Housing Opportunities and Preservation Enhancement Act of 2026

This bill amends the Internal Revenue Code to provide tax incentives for certain residential rental properties, aiming to encourage the preservation and creation of affordable housing. It introduces a new subchapter offering various tax benefits to qualifying properties and their owners, applicable to taxable years beginning after enactment. A property qualifies if it is residential rental, not under existing low-income housing tax credit compliance, and owned by a partnership with specific tax-exempt or governmental managing members. It must also have at least 70% of its units rent-restricted for individuals earning 80% or less of the area median income, and undergo substantial rehabilitation after being in service for over 15 years. Key incentives include an exemption from passive activity rules and the profit motive requirement , facilitating investor participation, alongside accelerated depreciation with a 15-year recovery period and favorable debt allocation and at-risk rules . The bill also clarifies that certain rights of first refusal by government or non-profit entities will not jeopardize tax benefits, and excludes capital grants from gross income while preventing a reduction in depreciable basis for property acquired with such funds.