“A bill to amend the Internal Revenue Code of 1986 to improve the historic rehabilitation tax credit, and for other purposes.”
No CRS summary available for this bill.
This section revises the rehabilitation credit under IRC §47(a)—previously limited to 20% of qualified rehabilitation expenditures certified by the Secretary of the Interior as relating to certified historic structures—to instead equal 20% of any qualified rehabilitation expenditures for the taxable year (thus expanding the credit to 20% from 0% for qualified rehabilitated buildings that are not certified historic structures, such as certain pre-1936 buildings substantially rehabilitated but ineligible since 2018). The revision applies to property placed in service after December 31, 2023.
This section establishes a special rule under the rehabilitation tax credit (IRC §47)—which provides a 20% credit for qualified rehabilitation expenditures on certified historic structures—for qualifying small projects placed in service after enactment with no credit allowed under §47 (other than under §47(d)) in either of the prior two taxable years. For such projects, it (1) caps eligible expenditures at $3,750,000 ($5 million for projects in rural areas, i.e., outside cities/towns of more than 50,000 population or contiguous urbanized areas), (2) increases the credit rate to 30% (from 20%), and (3) authorizes taxpayers to elect and transfer all or part of the credit, subject to certification, disallowance of deductions for amounts paid by transferees, exclusion of transfer proceeds from transferor income, transferee credit allowance, recapture rules treating transferees as taxpayers for §50 purposes, and information reporting consistent with IRC §6418.
This section lowers the substantial rehabilitation expenditure threshold for qualified rehabilitated buildings eligible for the rehabilitation tax credit to 50% of the adjusted basis (from the adjusted basis). (As background, the rehabilitation tax credit provides a 20% credit for certified historic structures and a 10% credit for certain pre-1936 nonresidential buildings, provided qualified rehabilitation expenditures during a 24-month measuring period exceed the greater of that threshold or $5,000.) The change applies to property placed in service after the date of enactment.
This section eliminates the requirement to reduce the adjusted basis of property by 50% of the rehabilitation credit allowed (i.e., the tax credit for qualified rehabilitation expenditures on certified historic structures and certain other buildings), including in cases where the credit is allowed to a lessee. The change applies to property placed in service after the date of enactment. (Thus, taxpayers receive the full credit value without a depreciable basis reduction.)
This section modifies the determination of tax-exempt use property for the rehabilitation credit by directing that, except for leases to governmental entities, such determination under section 168(h) disregard whether the lease is a disqualified lease. (Thus, rehabilitated property leased under disqualified leases to non-governmental tax-exempt entities—e.g., universities or hospitals—may qualify for the credit, which provides up to a 20% tax credit for qualified rehabilitation expenditures on certified historic structures.) The change applies to property placed in service after enactment.