,i #aaith ,,congress #b;d ,session ,h4 ,r4 #iegc ,,in ,,the ,,house ,,of ,,representatives ,july #b1 #bjbf,mr4 ,carey introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide incentives for certain residential rental property4 #a4 ,short title ,this ,act may be cited as the ,housing ,opportunities and ,preservation ,enhancement ,act of #bjbf4 #b4 ,tax incentives for certain residential rental property 7a7 ,in general ,chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after subchapter ,v the following new subchapter3 ,w ,certain residential rental property ,sec4 #adjj,w-#a4 ,qualified property4 ,sec4 #adjj,w-#b4 ,rights of first refusal4 ,sec4 #adjj,w-#c4 ,exemption from passive activity rules4 ,sec4 #adjj,w-#d4 ,exemption from profit motive requirement4 ,sec4 #adjj,w-#e4 ,application of debt allocation and at-risk rules4 ,sec4 #adjj,w-#f4 ,determination of gain or loss on disposition of qualified property4 ,sec4 #adjj,w-#g4 ,accelerated depreciation4 ,sec4 #adjj,w-#h4 ,exception from certain basis adjustment rules4 #adjj,w-#a4 ,qualified property 7a7 ,in general ,for purposes of this subchapter1 the term qualified property means1 with respect to any taxable year1 any building which-- 7#a7 is residential rental property 7as defined in section #afh7;e77#b77;,a771 7#b7 in the case of a qualified low-income building 7as defined in section #db7;c77#b771 is not within the compliance period 7as defined in section #db7;i77#a77 with respect to such building1 7#c7 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 organization1 a ,state or local government1 a qualified tribal housing agency1 or a public housing authority1 7#d7 as of the close of such taxable year1 at least #gj percent of the residential units in such building are both rent-restricted 7within the meaning of section #db7;g77#b77 and occupied by individuals whose income is #hj percent or less of the area median income 7determined under the rules of section #db71 7#e7 as of the close of such taxable year1 such building bound by restrictions enforcing paragraph 7#d7 which otherwise meet the requirements of clauses 7ii7 through 7vi7 of section #db7;h77#f77;,b71 7#f7 during any #bd-month period1 rehabilitation expenditures 7as defined in section #db7;e77#b77 with respect to such building paid or incurred by such partnership equal or exceed the greater of-- 7,a7 #bj percent of the adjusted basis of such building 7as of the beginning of such period71 or 7,b7 #bj1jjj per residential unit1 and 7#g7 was originally placed in service more than #ae years before the date on the which the rehabilitation referred to in paragraph 7#f7 began4 7b7 ,verification of rehabilitation expenditures ,the requirement of subsection 7a77#f7 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 and1 based upon such examination1 it is such attorney's or accountant's belief that such requirement has been satisfied4 7c7 ,definitions ,for purposes of this section-- 7#a7 ,public housing authority ,the term public housing authority means any ,state1 county1 municipality1 or other governmental entity or public body1 or agency or instrumentality of the foregoing1 that is authorized to engage or assist in the development or operation of low-income housing under the ,united ,states ,housing ,act of #aicg4 7#b7 ,qualified tax-exempt organization 7,a7 ,in general ,the term qualified tax-exempt organization means1 with respect to any qualified property1 any organization exempt from the tax imposed under this chapter that1 for the #e years preceding the date on which such qualified property was placed in service-- 7i7 met the requirements of section #db7;h77#e77;,c77i7 and 7ii71 7ii7 had an ownership interest in residential rental property serving low-income persons1 and 7iii7 materially participated 7within the meaning of section #dfi7;h77 in the development and operation of residential rental property4 7,b7 ,application of requirements to tiered organizations ,for purposes of this paragraph1 an organization shall be treated as satisfying the requirements of clause 7ii7 or 7iii7 of subparagraph 7,a7 if-- 7i7 any organization in which such organization holds stock satisfies such requirements1 or 7ii7 all of the stock of such organization is held by #a or more tax-exempt organizations at all times during the period such organization is in existence and such organizations satisfy such requirements4 7#c7 ,qualified tribal housing authority ,the term qualified tribal housing authority means1 with respect to any qualified property1 any organization that1 for the #e years preceding the date on which such qualified property was placed in service-- 7,a7 is designated by an ,indian tribal government 7as defined in section #ggja7;a77#dj77 to engage or assist in the development and operation of low-income housing1 and 7,b7 had an ownership interest in residential rental property serving low-income persons1 and materially participated 7within the meaning of section #dfi7;h77 in the development and operation of residential rental property4 7d7 ,inflation adjustment ,in the case of a #bd-month period referred to in subsection 7a77#f7 which ends in a calendar year after #bjbf1 the #bj1jjj amount in such subparagraph shall be increased by an amount equal to-- 7#a7 such dollar amount1 multiplied by 7#b7 the cost-of-living adjustment determined under section #a7;f77#c7 for such calendar year by substituting calendar year #bjbe for calendar year #bjaf in subparagraph 7,a77ii7 thereof4 ,any increase under the preceding sentence which is not a multiple of #ajj shall be rounded to the nearest multiple of #ajj4 #adjj,w-#b4 ,rights of first refusal 7a7 ,in general ,no ,federal income tax benefit shall fail to be allowable to the taxpayer with respect to any qualified property1 merely by reason of a right of first refusal or purchase option held by a government agency or an organization described in paragraph 7#c7 or 7#d7 of section #eja7;c7 and exempt from tax under section #eja7;a7 to purchase such property or all of the partnership interests 7other than interests of the person exercising such option or a related party thereto 7within the meaning of section #bfg7;b7 or #gjg7;b77#a7771 after the close of the #ajth year after the acquisition of the qualified property for a price which is not less than the minimum purchase price4 7b7 ,minimum purchase price ,for purposes of this section1 the term minimum purchase price means1 with respect to any qualified property1 the sum of-- 7#a7 the principal amount of outstanding indebtedness secured by such property 7other than indebtedness incurred within the #e-year period ending on the date of the sale71 and 7#b7 all ,federal1 ,state1 and local taxes attributable to such sale4 7c7 ,special rules ,for purposes of determining whether an option1 including a right of first refusal1 to purchase property is described in this section-- 7#a7 such option or right of first refusal may be exercised with or without the approval of the taxpayer1 or any limited partner in a limited partnership or manager or managing member of a limited liability company1 and 7#b7 a right of first refusal may be exercised in response to any offer to purchase the property1 including an offer by a related party4 #adjj,w-#c4 ,exemption from passive activity rules ,for purposes of section #dfi1 the term passive activity shall not include the residential rental of qualified property4 #adjj,w-#d4 ,exemption from profit motive requirement ,section #ahc7;a7 shall not apply to the residential rental of qualified property4 #adjj,w-#e4 ,application of debt allocation and at-risk rules 7a7 ,in general ,for purposes of sections #geb and #dfe1 the term qualified nonrecourse financing includes any financing-- 7#a7 which is borrowed by a partnership referred to in section #adjj,w-#a7;a77#c7 with respect to the activity of holding qualified property1 and 7#b7 which is borrowed by the partnership from an organization exempt from tax under this chapter1 including any such organization that is a partner in the partnership4 7b7 ,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 7within the meaning of section #geb74 7c7 ,risk of loss ,for the purposes of section #geb and subsection 7b71 a partner shall be deemed to not bear the risk of loss for a loan made 7or made by a related person to such partner7 with respect to qualified property that is qualified nonrecourse financing described in subsection 7a74 #adjj,w-#f4 ,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 7or any pass-through interest therein7 held by the taxpayer for not less than #aj years beginning on the date that such qualified property was placed in service1 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 exchange4 #adjj,w-#g4 ,accelerated depreciation ,in the case of qualified property 7and any property intended to become qualified property within #bd months71 the recovery period of such property for purposes of section #afh 7including subsection 7g77#b7 thereof7 shall be #ae years4 #adjj,w-#h4 ,exception from certain basis adjustment rules 7a7 ,no basis adjustment for energy efficient home credit ,section #de,l7e7 shall not apply to qualified property4 7b7 ,no basis adjustment for energy efficient commercial building deduction ,section #agi;,d7e7 shall not apply to qualified property4 7c7 ,no basis adjustment for investment credits ,section #ej7;c7 shall not apply to qualified property4 #adjj,w-#i4 ,treatment of cpaital grants ,in the case of any amount received by an entity described in #adjj,w-#a7;c7 with respect to property intended to be qualified property1 as defined in section #dfj7;c77#h71 such consideration-- 7#a7 shall not be includible in gross income of the eligible taxpayer1 and 7#b7 the depreciable basis of any property acquired with such money shall not be reduced by the amount of such consideration4 4 7b7 ,clerical amendment ,the table of subchapters for chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after the item relating to subchapter ,v the following new item3 ,subchapter ,w--,certain residential rental property 4 7c7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4