Make Housing Affordable and Defend Democracy Act
- Sponsor
- Rep. Gomez, Jimmy [D-CA-34]
- Committees
- Homeland Security Committee (primary)
- Last action
- Dec 4, 2025
Bottom line
This bill redirects substantial federal funds from immigration enforcement to a comprehensive suite of housing affordability initiatives through new tax credits and LIHTC enhancements.
What it actually does
The "Make Housing Affordable and Defend Democracy Act" proposes to rescind approximately $175.66 billion in unobligated balances from various immigration enforcement and border security funds previously allocated under Public Law 119-21. Concurrently, it amends the Internal Revenue Code of 1986 to establish several new tax credits aimed at expanding access to affordable housing, including a first-time homebuyer credit, a starter home construction credit, an affordable housing conversion credit, a boost to the Low-Income Housing Tax Credit (LIHTC) for extremely low-income households, and a renter tax credit with advance payment options.
Proponents argue
Supporters argue that the bill addresses critical housing affordability crises across the nation by providing direct financial assistance to homebuyers and renters, incentivizing the construction and conversion of affordable housing units, and supporting the lowest-income households. They contend that the rescinded immigration enforcement funds are excessive or misallocated, and their redirection to housing represents a more effective use of taxpayer money to address pressing domestic needs and promote economic stability.
Opponents contend
Opponents would likely argue that rescinding significant immigration enforcement funds would compromise national security, border control, and the ability of federal agencies to manage immigration flows effectively. They might also contend that the proposed tax credits are costly, potentially inflationary, and could distort housing markets rather than genuinely solving affordability issues, or that they represent an overreach of federal intervention in local housing matters.
The bill is moderately complex, combining significant rescissions with detailed tax code amendments. An informed reader would require ample time to fully understand its implications, especially given the lack of external analysis at this early stage.
Section 2
Rescissions of Certain Immigration Enforcement Funds
This section permanently rescinds a total of $175,660,630,000 from various unobligated balances previously made available by Public Law 119-21. These funds were designated for Department of Defense border support, border infrastructure and wall systems, U.S. Customs and Border Protection personnel, vehicles, and facilities, detention capacity, border security technology, State Border Security Reinforcement Fund, Department of Homeland Security border support, Immigration and Law Enforcement Activities, ICE hiring and training, Federal law enforcement training centers, Department of Justice, a reimbursement fund for immigration-related deficits, and the Bureau of Prisons. It also repeals sections 100001 through 100018 of Public Law 119-21 related to immigration fees and rescinds funds for the Operation Stonegarden Grant Program.
Supporters argue
Supporters argue these funds are excessive, inefficiently used, or represent a misprioritization of federal resources. They contend that redirecting these funds allows for investment in critical domestic needs like housing affordability.
Critics contend
Opponents would argue that these rescissions severely undermine national security, border control efforts, and the ability to manage immigration effectively, potentially leading to increased illegal immigration and strain on border communities.
Tradeoffs
The provision creates a direct tradeoff between federal spending on immigration enforcement and federal spending on domestic housing initiatives. It reflects differing priorities regarding national security versus social welfare.
Section 3, amending Section 36 of the Internal Revenue Code
First-Time Homebuyer Credit
This section establishes a new refundable tax credit of up to $25,000 for first-time homebuyers purchasing a principal residence. The credit is phased out for higher-income individuals (starting at $150,000 for individuals, $300,000 for joint filers). It increases to $50,000 for "first-generation homebuyers" (those who aged out of foster care, were emancipated, or whose parents never had a majority interest in a residential property). An additional increase is provided for homes in high-cost areas. Taxpayers can elect to receive an advanced payment of the credit into a qualifying escrow account. The credit is subject to recapture if the home is sold or ceases to be a principal residence within 5 years, with exceptions for death, divorce, government orders, or purchasing a new primary residence.
Section 4, adding new Section 45BB to the Internal Revenue Code
Starter Home Construction Credit
This section establishes a new general business credit equal to 15% of qualified home construction costs for units of housing with total square footage not exceeding 1200 feet and a sale price not exceeding 80% of the area median home price. The credit increases to 30% if the unit is sold to a first-time homebuyer. The credit is allocated by state housing credit agencies, with a state ceiling of $30 multiplied by the state population, and a separate allocation for Indian Tribal Governments. Unused state amounts can be reallocated.
Section 5, adding new Section 48F to the Internal Revenue Code
Affordable Housing Conversion Credit
This section creates a new investment tax credit equal to 20% of qualified conversion expenditures for converting eligible commercial buildings into qualified affordable housing buildings. An eligible commercial building must be at least 20 years old and nonresidential real property prior to conversion. A qualified affordable housing building must have at least 20% of its residential units rent-restricted and reserved for individuals at 80% or less of area median income for 30 years. The credit increases to 30% for buildings in qualified census tracts or difficult development areas if 20% of units serve individuals at 60% or less of area median income. A 35% credit is available for historic preservation projects in rural areas (up to $2 million). The credit is allocated by state housing credit agencies, with a national limitation of $12 billion and an additional $3 billion for economically distressed areas.
Section 6, amending Section 42(d)(5) of the Internal Revenue Code
LIHTC Boost for Extremely Low-Income Households
This section modifies the Low-Income Housing Tax Credit (LIHTC) program to provide an increased credit for projects that designate 20% or more of their residential units for occupancy by households whose income does not exceed the greater of 30% of area median gross income or 100% of the federal poverty line. For such designated units, the eligible basis of the building is increased to 150% of its basis, effectively providing a larger tax credit. This boost applies if the housing credit agency designates the increase as necessary for financial feasibility.
Section 7, adding new Section 36C to the Internal Revenue Code and Section 7527B to Chapter 77
Renter Tax Credit
This section establishes a new refundable tax credit for individuals who lease their principal residence and pay rent in excess of 30% of their adjusted gross income. The credit amount is an "applicable percentage" of this excess, ranging from 100% for incomes up to $25,000, phasing down to 0% for incomes over $100,000. The credit is limited by 100% of the small area fair market rent. The Secretary of the Treasury is directed to establish a program for making advance monthly payments of this credit. An appropriation of $50 million is provided for community outreach to increase enrollment in the credit.
Both the First-Time Homebuyer Credit and the Starter Home Construction Credit include provisions for inflation adjustment of their respective dollar amounts (e.g., $25,000/$50,000 credit limits, $30 per capita state ceiling). These adjustments are tied to the cost-of-living adjustment determined under section 1(f)(3) of the IRC, with a base year of 2024.
Section 3(j) for First-Time Homebuyer Credit, Section 4(g) for Starter Home Construction Credit
Why it matters:Standard legislative practice to ensure the value of dollar amounts in tax provisions is maintained over time without requiring constant legislative updates.
Case for: Ensures the credits remain effective and meaningful over time, preventing their value from eroding due to inflation.
Case against: No specific case against, as inflation adjustments are generally seen as good practice for long-term programs.
Estimated impact: Prevents the real value of potentially billions in tax credits from diminishing over decades.
Defines a "first-generation homebuyer" as an individual who aged out of foster care, was emancipated from their parent, or whose parent never had a majority interest in a residential property at any time during the individual's lifetime. This definition qualifies them for a doubled credit amount ($50,000 instead of $25,000).
Section 3(c)(3)
Why it matters:Standard legislative practice for defining specific eligibility criteria within a tax provision.
Case for: Targets a higher level of assistance to individuals who faced significant systemic barriers to wealth accumulation and homeownership, recognizing intergenerational wealth disparities.
Case against: Some might argue that the criteria are difficult to verify or could be subject to abuse, or that it creates an additional layer of complexity.
Estimated impact: Potentially doubles the credit for a significant subset of first-time homebuyers, increasing the overall cost of the program and its impact on targeted populations.
States that if qualified conversion expenditures are also taken into account for the rehabilitation credit under section 47, the amount taken into account for the Affordable Housing Conversion Credit (Section 48F) shall be reduced by 50%.
Section 5(b)(4)
Why it matters:Standard legislative practice to prevent "double-dipping" on federal tax credits for the same expenditures, ensuring efficient use of incentives.
Case for: Prevents taxpayers from claiming two full federal tax credits for the same rehabilitation work, ensuring that incentives are additive rather than duplicative.
Case against: No specific case against; it's a standard anti-abuse provision.
Estimated impact: Reduces the potential fiscal cost of the Affordable Housing Conversion Credit by limiting its stacking with another existing credit.