H.R. 10709: Multigenerational Housing Opportunities to Modify Existing Structures Act

This bill would create a new federal income tax credit for certain home renovation costs related to multigenerational living arrangements.

What the credit would do

Individuals could claim a credit worth 15% of qualifying renovation expenses made during the tax year. The credit would apply to costs for modifications that help a home accommodate an older or disabled relative, or that create living quarters for a family member who cares for the taxpayer.

The credit would be limited to a lifetime maximum of $7,500 per qualifying home. If a taxpayer uses part of the credit in one year, that amount would count against the lifetime cap in later years.

Who could qualify

The credit would apply to renovations at a qualified dwelling unit, meaning a home in the United States or a U.S. territory that is either:

• the taxpayer’s main home, or
• a secondary unit on the same property as the taxpayer’s main home.

The bill defines a qualified relative as a family member of the taxpayer or the taxpayer’s spouse who:

• is at least 65 years old or has a disability,
• lives in the home for more than half the year, and
• is listed on the taxpayer’s tax return.

The relationship must generally be one recognized under existing tax rules, with some limits on in-laws.

What expenses would count

Qualifying expenses would include:

• tangible property directly related to making the home safer, more accessible, or easier to use for a qualified relative,
• labor for onsite preparation, assembly, or installation of that property, and
• required inspections connected to the installation.

The bill also says a home would not fail to qualify merely because no one has moved in yet, as long as the person moves in within one year after the improvements are finished.

Income limits and refundability

The credit would be phased out for higher-income taxpayers. For single filers, it would begin to phase out above $200,000 of modified adjusted gross income; for joint filers, the threshold would be $400,000. The phaseout would be gradual over a $75,000 income range.

For taxpayers with income at or below the local area median gross income, the credit would be refundable, meaning they could receive the credit even if they owe little or no income tax. For others, it would be nonrefundable.

Other rules

Unused credit amounts could be carried forward for up to five years if they exceed the taxpayer’s tax liability. Taxpayers would need to provide documentation to support the claim.

The credit amounts and income thresholds would be adjusted for inflation after 2027.

Effective date

The changes would apply to taxable years beginning after December 31, 2026.

Relevant Companies

None found