119-s631

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 631 Introduced in Senate

    (IS) ]

<DOC>

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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