The Shared Appreciation Mortgage Tax Exemption: Explained

Overview: Shared Appreciation Mortgage Tax Exemption

The Shared Appreciation Mortgage Tax Exemption is a bill that keeps certain proceeds from shared appreciation mortgage contracts out of your federal gross income.

Gross income is the starting point for federal income taxes. When a payment is excluded from gross income, it doesn’t count as taxable income. For home buyers and homeowners using shared appreciation mortgage financing, that lowers the chance of an unexpected tax bill tied to receiving cash through the mortgage.

The bill was introduced on March 26, 2026, in the House of Representatives and referred to the House Committee on Ways and Means.

Note that bills often change on their way to becoming law, so this page will update as new details emerge. For real-time updates, subscribe to our newsletter.

What Is the Shared Appreciation Mortgage Tax Exemption?

A shared appreciation mortgage is a financing agreement where you receive a benefit today and share some of your home’s future price growth later. The “benefit today” varies by program. It often looks like a lower interest rate, reduced monthly payments, or cash you can use for your down payment, closing costs, or a refinance.

The Shared Appreciation Mortgage Tax Exemption focuses on how the money you receive through that contract is treated for federal income taxes. The bill says qualifying proceeds from a shared appreciation mortgage contract are excluded from gross income, so they don’t get counted as taxable income on your federal return.

For home buyers, this makes shared appreciation financing feel more predictable because the tax treatment is clear: qualifying proceeds are not treated like regular income.

Who Benefits From the Shared Appreciation Mortgage Tax Exemption?

You benefit from the Shared Appreciation Mortgage Tax Exemption when you use a shared appreciation mortgage contract that meets the bill’s requirements and you receive proceeds covered by the exclusion.

This matters for two groups:

• Home buyers who use shared appreciation financing to reduce upfront cash needs
• Homeowners who refinance using a shared appreciation feature to improve their monthly budget or access home equity

The bill is designed around the type of financing, not a specific life stage. That means it supports first-time home buyers and repeat buyers the same way when their financing uses a qualifying shared appreciation mortgage contract.

How The Shared Appreciation Mortgage Tax Exemption Works

Federal income taxes start with “gross income,” which is a broad category that includes wages and other payments you receive. Some items are specifically excluded by law. When something is excluded, it does not get added to your taxable income.

1. Today: shared appreciation proceeds can increase taxable income

Without a specific exclusion, money you receive through a financing arrangement can be treated as income, depending on how the payment is structured and documented. When taxable income goes up, your federal tax bill goes up.

That’s the concern with shared appreciation mortgages: the financing helps you buy or refinance, but the tax treatment of the proceeds can create extra cost.

2. The bill: qualifying shared appreciation proceeds are excluded from gross income

The Shared Appreciation Mortgage Tax Exemption excludes qualifying shared appreciation mortgage proceeds from gross income for federal tax purposes.

That single change reduces tax liability tied to using shared appreciation mortgage financing. It also makes the financing easier to compare to other options because the proceeds covered by the bill are not treated as taxable income.

3. Example: how the exclusion changes your federal taxable income

Here’s a simple example that shows the difference between taxable and non-taxable treatment. This example focuses on federal taxable income only and ignores other parts of your tax return.

When the $20,000 is excluded, it doesn’t raise your taxable income. That means you keep more of the benefit you received through the shared appreciation mortgage.

This bill does not change the main tradeoff of shared appreciation financing: you still share some of your home’s future value increase based on your contract.

Who Sponsors the Shared Appreciation Mortgage Tax Exemption?

H.R. 8116 is currently in the House of Representatives and has been referred to the House Committee on Ways and Means, which handles federal tax legislation.

For the latest legislative updates and cosponsors, see the Bill Tracker above.