[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2832 Introduced in House (IH)]
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116th CONGRESS
1st Session
H. R. 2832
To amend the Internal Revenue Code of 1986 to allow a business credit
for gain from the sale of real property for use as a manufactured home
community, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 17, 2019
Ms. Omar (for herself, Ms. Lee of California, Mr. Neguse, Mr. Pocan,
Mr. Pappas, Ms. Kuster of New Hampshire, Mr. DeFazio, and Mr. Khanna)
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 allow a business credit
for gain from the sale of real property for use as a manufactured home
community, and for other purposes.
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 ``Frank Adelmann Manufactured Housing
Community Sustainability Act''.
SEC. 2. FINDINGS.
The Congress finds that--
(1) more than 17 million people live in manufactured homes,
benefitting from high-quality affordable homes that can provide
them stability;
(2) owners of manufactured homes are disproportionately
low-income households: in 2013, the median annual household
income for those living in manufactured housing was $28,400;
(3) about 75 percent of manufactured home households earn
less than $50,000;
(4) over 10 percent of United States veterans live in
manufactured homes;
(5) in the late 1990s, manufactured housing represented
two-thirds of the new affordable housing produced in the United
States, and it remains the largest source of unsubsidized
affordable housing in the country;
(6) as of 2015, the average cost per square foot for a new
manufactured home was $48, less than half the $101 per square
foot of the structure-only cost of a new site-built home;
(7) in 2009, 43 percent of all new homes that sold for less
than $150,000 were manufactured homes;
(8) manufactured homes accounts for 23 percent of new home
sales under $200,000;
(9) more than 50,000 manufactured home communities, or
``mobile home parks'', exist throughout the United States;
(10) more than 2.9 million manufactured homes are placed in
manufactured home communities;
(11) manufactured home communities provide critical
affordable housing but receive very little local, State, or
Federal funds subsidizing the cost of these homes;
(12) manufactured home owners in communities may own the
home, but they do not own the land under their homes, leaving
them vulnerable to rent increases, arbitrary rule enforcement,
and even closure of the community if the community owner
decides to convert the land to some other use;
(13) eviction or closure of manufactured home communities
is very disruptive to residents who may be unable to pay the
thousands of dollars it takes to move their home or even find a
new location for their home;
(14) in the past two decades, a national network of housing
providers has helped residents purchase and own the land and
manage the community in order to preserve a crucial source of
affordable housing;
(15) nationwide, there are more than 1,000 of these stable,
permanent ownership cooperatives or nonprofit-owned
developments in more than a dozen States;
(16) members continue to own their own homes individually
and an equal share of the land beneath the entire neighborhood
where everyone has a say in the way the resident-owned
community is run, and major decisions are made by democratic
vote by a member-elected board of directors;
(17) in New Hampshire, more than 20 percent of manufactured
home communities are owned by residents;
(18) in Vermont, Massachusetts, Rhode Island, Washington,
Oregon, and Minnesota, resident-owned cooperatives and
nonprofit ownership have flourished;
(19) nationwide, only 2 percent of all manufactured home
communities are resident- or nonprofit-owned;
(20) owners are frequently reluctant to sell the community
because they would prefer to pass the property on to their
heirs tax free and avoid capital gains taxes;
(21) when the owner dies, the heirs frequently sell the
community to the highest bidder resulting in displacement for
dozens and sometimes hundreds of families; and
(22) a Federal tax benefit needs to be established to
induce owners to sell to residents they have known for decades
or to nonprofit organizations in order to preserve the
community for years to come.
SEC. 3. TAX CREDIT FOR MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR
NONPROFIT ENTITY.
(a) In General.--Subpart D of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to business related
credits) is amended by adding at the end the following new section:
``SEC. 45T. MANUFACTURED HOME COMMUNITY SALE TO RESIDENTS OR NONPROFIT
ENTITY.
``(a) Allowance of Credit.--For purposes of section 38, the
manufactured home community sale credit determined under this section
for any taxable year is an amount equal to 75 percent of the qualified
gain received by the taxpayer during the taxable year.
``(b) Definitions.--For purposes of this section--
``(1) Qualified gain.--The term `qualified gain' means gain
from the sale or exchange of real property to a qualified
manufactured home community cooperative or corporation if--
``(A) the real property is acquired for use as a
manufactured home community, and
``(B) the requirements of paragraph (2) are met.
``(2) Requirements.--The requirements of this paragraph are
met if--
``(A) the seller (or any related person) owned the
property for not less than the 2-year period ending
before the sale or exchange, and
``(B) the property is transferred subject to a
binding covenant that the property will be used as a
manufactured home community for a term of not less than
50 years (or, in the case of a manufactured home
community located in a State the laws of which restrict
such covenant to a lesser term, the maximum permissible
term allowed under such State laws).
``(3) Manufactured home community.--The term `manufactured
home community' means a community comprised primarily of
manufactured homes used solely for residential purposes and
owned by a manufactured home community cooperative or
corporation.
``(4) Manufactured home community cooperative or
corporation.--
``(A) In general.--The term `qualified manufactured
home community cooperative or corporation' means a
cooperative or a nonprofit corporation established
pursuant to the laws of the State in which the property
used as a manufactured home community is located and
which--
``(i) in the case of a community owned by a
nonprofit corporation whose membership
interests are sold on a nonappreciating basis,
has only one class of membership consisting of
residents, and
``(ii) in the case of a community owned by
a cooperative, has no more than two classes of
membership, which includes both members and a
tax-exempt organization actively engaged in
supporting affordable housing and resident-
owned manufactured home communities.
``(B) Governance.--An entity shall not be treated
as a qualified manufactured home community cooperative
or corporation for purposes of subparagraph (A) unless
governance of the entity is carried out by members
elected to a board of directors with voting structured
equitably among all members.
``(C) Member.--The term `member' means--
``(i) an individual--
``(I) has attained the age of 18,
``(II) is entitled by reason of the
individual's membership interest to
execute an occupancy agreement with the
manufactured home community cooperative
nonprofit with respect to one site in
the manufactured home community for the
purposes of situating a manufactured
home owned by the member or, as
permitted by the manufactured community
cooperative or corporation, the
member's trust or other entity, and
``(III) is a resident of the
manufactured home community, and
``(ii) a tax exempt organization.
``(5) Membership interest.--The term `membership interest'
means an ownership interest in a manufactured home community
cooperative or corporation or a membership interest in a
manufactured home community nonprofit corporation.
``(6) Manufactured home.--The term `manufactured home'
means a structure, transportable in one or more sections,
which--
``(A) in the traveling mode, is 8 body feet or more
in width and 40 body feet or more in length, or when
erected on site, is 320 square feet or more,
``(B) is built on a permanent chassis and designed
to be used as a dwelling (with or without a permanent
foundation when connected to required utilities) and
includes plumbing, heating, and electrical heating
systems, and
``(C) in the case of a structure manufactured after
June 15, 1976, is certified as meeting the Manufactured
Home Construction and Safety Standards issued under the
National Manufactured Housing Construction and Safety
Standards Act of 1974 (42 U.S.C. 5401-5426) by the
Department of Housing and Urban Development and
displays a label of such certification on the exterior
of each transportable section.
``(c) Special Rules.--
``(1) Related person.--For purposes of subsection
(b)(2)(A), a person (hereafter in this subparagraph referred to
as the `related person') is related to the seller if--
``(A) the related person bears a relationship to
the seller specified in section 267(b) or 707(b)(1), or
``(B) the related person and the seller are engaged
in trades or businesses under common control (within
the meaning of subsections (a) and (b) of section 52).
``(2) Election by both seller and buyer.--The credit is
allowable under this section only if--
``(A) elected by both the seller and the buyer of
the real property and evidenced by an affidavit
executed by both parties, and
``(B) the buyer of the real property records the
affidavit and the affidavit is referenced in its deed
to the real property.
The seller shall elect the credit under this section on its
return of tax.
``(d) Tax Upon Violation of Covenant.--There is imposed a tax on
the buyer for a violation of the covenant specified in subsection
(b)(2)(B). The amount of such tax shall be 20 percent of the net
proceeds after settlement for the sale or exchange of the real property
referred to in subsection (b)(2). For purposes of section 501(a), the
tax imposed by this subsection shall not be treated as a tax imposed by
this subtitle.
``(e) Regulations.--The Secretary shall issue such regulations or
other guidance as may be necessary to carry out this section, including
the recapture of the tax benefit under this section in any case in
which the real property described in subsection (b) is not used as a
manufactured home community for at least 50 years.''.
(b) Credit Allowed as Part of General Business Credit.--Section
38(b) of such Code is amended by striking ``plus'' at the end of
paragraph (31), by striking the period at the end of paragraph (32) and
inserting ``, plus'', and by adding at the end the following new
paragraph:
``(33) the manufactured home community sale credit
determined under section 45T(a).''.
(c) Conforming Amendments.--
(1) Subsection (c) of section 196 of such Code is amended
by striking ``and'' at the end of paragraph (13), by striking
the period at the end of paragraph (14) and inserting ``,
and'', and by adding at the end the following new paragraph:
``(15) the manufactured home community sale credit
determined under section 45T(a).''.
(2) The table of sections for subpart D of part IV of
subchapter A of chapter 1 of such Code is amended by adding at
the end the following new item:
``Sec. 45T. Manufactured home community sale to residents or nonprofit
entity.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2019.
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