[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 631 Introduced in Senate (IS)]
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119th CONGRESS
1st Session
S. 631
To amend the Internal Revenue Code of 1986 to enhance the
rehabilitation credit for buildings in rural areas.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 19, 2025
Mrs. Capito (for herself and Mr. Warner) introduced the following bill;
which was read twice and referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to enhance the
rehabilitation credit for buildings in rural areas.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Rural Historic Tax Credit
Improvement Act''.
SEC. 2. ENHANCEMENT OF REHABILITATION CREDIT FOR BUILDINGS IN RURAL
AREAS.
(a) In General.--Section 47(a) of the Internal Revenue Code of 1986
is amended--
(1) in paragraph (1), by striking ``For purposes'' and
inserting ``Except as provided in paragraph (3), for
purposes'', and
(2) by adding at the end the following new paragraphs:
``(3) Applicable rural projects.--
``(A) In general.--In the case of any applicable
rural project--
``(i) paragraph (1) shall not apply for any
qualified rehabilitation expenditures with
respect to such project, and
``(ii) for the taxable year in which such
project is placed in service, the
rehabilitation credit for such taxable year is
an amount equal to--
``(I) in the case of a project
which is an affordable housing project,
40 percent of the qualified
rehabilitation expenditures with
respect to such project, or
``(II) in the case of a project
which is not an affordable housing
project, 30 percent of the qualified
rehabilitation expenditures with
respect to such project.
``(B) Applicable rural project.--
``(i) In general.--For purposes of this
section, the term `applicable rural project'
means a qualified rehabilitated building which
is located in a rural area.
``(ii) Limitation.--In the case of any
applicable rural project, the total amount of
qualified rehabilitation expenditures which may
be taken into account under this section with
respect to such project may not exceed
$5,000,000.
``(iii) Rural area.--For purposes of this
paragraph, the term `rural area' means any area
other than--
``(I) a city or town that has a
population of greater than 50,000
inhabitants, or
``(II) the urbanized area
contiguous and adjacent to a city or
town described in subclause (I), as
defined by the Bureau of the Census
based on the latest decennial census of
the United States.
``(C) Affordable housing project.--
``(i) In general.--For purposes of this
paragraph, the term `affordable housing
project' means a project--
``(I) in which--
``(aa) not less than 50
percent of the aggregate square
feet of the completed project
is housing, and
``(bb) with respect to the
housing described in item (aa),
not less than 50 percent of the
aggregate square feet of such
housing--
``(AA) is new
affordable housing, or
``(BB) continues to
provide affordable
housing, or
``(II) in which not less than 33
percent of the aggregate square feet of
the completed project--
``(aa) is new affordable
housing, or
``(bb) continues to provide
affordable housing.
``(ii) Affordable housing.--For purposes of
this paragraph, the term `affordable housing'
means a decent, safe, and sanitary dwelling,
apartment, or other living accommodation for a
household whose income does not exceed 80
percent of the median income for the market
area (as defined by the Secretary of Housing
and Urban Development under section 8 of the
United States Housing Act of 1937 (42 U.S.C.
1437f)).
``(4) Transfer of credit for applicable rural projects.--
``(A) In general.--Subject to subparagraph (B) and
such regulations or other guidance as the Secretary may
provide, the taxpayer may transfer all or a portion of
the credit determined under paragraph (3) for an
applicable rural project.
``(B) Certification.--
``(i) In general.--A transfer under
subparagraph (A) shall be accompanied by a
certificate which includes--
``(I) the certification for the
certified historic structure referred
to in subsection (c)(3),
``(II) the taxpayer's name,
address, tax identification number,
date of project completion, and the
amount of credit being transferred,
``(III) the transferee's name,
address, tax identification number, and
the amount of credit being transferred,
and
``(IV) such other information as
may be required by the Secretary.
``(ii) Transferability of certificate.--A
certificate issued under this section to a
taxpayer shall be transferable to any other
taxpayer.
``(C) Tax treatment relating to certificate.--
``(i) Disallowance of deduction.--No
deduction shall be allowed for the amount of
consideration paid or incurred by the
transferee.
``(ii) Allowance of credit.--The amount of
credit transferred under subparagraph (A)--
``(I) shall not be allowed to the
transferor for any taxable year, and
``(II) shall be allowable to the
transferee as a credit determined under
this section for the taxable year of
the transferee in which such credit is
transferred.
``(iii) Exclusion.--Gross income shall not
include any amount received in connection with
the transfer of the certificate.
``(D) Recapture and other special rules.--The
taxpayer who claims a credit determined under this
section by reason of a transfer of an amount of credit
under subparagraph (A) with respect to an applicable
rural project shall be treated as the taxpayer with
respect to such project for purposes of section 50.
``(E) Information reporting.--The transferor and
the transferee shall each make such reports regarding
the transfer of an amount of credit under paragraph (A)
and containing such information as the Secretary may
require. The reports required by this subsection shall
be filed at such time and in such manner as may be
required by the Secretary.
``(F) Regulations.--The Secretary shall prescribe
regulations or other guidance to carry out this
paragraph in a manner which is consistent with
applicable requirements with respect to transfer of
credits under section 6418.''.
(b) Recapture for Failure To Comply With Affordable Housing
Requirements.--
(1) In general.--Section 50(a) of the Internal Revenue Code
of 1986 is amended--
(A) by redesignating paragraphs (4) through (6) as
paragraphs (5) through (7), respectively, and
(B) by inserting after paragraph (3) the following
new paragraph:
``(4) Failure to comply with affordable housing
requirements under rehabilitation credit.--
``(A) In general.--In the case of any applicable
rural project which is an affordable housing project
(as such terms are defined in section 47(a)(3)) which
is eligible for the rehabilitation credit under section
47(a), if such project violates the requirements under
section 47(a)(3)(C) before the close of the recapture
period (as described in paragraph (1)), then the tax
under this chapter for the taxable year in which such
violation occurs shall be increased by 100 percent of
the aggregate decrease in the credits allowed under
section 38 for all prior taxable years which would have
resulted solely from reducing to zero any credit
determined under section 46 which is attributable to
the rehabilitation credit under section 47(a) with
respect to such project.
``(B) Exception.--Subparagraph (A) shall not apply
if the taxpayer demonstrates to the satisfaction of the
Secretary that the violation of the requirements under
section 47(a)(3)(C) has been rectified within 45 days
of a determination and notice by the Secretary.
``(C) Regulations and guidance.--The Secretary
shall issue such regulations or other guidance as the
Secretary determines necessary or appropriate to carry
out the purposes of this paragraph, including
regulations or other guidance which provide for
requirements for recordkeeping or information reporting
for purposes of administering the requirements of this
paragraph.''.
(2) Conforming amendments.--
(A) Section 50(a)(5) of such Code, as redesignated
by paragraph (1), is amended--
(i) by striking ``or any applicable
transaction to which paragraph (3)(A) applies''
and inserting ``any applicable transaction to
which paragraph (3)(A) applies, or any
violation to which paragraph (4)(A) applies'',
and
(ii) by striking ``cessation or applicable
transaction'' and inserting ``cessation,
applicable transaction, or violation''.
(B) Section 50(a)(7)(C) of such Code, as
redesignated by paragraph (1), is amended by striking
``or (3)'' and inserting ``(3), or (4)''.
(C) Section 1371(d)(1) of such Code is amended by
striking ``section 50(a)(5)'' and inserting ``section
50(a)(6)''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2025.
SEC. 3. ELIMINATION OF REHABILITATION CREDIT BASIS ADJUSTMENT.
(a) In General.--Section 50(c) of the Internal Revenue Code of 1986
is amended by adding at the end the following new paragraph:
``(6) Exception for rehabilitation credit.--In the case of
the rehabilitation credit with respect to any applicable rural
project (as defined in section 47(a)(3)), paragraph (1) shall
not apply.''.
(b) Treatment in Case of Credit Allowed to Lessee.--Section 50(d)
of such Code is amended by adding at the end the following: ``In the
case of the rehabilitation credit with respect to any applicable rural
project (as defined in section 47(a)(3)), paragraph (5)(B) of the
section 48(d) referred to in paragraph (5) of this subsection shall not
apply.''.
(c) Effective Date.--The amendments made by this section shall
apply to property placed in service after December 31, 2025.
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