HR 8116
SHARE Act
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- Passed House
- Passed Senate
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Bill overview
The SHARE Act aims to change how the Internal Revenue Code treats proceeds from shared appreciation mortgages. Specifically, it proposes to exclude certain repayment amounts from a lender's gross income if the borrower’s income is at or below 140% of the area median income and the property is their primary residence. This exclusion applies to mortgages that share a predetermined percentage of the property’s appreciation with the lender, are subordinate to a first mortgage, and don’t require repayment until a specific event occurs.
Key provisions
- Excludes repayment amounts from a lender's gross income.
- The exclusion applies to borrowers with incomes at or below 140% of the area median income.
- The property must be the borrower’s principal residence.
- The mortgage must share a predetermined percentage of property appreciation with the lender.
- The mortgage must be subordinate to a qualified first mortgage.
- The mortgage cannot require repayment before a specific event (sale, first mortgage maturity, etc.).
- The maximum amount of the shared appreciation mortgage cannot exceed 49% of the purchase price.
- The exclusion applies to amounts received after December 31, 2025.
Who is affected
- Mortgage lenders
- Homeowners with shared appreciation mortgages
- Borrowers of shared appreciation mortgages
- Taxpayers
- The mortgage industry
Notable changes
- Introduces a new section (139J) to the Internal Revenue Code.
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119th CONGRESS — 2d Session
H. R. 8116
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to exclude from gross income certain proceeds of shared appreciation mortgage contracts.
This Act may be cited as the Shared Home Appreciation for Residential Equity Act SHARE Act
or the
.
any amount received by a lender as repayment of a shared appreciation mortgage which exceeds the original principal obligation of such mortgage if—
the income of the borrower did not exceed 140 percent of the area median income for the census tract in which the real property is located for the calendar year in which such loan was issued, and
the real property is a residential property which was the principal residence (as such term is used in section 121) of the borrower, or
any gain from the disposition of so much of a capital asset as is composed of or secured by mortgages described in paragraph (1).
shared appreciation mortgagemeans a mortgage secured by a second lien on a property upon which there is located a dwelling designed principally for occupancy by one to four families which—
provides for the mortgagee to share in a predetermined percentage of the property's net appreciated value which does not exceed the percentage which is the quotient of—
the amount of such mortgage, divided by
the purchase price of such property,
the amount of which does not exceed 49 percent of the purchase price of such property,
qualified mortgageas such term is defined under section 129C(c)(2) of the Truth in Lending Act, and
the sale of the property;
a default under the mortgage.
The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139I the following new item: