S. 5625 — Affordable Housing Construction Act

This section increases the annual state housing credit ceiling for the low-income housing tax credit to $9.79 per capita (from $1.75) and the minimum ceiling amount to $11,340,000 (from $2,000,000) for calendar years beginning after December 31, 2026. It also resets inflation adjustments to apply after 2027 (from after 2002) using 2026 as the base year.

This section increases the eligible basis of qualified low-income buildings under the low-income housing tax credit by 50 percent for new buildings or rehabilitation expenditures that pay prevailing wages, by up to 50 percent for buildings using renewable energy, by 25 percent for buildings located within one-half mile of commuter rail or one-quarter mile of bus stops or in high-walkability census tracts, by up to 50 percentage points for buildings with low-income units meeting Uniform Federal Accessibility Standards for persons with disabilities, and by specified amounts for buildings serving extremely low-income families.

This section reduces the minimum tax-exempt bond financing threshold for the low-income housing tax credit under section 42 from 25 percent to 15 percent of aggregate basis. The lower threshold applies only to qualified obligations issued before January 1, 2028, and takes effect for buildings placed in service in taxable years beginning after December 31, 2025.

This section extends the extended use period for qualified low-income buildings under the low-income housing tax credit to 35 years (from 15 years) for agreements entered into in taxable years beginning after the date of enactment.

This section terminates the qualified contract option for low-income housing tax credit buildings that receive an allocation of housing credit dollar amount on or after January 1, 2027, or that receive a required determination from the bond issuer or housing credit agency on or after that date. It requires any sale of an existing project to preserve the low-income rent restrictions by valuing both the low-income and nonlow-income portions at fair market value that accounts for those ongoing restrictions. The changes take effect on the date of enactment, except that the revised sale valuation rules apply to written requests submitted after enactment.