Multigenerational HOMES Act

of the installation of such property. ``(2) Qualified dwelling unit.--The term `qualified dwelling unit' means a dwelling unit which-- ``(A) is located in the United States or in a territory of the United States, and ``(B) is either-- ``(i) used as a principal residence by the taxpayer, or ``(ii) a secondary unit located on the same property as such principal residence. ``(3) Qualified relative.-- ``(A) In general.--The term `qualified relative' means, with respect to any taxpayer for any taxable year, an individual-- ``(i) who bears a relationship described in subparagraph (B) to such taxpayer or to such taxpayer's spouse, ``(ii) who has attained age 65 as of the last day of such taxable year or is disabled (within the meaning of section 72(m)(7)), ``(iii) whose principal place of abode for more than one-half of such taxable year is a qualified dwelling unit of such taxpayer, and ``(iv) whose TIN is included on the taxpayer's return of tax for such taxable year. ``(B) Relationship.--For purposes of subparagraph (A), a relationship described in this subparagraph is a relationship described in subparagraph (B), (C), (D), (F), or (G) of section 152(d)(2), except that only a father-in-law, mother-in-law, brother-in-law, or sister-in-law shall be taken into account for purposes of subparagraph (G) thereof. ``(4) Principal residence.--The term `principal residence' has the same meaning as when used in section 121. ``(5) Safe harbor for delayed occupancy.--An expenditure shall not be treated as failing to satisfy the requirements of paragraph (1)(A) solely because the dwelling unit is not occupied by any person if such person occupies the dwelling unit not later than the date that is 1 year after the completion of the improvements referred to in such paragraph. ``(e) Inflation Adjustments.-- ``(1) In general.--In the case of any taxable year beginning after December 31, 2027, the $7,500 amount in subsection (a)(2), the $200,000 amount in subsection (b)(1)(A)(ii), and the $75,000 amount in subsection (b)(1)(B) shall each be increased by an amount equal to-- ``(A) such dollar amount, multiplied by ``(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting `calendar year 2026' for `calendar year 2016' in subparagraph (A)(ii) thereof. ``(2) Rounding.--If any increase determined under paragraph (1) is not a multiple of $50, such amount shall be rounded to the nearest multiple of $50. ``(f) Carryforward of Unused Credit.-- ``(1) In general.--If the credit allowable under subsection (a)(1) for any taxable year exceeds the applicable tax limit for such taxable year, such excess shall be a carryover to each of the 5 succeeding taxable years and, subject to the limitations of paragraph (2), shall be added to the credit allowable by subsection (a)(1) for such succeeding taxable year. ``(2) Limitation.--The amount of the unused credit which may be taken into account under paragraph (1) for any taxable year shall not exceed the amount (if any) by which the applicable tax limit for such taxable year exceeds the sum of-- ``(A) the credit allowable under subsection (a)(1) for such taxable year determined without regard to this subsection, and ``(B) the amounts which, by reason of this subsection, are carried to such taxable year and are attributable to taxable years before the unused credit year. ``(3) Applicable tax limit.--For purposes of this subsection, the term `applicable tax limit' means the limitation imposed by section 26(a) for the taxable year reduced by the sum of the credits allowable under this subpart (other than this section and section 25D). ``(g) Substantiation Requirement.--No credit shall be allowed under this section with respect to any multigenerational home renovation expenditure unless the taxpayer provides the Secretary with such documentation as the Secretary may require to substantiate such expenditure.''. (b) Conforming Amendments.-- (1) Section 23(c)(1) of such Code is amended by striking ``section 25D'' and inserting ``sections 25D and 25G''. (2) Section 25(e)(1)(C) of such Code is amended by striking ``and 25F'' and inserting ``25F, and 25G''. (3) Section 25F(f)(1) of such Code is amended by striking ``this section, section 23, and section 25D'' and inserting ``this section and sections 23, 25D, and 25G''. (4) Section 6211(b)(4)(A) of such Code is amended by inserting ``25G by reason of subsection (c) thereof,'' before ``32,''. (5) Section 1324(b)(2) of title 31, United States Code, is amended by inserting ``25G,'' after ``25A,''. (6) The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25F the following new item: ``Sec. 25G. Multigenerational home renovation expenditures.''. (c) Effective Date.--The amendments made by this section shall apply to taxable years beginning after December 31, 2026. <all>