Bill
HR 8116
The bill would exclude from federal gross income certain proceeds and gains from shared appreciation mortgages, up to set limits, for qualifying borrowers and properties.
Title: Shared Home Appreciation for Residential Equity Act (SHARE Act)
Purpose
- To amend the Internal Revenue Code of 1986 to exclude certain proceeds from gross income that arise from shared appreciation mortgage contracts (SAMCs).
Key Provisions
1) Gross income exclusion (Section 139J)
- The bill creates a new provision (Sec. 139J) to exclude from gross income:
- (a)(1) Any amount received by a lender as repayment of a shared appreciation mortgage that exceeds the original principal amount, but only if:
- (A) The borrower’s income for the calendar year the loan was issued did not exceed 140% of the area median income (AMI) for the census tract where the property is located.
- (B) The property is a residential principal residence (as defined in Section 121).
- (a)(2) Any gain from the disposition (sale or other disposition) of that portion of a capital asset that is composed of or secured by such mortgages described in (a)(1).
- In short, under certain income and use conditions, investors—specifically the lender’s proceeds from SAMCs—could be exempt from federal income tax.
2) Definition of shared appreciation mortgage (SAM) (Section 139J(b))
- A SAM is defined as a mortgage secured by a second lien on a dwelling designed for occupancy by 1–4 families, with these features:
- The lender shares in a predetermined percentage of the property’s net appreciated value, calculated as the ratio of the mortgage amount to the purchase price of the property.
- The percentage shared cannot exceed that ratio (mortgage amount divided by purchase price).
- The SAM does not require the borrower to make any payment other than the payment described in the above (i.e., the share in appreciation).
- The shared amount must not exceed 49% of the property’s purchase price.
- The SAM is subordinate to a first-lien “qualified mortgage” (as defined in 12 C.F.R. Truth in Lending Act).
- The SAM does not require repayment before certain triggering events, including:
- Scheduled maturity date of the first-lien mortgage,
- Sale of the property,
- Full repayment of the first-lien mortgage,
- If applicable, acceleration or default under the first-lien mortgage,
- The structure also clarifies that repayment timing is tied to the first lien’s terms and related events.
3) Administrative changes (Section 139J(c))
- Amends the table of sections to add Sec. 139J as a new entry: “Certain proceeds of a shared appreciation mortgage contract.”
4) Effective date
- The tax exclusion applies to amounts received after December 31, 2025.
Sponsorship and Status
- Introduced in the U.S. House of Representatives on March 26, 2026.
- Co-sponsors: Rep. Blake Moore, Rep. Jimmy Panetta, Rep. Andy Barr.
- Referred to the House Ways and Means Committee.
Who is affected
- Lenders issuing shared appreciation mortgages (SAMCs).
- Borrowers who obtain SAMCs (subject to income and residence conditions).
- Investors or buyers who might hold SAMC-related securities or inventory (through gains on SAMC-proceeds and disposition of related assets).
- Taxpayers with SAMC arrangements could see potential federal income tax relief on SAMC proceeds post-2025.
Potential Impact (high-level)
- Reduces federal income tax on certain SAMC proceeds received by lenders (and gains tied to SAMCs) if the borrower’s income and residence criteria are met.
- Encourages or enables financing structures that share in property appreciation, potentially broadening housing-financing alternatives.
- Could affect the tax planning landscape for lenders and borrowers dealing with shared appreciation arrangements.
Notes
- The bill uses a 140% area median income threshold and cap of 49% of purchase price for the shared appreciation component.
- It ties exclusions to the property being a principal residence and to first-lien mortgage standards (qualified mortgage criteria).
Compiled from official sources — confirm details with the bill’s official record.
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