“A bill to amend the Internal Revenue Code of 1986 to enhance the rehabilitation credit for buildings in rural areas.”
No CRS summary available for this bill.
This section establishes a new rehabilitation tax credit under IRC §47(a)(3) for applicable rural projects—equal to 40% of qualified rehabilitation expenditures (QREs) for affordable housing projects or 30% for other projects, with QREs not to exceed $5 million—and permits taxpayers to transfer such credits (subject to certification, reporting, and regulations consistent with IRC §6418). It defines an applicable rural project as a qualified rehabilitated building located in a rural area (i.e., any area other than a city or town with a population greater than 50,000 or a contiguous urbanized area per the latest decennial census) and an affordable housing project as one where specified percentages of square footage consist of new or continuing affordable housing (i.e., decent, safe, sanitary units for households with incomes not exceeding 80% of area median income, as defined under HUD's Section 8 program (42 U.S.C. 1437f)). This section further requires recapture under new IRC §50(a)(4) if an affordable housing project violates such requirements before the close of the recapture period.
This section eliminates the basis adjustment requirement under IRC §50(c)(1)—previously reducing depreciable basis by 50% of the credit allowed—for the rehabilitation credit (i.e., tax credit under IRC §47 for qualified rehabilitations of certified historic structures and certain older buildings) with respect to applicable rural projects (as defined in IRC §47(a)(3)), and provides a conforming exception for lessees under IRC §50(d). The changes apply to property placed in service after December 31, 2025. (Thus, taxpayers receive the full credit plus undiminished depreciation deductions on such property.)