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[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 5607 Introduced in Senate (IS)]

<DOC>

118th CONGRESS
  2d Session
                                S. 5607

       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

            December 19 (legislative day, December 16), 2024

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 60 
                        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, 2024.

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, 2024.
                                 <all>
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