“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 general rule for the rehabilitation credit under IRC §47(a) to allow the full credit in the year the building is placed in service, equal to 20% of qualified rehabilitation expenditures (i.e., amounts chargeable to capital account for the certified rehabilitation of a certified historic structure). The change applies to property placed in service after December 31, 2023.
This section establishes an elective special rule under the rehabilitation tax credit (i.e., 20% credit under IRC §47 for qualified rehabilitation expenditures on certified historic structures) for qualifying small projects placed in service after enactment. Under the election, such projects are eligible for a 30% credit rate (from 20%) on up to $3.75 million in expenditures ($5 million for projects in rural areas, defined as areas other than cities/towns with >50,000 population or contiguous urbanized areas), with no credit allowed under §47 (other than under §47(d)) for the building in either of the prior two taxable years; it also permits transfer of all or part of the credit, with rules for certification, disallowance of deductions for consideration paid by transferees, credit allowance to transferees, income exclusion for transferors, recapture treatment of transferees as taxpayers, and information reporting consistent with IRC §6418.
This section lowers the substantial rehabilitation expenditure threshold for the rehabilitation credit from a building's adjusted basis to 50% of the adjusted basis. (As background, the rehabilitation credit provides a 20% tax credit for qualified rehabilitation expenditures on certified historic structures, which requires substantial rehabilitation defined as expenditures during a specified period exceeding the greater of $5,000 or the adjusted basis; thus, this change expands the number of eligible buildings.) The amendment applies to property placed in service after the date of enactment.
This section eliminates the basis adjustment requirement for the rehabilitation credit (i.e., the tax credit under IRC §47 for qualified rehabilitation expenditures on certified historic structures and certain other buildings). (Thus, taxpayers may claim the full credit—generally 20% of qualified expenditures—without reducing the property's depreciable basis by the credit amount, including in cases where the credit is allowed to a lessee.) The change applies to property placed in service after the date of enactment.
This section modifies the determination of tax-exempt use property for the rehabilitation tax credit (i.e., 20% credit under IRC § 47 for qualified rehabilitation expenditures on certified historic structures) by providing that, except for leases to government entities, such determination under § 168(h) disregards whether the lease is a disqualified lease (i.e., one where the lessee bears more than nominal risk of loss or has significant purchase or use options). (Thus, this expands credit eligibility for property leased to non-governmental tax-exempt entities.) The change applies to property placed in service after the date of enactment.