I 

113TH CONGRESS 

1ST SESSION H. R. 2042 

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

credit for commercial buildings and to provide a rehabilitation credit 

for principal residences. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 17, 2013 

Mr. MCKINLEY (for himself, Mr. BEN RAY LUJA ́N of New Mexico, Mr. CARSON of Indiana, and Mr. TONKO) 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 increase 

the rehabilitation credit for commercial buildings and 

to provide a rehabilitation credit for principal residences. 

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 ‘‘Preserving America’s 

5 Downtowns and Heritage Act of 2013’’. 

6 SEC. 2. INCREASED REHABILITATION CREDIT FOR COM7 MERCIAL BUILDINGS. 

8 (a) BUILDINGS OTHER THAN CERTIFIED HISTORIC

9 STRUCTURES.—Paragraph (1) of section 47(a) of the InVerDate Mar 15 2010 06:31 May 24, 2013 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2042.IH H2042

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1 ternal Revenue Code of 1986 (relating to rehabilitation 

2 credit) is amended by striking ‘‘10 percent’’ and inserting 

3 ‘‘12.5 percent’’. 

4 (b) CERTIFIED HISTORIC STRUCTURES.—Paragraph 

5 (2) of such section is amended by striking ‘‘20 percent’’ 

6 and inserting ‘‘25 percent’’. 

7 (c) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply with respect to rehabilitations the 

9 physical work on which begins after the date of enactment 

10 of this Act. 

11 SEC. 3. REHABILITATION CREDIT FOR HISTORIC PRIN12 CIPAL RESIDENCES. 

13 (a) IN GENERAL.—Subpart A of part IV of sub14 chapter A of chapter 1 of the Internal Revenue Code of 

15 1986 (relating to nonrefundable personal credits) is 

16 amended by inserting after section 25D the following new 

17 section: 

18 ‘‘SEC. 25E. REHABILITATION OF HISTORIC PRINCIPAL RESI19 DENCES. 

20 ‘‘(a) GENERAL RULE.—In the case of an individual, 

21 there shall be allowed as a credit against the tax imposed 

22 by this chapter for the taxable year an amount equal to 

23 20 percent of the qualified rehabilitation expenditures 

24 made by the taxpayer with respect to a qualified historic 

25 home. 


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1 ‘‘(b) QUALIFIED REHABILITATION EXPENDITURE.— 

2 For purposes of this section— 

3 ‘‘(1) IN GENERAL.—The term ‘qualified reha4 bilitation expenditure’ means any amount properly 

5 chargeable to capital account— 

6 ‘‘(A) in connection with the certified reha7 bilitation of a qualified historic home, and 

8 ‘‘(B) for property for which depreciation 

9 would be allowable under section 168 if the 

10 qualified historic home were used in a trade or 

11 business. 

12 ‘‘(2) CERTAIN EXPENDITURES NOT IN13 CLUDED.—Rules similar to the rules of clauses (ii) 

14 and (iii) of section 47(c)(2)(B) shall apply. 

15 ‘‘(3) MIXED USE OR MULTIFAMILY BUILDING.— 

16 If only a portion of a building is used as the prin17 cipal residence of the taxpayer, only qualified reha18 bilitation expenditures which are properly allocable 

19 to such portion shall be taken into account under 

20 this section. 

21 ‘‘(c) CERTIFIED REHABILITATION.—For purposes of 

22 this section— 

23 ‘‘(1) IN GENERAL.—The term ‘certified reha24 bilitation’ has the meaning given such term by sec25 tion 47(c)(2)(C). 


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1 ‘‘(2) APPROVED STATE PROGRAM.—The term 

2 ‘certified rehabilitation’ includes a certification made 

3 by— 

4 ‘‘(A) a State Historic Preservation Officer 

5 who administers a State Historic Preservation 

6 Program approved by the Secretary of the Inte7 rior pursuant to section 101(b)(1) of the Na8 tional Historic Preservation Act, or 

9 ‘‘(B) a local government, certified pursuant 

10 to section 101(c)(1) of the National Historic 

11 Preservation Act and authorized by a State 

12 Historic Preservation Officer, or the Secretary 

13 of the Interior where there is no approved State 

14 program, subject to such terms and conditions 

15 as may be specified by the Secretary of the In16 terior for the rehabilitation of buildings within 

17 the jurisdiction of such officer (or local govern18 ment) for purposes of this section. 

19 ‘‘(d) DEFINITIONS AND SPECIAL RULES.—For pur20 poses of this section— 

21 ‘‘(1) QUALIFIED HISTORIC HOME.—The term 

22 ‘qualified historic home’ means a certified historic 

23 structure— 

24 ‘‘(A) which has been substantially rehabili25 tated, and 


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1 ‘‘(B) which (or any portion of which)— 

2 ‘‘(i) is owned by the taxpayer, and 

3 ‘‘(ii) is used (or will, within a reason4 able period, be used) by such taxpayer as 

5 his principal residence. 

6 ‘‘(2) SUBSTANTIALLY REHABILITATED.—The 

7 term ‘substantially rehabilitated’ has the meaning 

8 given such term by section 47(c)(1)(C). 

9 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin10 cipal residence’ has the same meaning as when used 

11 in section 121. 

12 ‘‘(4) CERTIFIED HISTORIC STRUCTURE.— 

13 ‘‘(A) IN GENERAL.—The term ‘certified 

14 historic structure’ means any building (and its 

15 structural components) which— 

16 ‘‘(i) is listed in the National Register, 

17 or 

18 ‘‘(ii) is located in a registered historic 

19 district (as defined in section 47(c)(3)(B)) 

20 and is certified by the Secretary of the In21 terior as being of historic significance to 

22 the district. 

23 ‘‘(5) REHABILITATION NOT COMPLETE BEFORE

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1 ed as complete before the date of the certification re2 ferred to in subsection (c). 

3 ‘‘(6) TENANT-STOCKHOLDER IN COOPERATIVE

4 HOUSING CORPORATION.—If the taxpayer holds 

5 stock as a tenant-stockholder (as defined in section 

6 216) in a cooperative housing corporation (as de7 fined in such section), such stockholder shall be 

8 treated as owning the house or apartment which the 

9 taxpayer is entitled to occupy as such stockholder. 

10 ‘‘(e) CARRYFORWARD OF UNUSED CREDIT.—If the 

11 credit allowable under subsection (a) exceeds the limita12 tion imposed by section 26(a) for the taxable year reduced 

13 by the sum of the credits allowable under this subpart 

14 (other than this section and sections 25D and 1400C), 

15 such excess shall be a carried to each of the 5 succeeding 

16 taxable years and, subject to rules similar to the rules of 

17 section 39(a)(2), shall be added to the credit allowable by 

18 subsection (a) for such succeeding taxable year. 

19 ‘‘(f) WHEN EXPENDITURES TAKEN INTO AC20 COUNT.—Qualified rehabilitation expenditures shall be 

21 treated for purposes of this section as made— 

22 ‘‘(1) on the date the rehabilitation is completed, 

23 or 


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1 ‘‘(2) to the extent provided by the Secretary by 

2 regulation, when such expenditures are properly 

3 chargeable to capital account. 

4 Regulations under paragraph (2) shall include a rule simi5 lar to the rule under section 50(a)(2) (relating to recap6 ture if property ceases to qualify for progress expendi7 tures). 

8 ‘‘(g) RECAPTURE.— 

9 ‘‘(1) IN GENERAL.—If, before the end of the 5- 

10 year period beginning on the date on which the reha11 bilitation of the building is completed— 

12 ‘‘(A) the taxpayer disposes of such tax13 payer’s interest in such building, or 

14 ‘‘(B) such building ceases to be used as the 

15 principal residence of the taxpayer or ceases to 

16 be a certified historic structure, 

17 the taxpayer’s tax imposed by this chapter for the 

18 taxable year in which such disposition or cessation 

19 occurs shall be increased by the recapture percent20 age of the credit allowed under this section for all 

21 prior taxable years with respect to such rehabilita22 tion. 

23 ‘‘(2) RECAPTURE PERCENTAGE.—For purposes 

24 of paragraph (1), the recapture percentage shall be 

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1 tion 50(a)(1)(B), deeming such table to be amend2 ed— 

3 ‘‘(A) by striking ‘If the property ceases to 

4 be investment credit property within—’ and in5 serting ‘If the disposition or cessation occurs 

6 within—’, and 

7 ‘‘(B) in clause (i) by striking ‘One full year 

8 after placed in service’ and inserting ‘One full 

9 year after the taxpayer becomes entitled to the 

10 credit’. 

11 ‘‘(3) TRANSFER BETWEEN SPOUSES OR INCI12 DENT TO DIVORCE.—In the case of any transfer de13 scribed in subsection (a) of section 1041 (relating to 

14 transfers between spouses or incident to divorce)— 

15 ‘‘(A) the foregoing provisions of this sub16 section shall not apply, and 

17 ‘‘(B) the same tax treatment under this 

18 subsection with respect to the transferred prop19 erty shall apply to the transferee as would have 

20 applied to the transferor. 

21 ‘‘(h) BASIS ADJUSTMENTS.—For purposes of this 

22 subtitle, if a credit is allowed under this section for any 

23 expenditure with respect to any property, the increase in 

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1 section) result from such expenditure shall be reduced by 

2 the amount of the credit so allowed. 

3 ‘‘(i) PROCESSING FEES.—Any State may impose a 

4 fee for the processing of applications for the certification 

5 of any rehabilitation under this section provided that the 

6 amount of such fee is used only to defray expenses associ7 ated with the processing of such applications. 

8 ‘‘(j) DENIAL OF DOUBLE BENEFIT.—No credit shall 

9 be allowed under this section for any amount for which 

10 credit is allowed under section 47. 

11 ‘‘(k) REGULATIONS.—The Secretary shall prescribe 

12 such regulations as may be appropriate to carry out the 

13 purposes of this section, including regulations where less 

14 than all of a building is used as a principal residence and 

15 where more than 1 taxpayer use the same dwelling unit 

16 as their principal residence.’’. 

17 (b) CONFORMING AMENDMENTS.— 

18 (1) Subsection (a) of section 1016 of such Code 

19 is amended by striking ‘‘and’’ at the end of para20 graph (36), by striking the period at the end of 

21 paragraph (37) and inserting ‘‘, and’’, and by add22 ing at the end the following new item: 

23 ‘‘(38) to the extent provided in section 

24 25E(h).’’. 


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1 (2) The table of sections for subpart A of part 

2 IV of subchapter A of chapter 1 of such Code is 

3 amended by inserting after the item relating to sec4 tion 25D the following new item: 

‘‘Sec. 25E. Rehabilitation of historic principal residences.’’. 

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

6 this section shall apply with respect to rehabilitations the 

7 physical work on which begins after the date of enactment 

8 of this Act. 

Æ 


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