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Title II — Reforms relating to tenant eligibility

S. 1703 · 116th Congress · Jun 4, 2019 · Lineage

II Reforms relating to tenant eligibility

Sec. 201 Average income test applicability to exempt facility bonds

(a)
In general— Paragraph (1) of section 142(d) of the Internal Revenue Code of 1986 is amended—
(1)
by striking “(A) or (B)” and inserting “(A), (B), or (C)”, and
(2)
by inserting after subparagraph (B) the following new subparagraph:

“(C) Average income test—A project meets the requirements of this subparagraph if it meets the minimum requirements of section 42(g)(1)(C).”

(b)
Effective date— The amendments made by this section shall apply to elections made under section 142(d)(1) of the Internal Revenue Code of 1986 after March 23, 2018.

Sec. 202 Codification of rules relating to increased tenant income

(a)
In general— Clause (i) of section 42(g)(2)(D) of the Internal Revenue Code of 1986 is amended by striking “clauses (ii), (iii), and (iv)” and all that follows and inserting “clauses (ii), (iii), (iv), and (vi), notwithstanding an increase in the income of the occupants above the income limitation applicable under paragraph (1)—

“(I) a low-income unit shall continue to be treated as a low-income unit if the income of such occupants initially was 60 percent or less of area median gross income and such unit continues to be rent-restricted, and

“(II) a unit to which, at the time of initial occupancy by such occupants, any Federal, State, or local government income restriction applied, and which subsequently becomes part of a building with respect to which rehabilitation expenditures are taken into account under subsection (e), shall be treated as a low-income unit if the income of such occupants initially was 60 percent or less of area median gross income and does not exceed 120 percent of area median gross income as of the date of acquisition of the property by the taxpayer.”

(b)
Exception— Subparagraph (D) of section 42(g)(2) of the Internal Revenue Code of 1986, as amended by this Act, is amended by adding at the end the following new clause:

“(vi) Exception to rule relating to increased tenant income—In the case of an occupant of a low-income unit who initially qualified to occupy such unit by reason of paragraph (1)(C) with an income in excess of 60 percent of area median gross income but not in excess of 80 percent of area median gross income, clause (i) shall be applied for substituting “80 percent” for “60 percent” each place it appears.”

(c)
Effective date— The amendments made by this section shall apply to taxable years beginning after December 31, 2018.

Sec. 203 Modification of student occupancy rules

(a)
In General— Subparagraph (D) of section 42(i)(3) of the Internal Revenue Code of 1986 is amended to read as follows:

“(D) Rules relating to students

“(i) In general—A unit occupied solely by individuals who—

“(I) have not attained age 24, and

“(II) are enrolled in a full-time course of study at an institution of higher education (as defined in section 3304(f)),

“(ii) Exception for certain Federal programs—In the case of a federally-assisted building (as defined in subsection (d)(6)(C)(i)), clause (i) shall not apply to a unit all of the occupants of which meet all applicable requirements under the housing program described in such subsection through which the building is assisted, financed, or operated.

“(iii) Other exceptions—An individual shall not be treated as described in clause (i) if the individual—

“(I) is married,

“(II) is a person with disabilities (as defined in section 3(b)(3)(E) of the United States Housing Act of 1937),

“(III) is a veteran (as defined in section 101(2) of title 38, United States Code),

“(IV) has 1 or more qualifying children (as defined in section 152(c)),

“(V) is or has been a victim or threatened victim of domestic violence, dating violence, sexual assault, or stalking (as defined in section 40002 of the Violence Against Women Act of 1994), or

“(VI) meets the income limitation applicable under subsection (g)(1) to the project of which the building is a part and is, or was immediately prior to attaining the age of majority—

“(aa) an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual's State of legal residence,

“(bb) under the care and placement responsibility of the State agency responsible for administering a plan under part B or part E of title IV of the Social Security Act, or

“(cc) an unaccompanied youth (within the meaning of section 725(6) of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11434a(6))) or a homeless child or youth (within the meaning of section 725(2) of such Act (42 U.S.C. 11434a(2))).”

(b)
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2019.

Sec. 204 Tenant voucher payments taken into account as rent for certain purposes

(a)
In general— Subparagraph (B) of section 42(g)(2) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: “In the case of a project with respect to which the taxpayer elects the requirements of subparagraph (C) of paragraph (1), or the portion of a project to which subsection (d)(5)(C) applies, clause (i) shall not apply with respect to any tenant-based assistance (as defined in section 8(f)(7) of the United States Housing Act of 1937 (42 U.S.C. 1437f(f)(7))).”.
(b)
Effective date— The amendments made by this section shall apply to rent paid in taxable years beginning after December 31, 2019.

Sec. 205 Requirement that low-income housing credit-supported housing protect victims of domestic abuse

(a)
In general— Subparagraph (B) of section 42(h)(6) of the Internal Revenue Code of 1986 is amended by striking “and” at the end of clause (v), by striking the period at the end of clause (vi) and inserting “, and”, and by adding at the end the following new clause:

“(vii) which—

“(I) prohibits the refusal to lease to, or termination of a lease by, a person solely on the basis of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking that is engaged in by a member of the household of the tenant or any guest or other person under the control of the tenant, if the tenant or an affiliated individual of the tenant is the victim or threatened victim of such domestic violence, dating violence, sexual assault, or stalking, and

“(II) allows prospective, present, or former occupants of the building the right to enforce in any State court the prohibition of subclause (I).”

(b)
Bifurcation—
(1)
In general— Subparagraph (B) of section 42(h)(6) of the Internal Revenue Code of 1986, as amended by subsection (a), is amended by adding at the end the following new flush sentence:
(2)
Effect of bifurcation— Paragraph (2) of section 42(g) of such Code is amended by adding at the end the following new subparagraph:

“(F) Treatment of bifurcation in cases of domestic violence—In any case in which—

“(i) an occupant is evicted or removed from a low-income unit because such occupant has engaged in criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking against an affiliated individual or other individual on the basis of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking, and

“(ii) the lease on such unit is bifurcated as provided in the last sentence of subsection (h)(6)(B),”

(c)
Clarification of general public use requirement— Paragraph (9) of section 42(g) of the Internal Revenue Code of 1986 is amended by striking “or” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting “, or”, and by adding at the end the following new subparagraph:

“(D) who are victims or threatened victims of criminal activity directly relating to domestic violence, dating violence, sexual assault, or stalking.”

(d)
Effective dates—
(1)
In general— Except as provided in paragraph (2), the amendments made by this section shall apply to agreements executed or modified on or after the date that is 30 days after the date of the enactment of this Act.
(2)
Public use requirement— The amendments made by subsection (c) shall apply to buildings placed in service before, on, or after the date of the enactment of this Act.

Sec. 206 Clarification of general public use requirement relating to veterans, etc

(a)
In general— Paragraph (9) of section 42(g) of the Internal Revenue Code of 1986, as amended by section 205, is further amended by adding at the end the following flush language:
(b)
Qualified residential rental projects— Paragraph (2) of section 142(d) of the Internal Revenue Code of 1986 is amended by adding at the end the following new subparagraph:

“(F) Clarification of general public use requirement—A unit shall not fail to meet the general public use requirement solely because of occupancy restrictions or preferences, if such restrictions or preferences meet the general public use requirement of section 42.”

(c)
Effective dates—
(1)
In general— The amendment made by subsection (a) shall apply to buildings placed in service before, on, or after the date of the enactment of this Act.
(2)
Qualified residential rental projects— The amendment made by subsection (b) shall apply to bonds issued before, on, or after the date of the enactment of this Act.