As your representative, I will propose a bill that restructures federal tax incentives so that private developers who build affordable and workforce housing receive greater financial advantages. By using targeted tax reforms, we can unleash market forces to expand supply, lower housing costs, and help families secure stable, affordable homes.
1. Capital Gains Tax Incentives for Qualified Housing Projects
Developers would receive reduced capital gains tax rates when they invest in housing that meets affordability criteria — including rental homes affordable to middle- and lower-income households and workforce housing near job centers.
- Projects with long-term affordability requirements (e.g., 20+ years) would qualify for the strongest incentives
- Additional tax reductions for developments that include dedicated units for low- and moderate-income families
This creates a clear message: building housing that communities need is rewarded.
Housing costs have grown significantly faster than incomes — rents rose about 37% from 2012 to 2022 while median household income grew only about 13%, squeezing families and contributing to housing insecurity. (Joint Center for Housing Studies, Harvard University)
2. Recognizing Existing Capital Gains Deferral Through 1031 Exchanges
Today’s real estate market already allows many investors to defer paying capital gains tax using Section 1031 like-kind exchanges — swapping one investment property for another without recognizing the gain at the time of sale. This means investors often avoid immediate capital gains tax by continuously reinvesting proceeds, effectively reducing tax revenue without any public benefit.
Rather than losing revenue, this policy redirects a portion of those deferred gains toward housing that serves community needs. By lowering capital gains tax on targeted developments, we align private incentives with public goals — increasing supply while preserving investment activity.
3. Federal Financing and Loan Support Prioritized for High-Impact Projects
When the federal government offers housing finance or support — including through programs like the Low-Income Housing Tax Credit (LIHTC) and HUD loans — projects that expand affordable and workforce housing supply should receive enhanced support.
Developers competing for federal financing would be evaluated on criteria that includes:
- Affordable unit count and long-term pricing stability
- Proximity to transit and job centers
- Plans for mixed-income integration
Taxpayer support should go first to developments that make the biggest difference in lowering housing costs.
4. Incentives for Small and Mid-Size Developers
Smaller developers are often well-positioned to build community-focused housing but lack the capital to scale.
This plan would include:
- Gradual phase-ins for small developers
- Access to low-cost loans and technical assistance
- Targeted tax relief to help smaller builders participate in affordable housing
The goal isn’t to punish big developers — it’s to activate all builders to help close the housing supply gap.
Why This Matters
America is facing a housing affordability crisis that hurts families, workers, and local economies. A shortage of supply is a major driver of rising rents and home prices, and traditional zoning and regulatory barriers have slowed construction. By aligning tax incentives with community needs — and recognizing that investors already defer capital gains under 1031 exchanges — we reward developers who help build the homes working families can afford while keeping investment flowing.
When we expand affordable and workforce housing:
- Families spend less of their income on rent or mortgages
- Workers can live near jobs, reducing commute times
- Communities grow stronger and more economically resilient
That’s not just good for families — it’s good for our entire country.
Proposed Legislation: The Building Homes, Building Communities Act
David has drafted proposed legislation to put these principles into law. The BHBC Act uses the tax code to steer private capital toward the housing Americans need. Developers who build affordable and workforce housing get reduced capital gains rates — as low as 5% for deeply affordable, long-commitment projects. It reforms 1031 exchanges to favor community-serving investments, increases LIHTC allocations, creates a $250 million revolving loan fund for small developers, and lets communities define what housing they need.
Read the Policy Brief (PDF) | Read the Full Proposed Bill (PDF)