect to any
qualified property, any organization that, for the 5 years
preceding the date on which such qualified property was placed
in service--
``(A) is designated by an Indian tribal government
(as defined in section 7701(a)(40)) to engage or assist
in the development and operation of low-income housing,
and
``(B) had an ownership interest in residential
rental property serving low-income persons, and
materially participated (within the meaning of section
469(h)) in the development and operation of residential
rental property.
``(d) Inflation Adjustment.--In the case of a 24-month period
referred to in subsection (a)(6) which ends in a calendar year after
2026, the $20,000 amount in such subparagraph shall be increased by an
amount equal to--
``(1) such dollar amount, multiplied by
``(2) the cost-of-living adjustment determined under
section 1(f)(3) for such calendar year by substituting
`calendar year 2025' for `calendar year 2016' in subparagraph
(A)(ii) thereof.
Any increase under the preceding sentence which is not a multiple of
$100 shall be rounded to the nearest multiple of $100.
``SEC. 1400W-2. RIGHTS OF FIRST REFUSAL.
``(a) In General.--No Federal income tax benefit shall fail to be
allowable to the taxpayer with respect to any qualified property,
merely by reason of a right of first refusal or purchase option held by
a government agency or an organization described in paragraph (3) or
(4) of section 501(c) and exempt from tax under section 501(a) to
purchase such property or all of the partnership interests (other than
interests of the person exercising such option or a related party
thereto (within the meaning of section 267(b) or 707(b)(1))), after the
close of the 10th year after the acquisition of the qualified property
for a price which is not less than the minimum purchase price.
``(b) Minimum Purchase Price.--For purposes of this section, the
term `minimum purchase price' means, with respect to any qualified
property, the sum of--
``(1) the principal amount of outstanding indebtedness
secured by such property (other than indebtedness incurred
within the 5-year period ending on the date of the sale), and
``(2) all Federal, State, and local taxes attributable to
such sale.
``(c) Special Rules.--For purposes of determining whether an
option, including a right of first refusal, to purchase property is
described in this section--
``(1) such option or right of first refusal may be
exercised with or without the approval of the taxpayer, or any
limited partner in a limited partnership or manager or managing
member of a limited liability company, and
``(2) a right of first refusal may be exercised in response
to any offer to purchase the property, including an offer by a
related party.
``SEC. 1400W-3. EXEMPTION FROM PASSIVE ACTIVITY RULES.
``For purposes of section 469, the term `passive activity' shall
not include the residential rental of qualified property.
``SEC. 1400W-4. EXEMPTION FROM PROFIT MOTIVE REQUIREMENT.
``Section 183(a) shall not apply to the residential rental of
qualified property.
``SEC. 1400W-5. APPLICATION OF DEBT ALLOCATION AND AT-RISK RULES.
``(a) In General.--For purposes of sections 752 and 465, the term
`qualified nonrecourse financing' includes any financing--
``(1) which is borrowed by a partnership referred to in
section 1400W-1(a)(3) with respect to the activity of holding
qualified property, and
``(2) which is borrowed by the partnership from an
organization exempt from tax under this chapter, including any
such organization that is a partner in the partnership.
``(b) Determination of Partner's Share of Qualified Nonrecourse
Financing.--A partner's share of any qualified nonrecourse financing of
such partnership shall be determined on the basis of the partner's
share of liabilities of such partnership incurred in connection with
such financing (within the meaning of section 752).
``(c) Risk of Loss.--For the purposes of section 752 and subsection
(b), a partner shall be deemed to not bear the risk of loss for a loan
made (or made by a related person to such partner) with respect to
qualified property that is qualified nonrecourse financing described in
subsection (a).
``SEC. 1400W-6. DETERMINATION OF GAIN OR LOSS ON DISPOSITION OF
QUALIFIED PROPERTY.
``For purposes of determining the gain or loss on the sale or
exchange of any qualified property (or any pass-through interest
therein) held by the taxpayer for not less than 10 years beginning on
the date that such qualified property was placed in service, the basis
of such property or pass-through interest shall be equal to the fair
market value of such property on the date of such sale or exchange.
``SEC. 1400W-7. ACCELERATED DEPRECIATION.
``In the case of qualified property (and any property intended to
become qualified property within 24 months), the recovery period of
such property for purposes of section 168 (including subsection (g)(2)
thereof) shall be 15 years.
``SEC. 1400W-8. EXCEPTION FROM CERTAIN BASIS ADJUSTMENT RULES.
``(a) No Basis Adjustment for Energy Efficient Home Credit.--
Section 45L(e) shall not apply to qualified property.
``(b) No Basis Adjustment for Energy Efficient Commercial Building
Deduction.--Section 179D(e) shall not apply to qualified property.
``(c) No Basis Adjustment for Investment Credits.--Section 50(c)
shall not apply to qualified property.
``SEC. 1400W-9. TREATMENT OF CPAITAL GRANTS.
``In the case of any amount received by an entity described in
1400W-1(c) with respect to property intended to be qualified property,
as defined in section 460(c)(8), such consideration--
``(1) shall not be includible in gross income of the
eligible taxpayer, and
``(2) the depreciable basis of any property acquired with
such money shall not be reduced by the amount of such
consideration.''.
(b) Clerical Amendment.--The table of subchapters for chapter 1 of
the Internal Revenue Code of 1986 is amended by inserting after the
item relating to subchapter V the following new item:
``subchapter w--certain residential rental property''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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