H.R. 2854: Neighborhood Homes Investment Act
Sponsor
Mike Kelly
Republican · PA-16
Bill Progress
Latest Action · Apr 10, 2025
Referred to the House Committee on Ways and Means.
H.R. 2854 tries to make broken housing math work
Why it matters
At least $12 million per state could go toward homes that cost more to build or fix than they can sell for. Congress says the national housing shortage could take nearly a decade to address, and H.R. 2854 tries to close the financing gap on distressed blocks so more homes can actually get built, rehabbed, and sold to owner-occupants.
H.R. 2854 creates a new federal tax credit for building or substantially rehabbing homes in distressed areas where development costs are higher than the eventual sale price. The credit is meant for homes sold to owner-occupants, not for open-ended subsidies or investor flips.
The credit amount is capped three different ways, and the builder gets the smallest result. It can cover the gap between development cost and sale price, up to 40% of eligible development costs, or up to 32% of the national median sale price for a new home. A state agency could approve up to 120% of the financing gap if it decides the extra amount is needed to make the project feasible.
The bill also puts guardrails on who can buy these homes and what they can cost. Buyers generally must have family income at or below 140% of area median income, use the home as their principal residence, and pay an affordable sale price that is generally capped at 4 times local median family income, with higher limits for small 2- to 4-unit homes.
To qualify as a substantial rehab, work must cost more than $25,000 or more than 20% of the building-and-land acquisition cost, whichever is greater. Manufactured homes on permanent foundations can qualify, and owner-occupied rehab projects can use an alternate credit worth up to $50,000.
If a buyer turns around and sells too quickly, part of the gain has to be repaid. The repayment starts at 50% of the gain and falls by 10 percentage points for each year completed over a 5-year period, with hardship exceptions for situations like illness, disability, or divorce.
States would run the front end of the program. Each state would receive an annual credit ceiling equal to $9 per resident or $12 million, whichever is greater, then decide which projects get allocations under a state plan that is supposed to prioritize need, neighborhood stability, sponsor capacity, and long-term homeownership.
H.R. 2854 Bill Summary
What H.R. 2854 actually does.
Builders get help when sale prices do not cover costs
The credit is designed to fill the gap between what it costs to build or substantially rehab a home and what that home can realistically sell for in a qualified neighborhood.
Credit size is capped to limit over-subsidizing
The credit is limited to the smallest of three amounts: the financing gap, 40% of eligible development costs, or 32% of the national median sale price for a new home. A state agency could approve up to 120% of the financing gap if it says that is necessary for financial feasibility.
Homes have to stay affordable for owner-occupants
Buyers generally must live in the home as a principal residence and have family income at or below 140% of area median income. Sale prices are also capped, generally at 4 times local median family income, with higher limits for small multifamily homes.
Quick resales trigger payback
If the home is resold within 5 years, part of the gain must be repaid. The repayment starts at 50% and declines by 10 percentage points for each completed year, unless a hardship exception applies.
States control who gets the credits
Each governor would designate a state agency to allocate the credits under a state plan. Every state gets at least $12 million a year, or $9 per resident if that amount is higher, and unused authority can carry forward for 3 years.
Owner rehab projects can claim up to $50,000
Owner-occupied rehabilitation projects can qualify for an alternate credit capped at $50,000. The bill also makes a special exception for pyrrhotite or iron sulfide foundation damage, even outside the usual location rules.
Who benefits from H.R. 2854?
Homebuyers trying to buy on a block the market has skipped
If your income is at or below 140% of area median income, you could have access to a home sold under affordability limits instead of competing for a fully market-priced property.
Small builders and rehabbers working in distressed neighborhoods
If you can make the project work except for the last piece of the financing gap, this credit is designed for that problem. The bill also tells states to do outreach to small residential builders and remodelers.
Owners facing major rehab bills
Owner-occupants doing substantial rehabilitation could qualify for an alternate credit of up to $50,000, including some homeowners dealing with pyrrhotite or iron sulfide foundation damage.
Neighborhoods with empty, deteriorating, or unsellable homes
Congress says the credit is meant to address the "value gap" that leaves homes unbuilt or unrepaired in distressed communities, especially where sale prices lag far behind development costs.
Who is affected by H.R. 2854?
State housing agencies
State agencies would have to write allocation plans, choose projects, track buyer and price rules, collect reports, and enforce resale payback rules, including liens in many cases.
Buyers who want to flip the home quickly
You can buy the home only if you plan to use it as your principal residence, and if you resell within 5 years, part of your gain may have to be repaid.
Investors and related-party buyers
The bill is structured to favor owner-occupied sales, not insider transactions or rental conversions. Related-party sales are restricted, and converting the home away from principal-residence use can trigger tax consequences.
Projects with inflated land or acquisition costs
If too much of the deal is tied up in buying the property rather than actually improving it, the bill limits how much of those acquisition costs count toward the credit.
What Congress Is Saying
H.R. 2854 hasn't been debated on the floor yet.
This section updates when a legislator speaks about it on the floor or in committee.
HR2854 Legislative Journey
House: Committee Action
Apr 10, 2025
Referred to the House Committee on Ways and Means.
About the Sponsor
Mike Kelly
Republican, Pennsylvania's 16th congressional district · 15 years in Congress
Committees: Ways and Means
View full profile →
Cosponsors (69)
This bill has 69 cosponsors: 42 Democrats, 27 Republicans, reflecting bipartisan support. Cosponsors represent 24 states: Alabama, California, Colorado, and 21 more.
John Larson
Democrat · CT
Mike Carey
Republican · OH
Terri Sewell
Democrat · AL
Vern Buchanan
Republican · FL
Danny Davis
Democrat · IL
Carol Miller
Republican · WV
Jimmy Panetta
Democrat · CA
Randy Feenstra
Republican · IA
David Kustoff
Republican · TN
Nicole Malliotakis
Republican · NY
Nathaniel Moran
Republican · TX
Robin Kelly
Democrat · IL
Committee Sponsors
Ways and Means Committee
20 of 45 committee members cosponsored
15 Republicans across this committee haven't cosponsored yet. Mobilize their constituents
What laws does H.R. 2854 change?
6 changes
Sections Amended
Section 3 of this Act) should be an activity administered in a manner which-- (1) revitalizes distressed communities in rural and urban geographies; (2) minimizes application burdens on small businesses applying for such credit; and (3) is consistent with the Fair Housing Act of 1968 (42 U.S.C. 3601 et seq.). SEC. 3. NEIGHBORHOOD HOMES CREDIT. (a) In General.--Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986
inserting after section 42 the following new section: ``SEC
Section 38(b) of Internal Revenue Code of 1986
striking ``plus'' at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting ``, plus'', and by adding at the end the following new paragraph: ``(42) the neighborhood homes credit determined under section 42A(a)
Section 25C(g) of Internal Revenue Code of 1986
adding after the first sentence the following new sentence: ``This subsection shall not apply for purposes of determining the eligible development costs or adjusted basis of any building under section 42A
Section 25D(f) of such Code
adding after the first sentence the following new sentence: ``This subsection shall not apply for purposes of determining the eligible development costs or adjusted basis of any building under section 42A
Section 45L(e) of such Code
inserting ``or for purposes of determining the eligible development costs or adjusted basis of any building under section 42A'' after ``section 42''
Section 469 of Internal Revenue Code of 1986 are each amended by inserting ``or 42A'' after ``section 42''. (2) The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code
inserting after the item relating to section 42 the following new item: ``Sec
H.R. 2854 Quick Facts
- Committee
- Ways and Means
- Chamber
- House
- Policy
- Taxation
- Introduced
- Apr 10, 2025
Referred to the House Committee on Ways and Means.
Apr 10, 2025
Official Sources
Official legislative status page for the Neighborhood Homes Investment Act, including text, sponsors, and actions.
The bill amends the Internal Revenue Code of 1986 to create a new tax credit, so the U.S. Code collection is a primary official source for the underlying statute.
The bill caps the credit partly by reference to the national median sale price for new homes using the most recent census data.
The bill uses median family income and poverty concepts to define qualified census tracts and affordability rules.
Buyer eligibility and affordability limits in the bill are tied to area median income, which HUD publishes annually.
The bill relies on qualified census tract concepts for location eligibility, making HUD's tract data a relevant official reference.
The bill's findings say the program should be administered consistently with the Fair Housing Act of 1968, codified at 42 U.S.C. 3601 and following.
H.R. 2854 Common Questions
What does H.R. 2854 actually do?
H.R. 2854 creates a federal tax credit for building or rehabbing homes in distressed areas where the sale price would not otherwise cover the development cost.
Who could buy a home backed by this credit?
You generally would need family income at or below 140% of area median income, and you would have to use the home as your principal residence.
How big is the Neighborhood Homes credit?
It is capped at the smallest of three amounts: the financing gap, 40% of eligible development costs, or 32% of the national median sale price for a new home.
How much money would each state get under H.R. 2854?
Each state would get annual credit authority equal to $9 per resident or $12 million, whichever is greater. Unused authority could roll over for 3 years.
What happens if you sell the home within 5 years?
Part of the gain must be repaid. It starts at 50% and drops by 10 percentage points for each completed year, with hardship exceptions in some cases.
Can a homeowner get help for major foundation repairs?
Yes. H.R. 2854 includes an alternate owner-occupied rehab credit up to $50,000, including certain pyrrhotite or iron sulfide foundation repairs.
Do manufactured homes count under H.R. 2854?
Yes, if the home is on a permanent foundation and meets the bill's other requirements.
What counts as a substantial rehab project?
The rehab work generally has to cost more than $25,000 or more than 20% of the building-and-land acquisition cost, whichever is greater.
Based on H.R. 2854 bill text
H.R. 2854 Bill Text
“To amend the Internal Revenue Code of 1986 to establish a tax credit for neighborhood revitalization, and for other purposes.”
Source: U.S. Government Publishing Office
Get notified when H.R. 2854 moves
Committee votes, floor action, cosponsor changes — straight to your inbox.
Bill alerts + Legisletter's monthly briefing. Unsubscribe anytime.
Taxation Bills
9 related bills we're tracking
Affordable Housing Credit Improvement Act of 2025
Referred to the House Committee on Ways and Means.
Apr 8, 2025
To amend the Internal Revenue Code of 1986 to modify the railroad track maintenance credit.
Referred to the House Committee on Ways and Means.
Jan 16, 2025
No Tax Breaks for Outsourcing Act
Referred to the House Committee on Ways and Means.
Feb 5, 2025
Military Spouse Hiring Act
Referred to the House Committee on Ways and Means.
Mar 11, 2025
More Homes on the Market Act
Referred to the House Committee on Ways and Means.
Feb 13, 2025
American Innovation and R&D Competitiveness Act of 2025
Referred to the House Committee on Ways and Means.
Mar 10, 2025
Credit for Caring Act of 2025
Referred to the House Committee on Ways and Means.
Mar 11, 2025
Revitalizing Downtowns and Main Streets Act
Referred to the House Committee on Ways and Means.
Mar 27, 2025
Billionaires Income Tax Act
Read twice and referred to the Committee on Finance.
Sep 17, 2025
Trending Right Now
Bills gaining momentum across Congress
RESULTS Act
Referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sep 10, 2025
Congressional Tribute to Constance Baker Motley Act of 2025
Referred to the House Committee on Financial Services.
Sep 11, 2025
Protecting Privacy in Purchases Act
Placed on the Union Calendar, Calendar No. 447.
Feb 25, 2026
Tracking Taxation in Congress? Monitor bills, track cosponsor momentum, and launch advocacy campaigns — all from one advocacy platform.