I 

109TH CONGRESS 

1ST SESSION H. R. 3159

To amend the Internal Revenue Code of 1986 to modify the rehabilitation 

credit and the low-income housing credit. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 30, 2005

Mr. ENGLISH of Pennsylvania (for himself, Mr. JEFFERSON, Mr. MCCRERY, 

Mr. TURNER, Mrs. JONES of Ohio, Mrs. JOHNSON of Connecticut, Mr. 

CARNAHAN, Mr. MCGOVERN, Mr. UDALL of Colorado, Mr. JENKINS, Mr. 

MILLER of North Carolina, Mr. MILLER of Florida, Mr. ANDREWS, Mr. 

MENENDEZ, Mr. NEAL of Massachusetts, Mr. WOLF, Mr. LEWIS of Georgia, Mr. ROSS, Mr. BAKER, Mr. PAUL, Mr. DAVIS of Alabama, Ms. 

HERSETH, and Mr. BOEHLERT) introduced the following bill; which was 

referred to the Committee on Ways and Means 

A BILL

To amend the Internal Revenue Code of 1986 to modify 

the rehabilitation credit and the low-income housing credit.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Community Restora5 tion and Revitalization Act of 2005’’. 
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1 SEC. 2. MODIFICATIONS TO RULES FOR DETERMINING THE 

2 APPLICABLE PERCENTAGE FOR CERTAIN 

3 BUILDINGS ELIGIBLE FOR LOW-INCOME 

4 HOUSING CREDIT. 

5 (a) IN GENERAL.—Subparagraph (B) of section 

6 42(b)(2) of the Internal Revenue Code of 1986 (relating 

7 to the method of prescribing the applicable percentage) is 

8 amended by striking ‘‘and’’ at the end of clause (i), by 

9 striking the period at the end of clause (ii) and inserting 

10 a comma, and by adding at the end the following new 

11 clauses: 

12 ‘‘(iii) 87.5 percent of the qualified 

13 basis of a building described in paragraph 

14 (1)(A), if the basis of the building is sub15 ject to the basis adjustment for rehabilita16 tion credit property required under section 

17 50(c), and 

18 ‘‘(iv) 37.5 percent of the qualified 

19 basis of a building described in paragraph 

20 (1)(B), if the basis of the building is sub21 ject to the basis adjustment for rehabilita22 tion credit property required under section 

23 50(c).’’. 

24 (b) EFFECTIVE DATE.—The amendments made by 

25 this section shall apply to—
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1 (1) housing credit dollar amounts allocated 

2 after December 31, 2004, and 

3 (2) buildings placed in service after such date 

4 to the extent paragraph (1) of section 42(h) of the 

5 Internal Revenue Code of 1986 does not apply to 

6 any building by reason of paragraph (4) thereof, but 

7 only with respect to bonds issued after such date. 

8 SEC. 3. MODIFICATION TO BASIS ADJUSTMENT RULE. 

9 (a) IN GENERAL.—Paragraph (3) of subsection 50(c) 

10 of the Internal Revenue Code of 1986 (relating to special 

11 rules for determining basis) is amended by striking ‘‘en12 ergy credit or reforestation credit’’ and inserting ‘‘energy 

13 credit, reforestation credit, or rehabilitation credit’’. 

14 (b) EFFECTIVE DATE.—The amendment made by 

15 this section shall apply to taxable years beginning after 

16 December 31, 2004. 

17 SEC. 4. INCREASE IN THE REHABILITATION CREDIT FOR 

18 CERTAIN SMALLER PROJECTS. 

19 (a) IN GENERAL.—Section 47 of the Internal Rev20 enue Code of 1986 (relating to rehabilitation credit) is 

21 amended by adding at the end the following new sub22 section: 

23 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER

24 PROJECTS.—
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1 ‘‘(1) IN GENERAL.—In the case of any qualified 

2 rehabilitated building or portion thereof—

3 ‘‘(A) which is placed in service after the 

4 date of the enactment of this subsection, and 

5 ‘‘(B) which is a smaller project, 

6 subsection (a)(2) shall be applied by substituting ‘40 

7 percent’ for ‘20 percent’ with respect to qualified re8 habilitation expenditures not over $1,000,000, and 

9 ‘20 percent’ with respect to qualified rehabilitation 

10 expenditures of over $1,000,000. 

11 ‘‘(2) SMALLER PROJECT DEFINED.—For pur12 poses of this section, the term ‘smaller project’ 

13 means any qualified rehabilitated building or portion 

14 thereof as to which—

15 ‘‘(A) the qualified rehabilitation expendi16 tures reported by the taxpayer for purposes of 

17 calculating the credit under this section are not 

18 over $2,000,000, except that for purposes of 

19 making this determination, qualified rehabilita20 tion expenditures attributable to the provisions 

21 of subsection (c)(2)(E) shall be disregarded, 

22 and 

23 ‘‘(B) no credit was allowable under this 

24 section during any of the two prior taxable 

25 years, provided that this subparagraph shall not 
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1 apply to any building as to which the election 

2 provided for in subsection (d)(5) shall have 

3 been made. 

4 ‘‘(3) COORDINATION WITH SUBSECTION (d).—

5 With respect to any building as to which the election 

6 provided for in subsection (d)(5) shall have been 

7 made, such building shall be deemed a smaller 

8 project only if the qualified rehabilitation expendi9 tures reported by the taxpayer for purposes of calcu10 lating the credit under this section with respect to 

11 the taxable years to which such election shall apply 

12 are, in the aggregate, not over $2,000,000.’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to property placed in service after 

15 the date of the enactment of this Act. 

16 SEC. 5. USE FOR LODGING NOT TO DISQUALIFY FOR REHA17 BILITATION CREDIT PROPERTY WHICH IS 

18 NOT A CERTIFIED HISTORIC STRUCTURE. 

19 (a) IN GENERAL.—Subparagraph (C) of section 

20 50(b)(2) of the Internal Revenue Code of 1986 (relating 

21 to property eligible for the investment credit) is amended 

22 by striking ‘‘certified historic structure’’ and inserting 

23 ‘‘qualified rehabilitated building’’. 
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1 (b) EFFECTIVE DATE.—The amendment made by 

2 this section shall apply to property placed in service after 

3 the date of the enactment of this Act. 

4 SEC. 6. DATE BY WHICH BUILDING MUST BE FIRST PLACED 

5 IN SERVICE. 

6 (a) IN GENERAL.—Subparagraph (B) of section 

7 47(c)(1) of the Internal Revenue Code of 1986 (relating 

8 to the date by which building must be first placed in serv9 ice) is amended—

10 (1) by striking ‘‘BUILDING MUST BE FIRST

11 PLACED IN SERVICE BEFORE 1936’’ and inserting 

12 ‘‘DATE BY WHICH BUILDING MUST FIRST BE

13 PLACED IN SERVICE’’, and 

14 (2) by striking ‘‘before 1936’’ at the end of the 

15 subparagraph and inserting ‘‘no less than 50 years 

16 prior to the year in which qualified rehabilitation ex17 penditures are taken into account under subsection 

18 (b)(1)’’. 

19 (b) EFFECTIVE DATE.—The amendments made by 

20 section shall apply to property placed in service after the 

21 date of the enactment of this Act. 

22 SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 

23 USE PROPERTY. 

24 (a) IN GENERAL.—Clause (I) of section 

25 47(c)(2)(B)(v) of the Internal Revenue Code of 1986 (re-
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1 lating to tax-exempt use property) is amended by striking 

2 the period at the end and inserting ‘‘(1)(B)(ii)(IV), except 

3 that for purposes of this clause, ‘50 percent’ shall be sub4 stituted for ‘35 percent’ in applying section 

5 168(h)(1)(B)(iii))’’. 

6 (b) EFFECTIVE DATE.—The amendments made by 

7 section shall apply to property placed in service after the 

8 date of the enactment of this Act. 

9 SEC. 8. INCREASE IN REHABILITATION CREDIT FOR BUILD10 INGS IN HIGH COST AREAS. 

11 (a) IN GENERAL.—Paragraph (2) of subsection 47(c) 

12 of the Internal Revenue Code of 1986 (relating to the defi13 nition of qualified rehabilitation expenditures) is amended 

14 by adding at the end the following new subparagraph: 

15 ‘‘(E) INCREASE IN CREDIT FOR BUILDINGS

16 IN HIGH COST AREAS.—

17 ‘‘(i) IN GENERAL.—In the case of any 

18 qualified rehabilitated building located in a 

19 qualified census tract or difficult develop20 ment area which is designated for purposes 

21 of this subparagraph, the qualified reha22 bilitation expenditures for purposes of this 

23 section shall be 130 percent of such ex24 penditures determined without regard to 

25 this subparagraph. 
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1 ‘‘(ii) RULES.—For purposes of clause 

2 (i), rules similar to the rules of section 

3 42(d)(5)(C) (excluding clause (i) thereof) 

4 shall be applied.’’. 

5 (b) EFFECTIVE DATE.—The amendments made by 

6 this section shall apply to property placed in service after 

7 the date of the enactment of this Act. 

8 SEC. 9. RECAPTURE OF REHABILITATION CREDIT FOR CER9 TIFIED HISTORIC STRUCTURE NOT TRIG10 GERED BY CONDOMINIUM TRANSACTION. 

11 (a) IN GENERAL.—Subsection (a) of section 50 of the 

12 Internal Revenue Code of 1986 (relating to recapture of 

13 credits upon disposition of property) is amended by adding 

14 at the end thereof the following new paragraph: 

15 ‘‘(6) SPECIAL RULE FOR CERTIFIED HISTORIC

16 STRUCTURES.—In the case of the rehabilitation 

17 credit determined under section 47(a)(2), para18 graphs (1) and (2) shall not apply to a transaction 

19 in which a portion of the building is transferred as 

20 a condominium unit.’’. 

21 (b) EFFECTIVE DATE.—The amendment made by 

22 this section shall apply to transfers after the date of enact23 ment of this Act.

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