II 

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. 

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 ‘‘Rural Historic Tax 

5 Credit Improvement Act’’. 

6 SEC. 2. ENHANCEMENT OF REHABILITATION CREDIT FOR 

7 BUILDINGS IN RURAL AREAS. 

8 (a) IN GENERAL.—Section 47(a) of the Internal Rev9 enue Code of 1986 is amended— 


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1 (1) in paragraph (1), by striking ‘‘For pur2 poses’’ and inserting ‘‘Except as provided in para3 graph (3), for purposes’’, and 

4 (2) by adding at the end the following new 

5 paragraphs: 

6 ‘‘(3) APPLICABLE RURAL PROJECTS.— 

7 ‘‘(A) IN GENERAL.—In the case of any ap8 plicable rural project— 

9 ‘‘(i) paragraph (1) shall not apply for 

10 any qualified rehabilitation expenditures 

11 with respect to such project, and 

12 ‘‘(ii) for the taxable year in which 

13 such project is placed in service, the reha14 bilitation credit for such taxable year is an 

15 amount equal to— 

16 ‘‘(I) in the case of a project 

17 which is an affordable housing 

18 project, 40 percent of the qualified re19 habilitation expenditures with respect 

20 to such project, or 

21 ‘‘(II) in the case of a project 

22 which is not an affordable housing 

23 project, 30 percent of the qualified re24 habilitation expenditures with respect 

25 to such project. 


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1 ‘‘(B) APPLICABLE RURAL PROJECT.— 

2 ‘‘(i) IN GENERAL.—For purposes of 

3 this section, the term ‘applicable rural 

4 project’ means a qualified rehabilitated 

5 building which is located in a rural area. 

6 ‘‘(ii) LIMITATION.—In the case of any 

7 applicable rural project, the total amount 

8 of qualified rehabilitation expenditures 

9 which may be taken into account under 

10 this section with respect to such project 

11 may not exceed $5,000,000. 

12 ‘‘(iii) RURAL AREA.—For purposes of 

13 this paragraph, the term ‘rural area’ 

14 means any area other than— 

15 ‘‘(I) a city or town that has a 

16 population of greater than 50,000 in17 habitants, or 

18 ‘‘(II) the urbanized area contig19 uous and adjacent to a city or town 

20 described in subclause (I), as defined 

21 by the Bureau of the Census based on 

22 the latest decennial census of the 

23 United States. 

24 ‘‘(C) AFFORDABLE HOUSING PROJECT.— 


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1 ‘‘(i) IN GENERAL.—For purposes of 

2 this paragraph, the term ‘affordable hous3 ing project’ means a project— 

4 ‘‘(I) in which— 

5 ‘‘(aa) not less than 50 per6 cent of the aggregate square feet 

7 of the completed project is hous8 ing, and 

9 ‘‘(bb) with respect to the 

10 housing described in item (aa), 

11 not less than 50 percent of the 

12 aggregate square feet of such 

13 housing— 

14 ‘‘(AA) is new affordable 

15 housing, or 

16 ‘‘(BB) continues to pro17 vide affordable housing, or 

18 ‘‘(II) in which not less than 33 

19 percent of the aggregate square feet 

20 of the completed project— 

21 ‘‘(aa) is new affordable 

22 housing, or 

23 ‘‘(bb) continues to provide 

24 affordable housing. 


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1 ‘‘(ii) AFFORDABLE HOUSING.—For 

2 purposes of this paragraph, the term ‘af3 fordable housing’ means a decent, safe, 

4 and sanitary dwelling, apartment, or other 

5 living accommodation for a household 

6 whose income does not exceed 60 percent 

7 of the median income for the market area 

8 (as defined by the Secretary of Housing 

9 and Urban Development under section 8 of 

10 the United States Housing Act of 1937 

11 (42 U.S.C. 1437f)). 

12 ‘‘(4) TRANSFER OF CREDIT FOR APPLICABLE

13 RURAL PROJECTS.— 

14 ‘‘(A) IN GENERAL.—Subject to subpara15 graph (B) and such regulations or other guid16 ance as the Secretary may provide, the taxpayer 

17 may transfer all or a portion of the credit deter18 mined under paragraph (3) for an applicable 

19 rural project. 

20 ‘‘(B) CERTIFICATION.— 

21 ‘‘(i) IN GENERAL.—A transfer under 

22 subparagraph (A) shall be accompanied by 

23 a certificate which includes— 


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1 ‘‘(I) the certification for the cer2 tified historic structure referred to in 

3 subsection (c)(3), 

4 ‘‘(II) the taxpayer’s name, ad5 dress, tax identification number, date 

6 of project completion, and the amount 

7 of credit being transferred, 

8 ‘‘(III) the transferee’s name, ad9 dress, tax identification number, and 

10 the amount of credit being trans11 ferred, and 

12 ‘‘(IV) such other information as 

13 may be required by the Secretary. 

14 ‘‘(ii) TRANSFERABILITY OF CERTIFI15 CATE.—A certificate issued under this sec16 tion to a taxpayer shall be transferable to 

17 any other taxpayer. 

18 ‘‘(C) TAX TREATMENT RELATING TO CER19 TIFICATE.— 

20 ‘‘(i) DISALLOWANCE OF DEDUC21 TION.—No deduction shall be allowed for 

22 the amount of consideration paid or in23 curred by the transferee. 


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1 ‘‘(ii) ALLOWANCE OF CREDIT.—The 

2 amount of credit transferred under sub3 paragraph (A)— 

4 ‘‘(I) shall not be allowed to the 

5 transferor for any taxable year, and 

6 ‘‘(II) shall be allowable to the 

7 transferee as a credit determined 

8 under this section for the taxable year 

9 of the transferee in which such credit 

10 is transferred. 

11 ‘‘(iii) EXCLUSION.—Gross income 

12 shall not include any amount received in 

13 connection with the transfer of the certifi14 cate. 

15 ‘‘(D) RECAPTURE AND OTHER SPECIAL

16 RULES.—The taxpayer who claims a credit de17 termined under this section by reason of a 

18 transfer of an amount of credit under subpara19 graph (A) with respect to an applicable rural 

20 project shall be treated as the taxpayer with re21 spect to such project for purposes of section 50. 

22 ‘‘(E) INFORMATION REPORTING.—The 

23 transferor and the transferee shall each make 

24 such reports regarding the transfer of an 

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1 taining such information as the Secretary may 

2 require. The reports required by this subsection 

3 shall be filed at such time and in such manner 

4 as may be required by the Secretary. 

5 ‘‘(F) REGULATIONS.—The Secretary shall 

6 prescribe regulations or other guidance to carry 

7 out this paragraph in a manner which is con8 sistent with applicable requirements with re9 spect to transfer of credits under section 

10 6418.’’. 

11 (b) RECAPTURE FOR FAILURE TO COMPLY WITH AF12 FORDABLE HOUSING REQUIREMENTS.— 

13 (1) IN GENERAL.—Section 50(a) of the Internal 

14 Revenue Code of 1986 is amended— 

15 (A) by redesignating paragraphs (4) 

16 through (6) as paragraphs (5) through (7), re17 spectively, and 

18 (B) by inserting after paragraph (3) the 

19 following new paragraph: 

20 ‘‘(4) FAILURE TO COMPLY WITH AFFORDABLE

21 HOUSING REQUIREMENTS UNDER REHABILITATION

22 CREDIT.— 

23 ‘‘(A) IN GENERAL.—In the case of any ap24 plicable rural project which is an affordable 

25 housing project (as such terms are defined in 


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1 section 47(a)(3)) which is eligible for the reha2 bilitation credit under section 47(a), if such 

3 project violates the requirements under section 

4 47(a)(3)(C) before the close of the recapture 

5 period (as described in paragraph (1)), then the 

6 tax under this chapter for the taxable year in 

7 which such violation occurs shall be increased 

8 by 100 percent of the aggregate decrease in the 

9 credits allowed under section 38 for all prior 

10 taxable years which would have resulted solely 

11 from reducing to zero any credit determined 

12 under section 46 which is attributable to the re13 habilitation credit under section 47(a) with re14 spect to such project. 

15 ‘‘(B) EXCEPTION.—Subparagraph (A) 

16 shall not apply if the taxpayer demonstrates to 

17 the satisfaction of the Secretary that the viola18 tion of the requirements under section 

19 47(a)(3)(C) has been rectified within 45 days of 

20 a determination and notice by the Secretary. 

21 ‘‘(C) REGULATIONS AND GUIDANCE.—The 

22 Secretary shall issue such regulations or other 

23 guidance as the Secretary determines necessary 

24 or appropriate to carry out the purposes of this 

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1 ance which provide for requirements for record2 keeping or information reporting for purposes 

3 of administering the requirements of this para4 graph.’’. 

5 (2) CONFORMING AMENDMENTS.— 

6 (A) Section 50(a)(5) of such Code, as re7 designated by paragraph (1), is amended— 

8 (i) by striking ‘‘or any applicable 

9 transaction to which paragraph (3)(A) ap10 plies’’ and inserting ‘‘any applicable trans11 action to which paragraph (3)(A) applies, 

12 or any violation to which paragraph (4)(A) 

13 applies’’, and 

14 (ii) by striking ‘‘cessation or applica15 ble transaction’’ and inserting ‘‘cessation, 

16 applicable transaction, or violation’’. 

17 (B) Section 50(a)(7)(C) of such Code, as 

18 redesignated by paragraph (1), is amended by 

19 striking ‘‘or (3)’’ and inserting ‘‘(3), or (4)’’. 

20 (C) Section 1371(d)(1) of such Code is 

21 amended by striking ‘‘section 50(a)(5)’’ and in22 serting ‘‘section 50(a)(6)’’. 

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

24 this section shall apply to property placed in service after 

25 December 31, 2024. 


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1 SEC. 3. ELIMINATION OF REHABILITATION CREDIT BASIS 

2 ADJUSTMENT. 

3 (a) IN GENERAL.—Section 50(c) of the Internal Rev4 enue Code of 1986 is amended by adding at the end the 

5 following new paragraph: 

6 ‘‘(6) EXCEPTION FOR REHABILITATION CRED7 IT.—In the case of the rehabilitation credit with re8 spect to any applicable rural project (as defined in 

9 section 47(a)(3)), paragraph (1) shall not apply.’’. 

10 (b) TREATMENT IN CASE OF CREDIT ALLOWED TO

11 LESSEE.—Section 50(d) of such Code is amended by add12 ing at the end the following: ‘‘In the case of the rehabilita13 tion credit with respect to any applicable rural project (as 

14 defined in section 47(a)(3)), paragraph (5)(B) of the sec15 tion 48(d) referred to in paragraph (5) of this subsection 

16 shall not apply.’’. 

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

18 this section shall apply to property placed in service after 

19 December 31, 2024. 

Æ 


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