I

103D CONGRESS

2D SESSION H. R. 5249

To amend the Internal Revenue Code of 1986 to provide a credit against

income tax to individuals who rehabilitate historic homes or who are

the first purchasers of rehabilitated historic homes for use as a principal

residence.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 7, 1994

Mr. ANDREWS of Texas (for himself, Mrs. KENNELLY, and Mr. SHAW) 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 provide

a credit against income tax to individuals who rehabilitate historic homes or who are the first purchasers of

rehabilitated historic homes for use as a principal residence.

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 ‘‘Historic Homeowner5 ship Assistance Act’’.
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1 SEC. 2. HISTORIC HOMEOWNERSHIP REHABILITATION

2 CREDIT.

3 (a) IN GENERAL.—Subpart A of part IV of sub4 chapter A of chapter 1 of the Internal Revenue Code of

5 1986 (relating to nonrefundable personal credits) is

6 amended by inserting after section 22 the following new

7 section:

8 ‘‘SEC. 23. HISTORIC HOMEOWNERSHIP REHABILITATION

9 CREDIT.

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

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

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

13 20 percent of the qualified rehabilitation expenditures

14 made by the taxpayer with respect to a qualified historic

15 home.

16 ‘‘(b) DOLLAR LIMITATION.—

17 ‘‘(1) IN GENERAL.—The credit allowed by sub18 section (a) with respect to any residence of a tax19 payer shall not exceed $50,000 ($25,000 in the case

20 of a married individual filing a separate return).

21 ‘‘(2) CARRYFORWARD OF CREDIT UNUSED BY

22 REASON OF LIMITATION BASED ON TAX LIABIL23 ITY.—If the credit allowable under subsection (a) for

24 any taxable year exceeds the limitation imposed by

25 section 26(a) for such taxable year reduced by the

26 sum of the credits allowable under this subpart
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1 (other than this section), such excess shall be carried

2 to the succeeding taxable year and added to the

3 credit allowable under subsection (a) for such suc4 ceeding taxable year.

5 ‘‘(c) QUALIFIED REHABILITATION EXPENDITURE.—

6 For purposes of this section:

7 ‘‘(1) IN GENERAL.—The term ‘qualified reha8 bilitation expenditure’ means any amount properly

9 chargeable to capital account—

10 ‘‘(A) in connection with the certified reha11 bilitation of a qualified historic home, and

12 ‘‘(B) for property for which depreciation

13 would be allowable under section 168 if the

14 qualified historic home were used in a trade or

15 business.

16 ‘‘(2) CERTAIN EXPENDITURES NOT IN17 CLUDED.—

18 ‘‘(A) EXTERIOR.—Such term shall not in19 clude any expenditure in connection with the re20 habilitation of a building unless at least 5 per21 cent of the total expenditures made in the reha22 bilitation process are allocable to the rehabilita23 tion of the exterior of such building.
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1 ‘‘(B) OTHER RULES TO APPLY.—Rules

2 similar to the rules of clauses (ii) and (iii) of

3 section 47(c)(2)(B) shall apply.

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

5 If only a portion of a building is used as the prin6 cipal residence of the taxpayer, only qualified reha7 bilitation expenditures which are properly allocable

8 to such portion shall be taken into account under

9 this section.

10 ‘‘(d) CERTIFIED REHABILITATION.—For purposes of

11 this section:

12 ‘‘(1) IN GENERAL.—Except as otherwise pro13 vided in this subsection, the term ‘certified rehabili14 tation’ has the meaning given such term by section

15 47(c)(2)(C).

16 ‘‘(2) FACTORS TO BE CONSIDERED IN THE

17 CASE OF TARGETED AREA RESIDENCES, ETC.—

18 ‘‘(A) IN GENERAL.—For purposes of ap19 plying section 47(c)(2)(C) under this section

20 with respect to the rehabilitation of a building

21 to which this paragraph applies, consideration

22 shall be given to—

23 ‘‘(i) the feasibility of preserving exist24 ing architectural and design elements of

25 the interior of such building,
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1 ‘‘(ii) the risk of further deterioration

2 or demolition of such building in the event

3 that certification is denied because of the

4 failure to preserve such interior elements,

5 and

6 ‘‘(iii) the effects of such deterioration

7 or demolition on neighboring historic prop8 erties.

9 ‘‘(B) BUILDINGS TO WHICH THIS PARA10 GRAPH APPLIES.—This paragraph shall apply

11 with respect to any building—

12 ‘‘(i) any part of which is a targeted

13 area residence within the meaning of sec14 tion 143(j)(1), or

15 ‘‘(ii) which is located within an enter16 prise or empowerment zone,

17 but shall not apply with respect to any building

18 which is listed in the National Register or a

19 State or local register of historic places.

20 ‘‘(3) COOPERATIVE AGREEMENTS.—The term

21 ‘certified rehabilitation’ includes a certification made

22 in accordance with a cooperative agreement between

23 the Secretary of the Interior and a State Historic

24 Preservation Officer which authorizes such officer

25 (or a local government certified pursuant to section
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1 101(c)(1) of the National Historic Preservation

2 Act), subject to such terms or conditions as may be

3 specified in such agreement, to certify the rehabilita4 tion of buildings within the jurisdiction of such offi5 cer (or local government) for purposes of this sec6 tion.

7 ‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur8 poses of this section:

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

10 ‘qualified historic home’ means a certified historic

11 structure—

12 ‘‘(A) which has been substantially rehabili13 tated, and

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

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

16 ‘‘(ii) is used (or will, within a reason17 able period, be used) by such taxpayer as

18 his principal residence.

19 ‘‘(2) SUBSTANTIALLY REHABILITATED.—The

20 term ‘substantially rehabilitated’ has the meaning

21 given such term by section 47(c)(1)(C); except that,

22 in the case of any building described in subsection

23 (d)(2), clause (i)(I) thereof shall not apply.
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1 ‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin2 cipal residence’ has the same meaning as when used

3 in section 1034.

4 ‘‘(4) CERTIFIED HISTORIC STRUCTURE.—The

5 term ‘certified historic structure’ has the meaning

6 given such term by section 47(c)(3).

7 ‘‘(5) ENTERPRISE OR EMPOWERMENT ZONE.—

8 The term ‘enterprise or empowerment zone’ means

9 any area designated under section 1391 as an enter10 prise community or an empowerment zone.

11 ‘‘(6) REHABILITATION NOT COMPLETE BEFORE

12 CERTIFICATION.—A rehabilitation shall not be treat13 ed as complete before the date of the certification re14 ferred to in subsection (d).

15 ‘‘(7) LESSEES.—A taxpayer who leases his

16 principal residence shall, for purposes of this section,

17 be treated as the owner thereof if the remaining

18 term of the lease (as of the date determined under

19 regulations prescribed by the Secretary) is not less

20 than such minimum period as the regulations re21 quire.

22 ‘‘(f) WHEN EXPENDITURES TAKEN INTO AC23 COUNT.—In the case of a building other than a building

24 to which subsection (g) applies, qualified rehabilitation ex-
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1 penditures shall be treated for purposes of this section as

2 made—

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

4 or

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

6 regulation, when such expenditures are properly

7 chargeable to capital account.

8 Regulations under paragraph (2) shall include a rule simi9 lar to the rule under section 50(a)(2) (relating to recap10 ture if property ceases to qualify for progress expendi11 tures).

12 ‘‘(g) ALLOWANCE OF CREDIT FOR PURCHASE OF RE13 HABILITATED HISTORIC HOME.—

14 ‘‘(1) IN GENERAL.—In the case of a qualified

15 purchased historic home, the taxpayer shall be treat16 ed as having made (on the date of purchase) the

17 qualified rehabilitation expenditures made by the

18 seller of such home.

19 ‘‘(2) QUALIFIED PURCHASED HISTORIC

20 HOME.—For purposes of this subsection, the term

21 ‘qualified purchased historic home’ means any sub22 stantially rehabilitated certified historic structure

23 purchased by the taxpayer if—

24 ‘‘(A) the taxpayer is the first purchaser of

25 such structure after the date rehabilitation is
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1 completed, and the purchase occurs within 5

2 years after such date,

3 ‘‘(B) the structure (or a portion thereof)

4 will, within a reasonable period, be the principal

5 residence of the taxpayer,

6 ‘‘(C) no credit was allowed to the seller

7 under this section or section 47 with respect to

8 such rehabilitation, and

9 ‘‘(D) the taxpayer is furnished with such

10 information as the Secretary determines is nec11 essary to determine the credit under this sub12 section.

13 ‘‘(h) HISTORIC REHABILITATION MORTGAGE CREDIT

14 CERTIFICATE.—

15 ‘‘(1) IN GENERAL.—The taxpayer may elect, in

16 lieu of the credit otherwise allowable under this sec17 tion, to receive a historic rehabilitation mortgage

18 credit certificate. An election under this paragraph

19 shall be made—

20 ‘‘(A) in the case of a building to which

21 subsection (g) applies, at the time of purchase,

22 or

23 ‘‘(B) in any other case, at the time reha24 bilitation is completed.
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1 ‘‘(2) HISTORIC REHABILITATION MORTGAGE

2 CREDIT CERTIFICATE.—For purposes of this sub3 section, the term ‘historic rehabilitation mortgage

4 credit certificate’ means a certificate—

5 ‘‘(A) issued to the taxpayer, in accordance

6 with procedures prescribed by the Secretary,

7 with respect to a certified rehabilitation,

8 ‘‘(B) the face amount of which shall be

9 equal to the credit which would (but for this

10 subsection) be allowable under subsection (a) to

11 the taxpayer with respect to such rehabilitation,

12 ‘‘(C) which may only be transferred by the

13 taxpayer to a lending institution in connection

14 with a loan—

15 ‘‘(i) that is secured by the building

16 with respect to which the credit relates,

17 and

18 ‘‘(ii) the proceeds of which may not be

19 used for any purpose other than the acqui20 sition or rehabilitation of such building,

21 and

22 ‘‘(D) in exchange for which such lending

23 institution provides the taxpayer a reduction

24 (determined as provided in such regulations) in

25 the rate of interest on the loan.
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1 ‘‘(3) USE OF CERTIFICATE BY LENDER.—The

2 amount of the credit specified in the certificate shall

3 be allowed to the lender only to offset the regular

4 tax (as defined in section 55(c)) of such lender. The

5 lender may carry forward all unused amounts under

6 this subsection until exhausted.

7 ‘‘(i) RECAPTURE.—

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

9 year period beginning on the date on which the reha10 bilitation of the building is completed (or, if sub11 section (g) applies, the date of purchase of such

12 building by the taxpayer)—

13 ‘‘(A) the taxpayer disposes of such tax14 payer’s interest in such building, or

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

16 principal residence of the taxpayer,

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

25 determined in accordance with the table under sec-
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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 ‘‘(j) BASIS ADJUSTMENTS.—For purposes of this

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

13 expenditure with respect to any property (including any

14 purchase under subsection (g) and any transfer under sub15 section (h)), the increase in the basis of such property

16 which would (but for this subsection) result from such ex17 penditure shall be reduced by the amount of the credit

18 so allowed.

19 ‘‘(k) PROCESSING FEES.—Proceeds of fees levied for

20 the processing of applications for the certification of any

21 rehabilitation under this section—

22 ‘‘(1) shall be deposited in a trust fund, and

23 ‘‘(2) subject to appropriations Acts, may be

24 used only to defray expenses associated with the

25 processing of such applications.
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1 ‘‘(l) DENIAL OF DOUBLE BENEFIT.—No credit shall

2 be allowed under this section for any amount for which

3 credit is allowed under section 47.

4 ‘‘(m) REGULATIONS.—The Secretary shall prescribe

5 such regulations as may be appropriate to carry out the

6 purposes of this section, including regulations where less

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

8 where more than 1 taxpayer use the same dwelling unit

9 as their principal residence.’’

10 (b) CONFORMING AMENDMENT.—Subsection (a) of

11 section 1016 of such Code is amended by striking ‘‘and’’

12 at the end of paragraph (24), by striking the period at

13 the end of paragraph (25) and inserting ‘‘, and’’, and by

14 adding at the end the following new item:

15 ‘‘(26) to the extent provided in section 23(j).’’

16 (c) CLERICAL AMENDMENT.—The table of sections

17 for subpart A of part IV of subchapter A of chapter 1

18 of such Code is amended by inserting after the item relat19 ing to section 22 the following new item:

‘‘Sec. 23. Historic homeownership rehabilitation credit.’’

20 (d) EFFECTIVE DATE.—The amendments made by

21 this section shall apply with respect to rehabilitations the

22 physical work on which begins after the date of enactment

23 of this Act.

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