Historic Tax Credit Growth and Opportunity Act of 2023

Subjects: Taxation

Summary:  <p><strong>Historic Tax Credit Growth and Opportunity Act of 2023</strong></p> <p>This bill increases the rehabilitation tax credit and modifies certain requirements for the credit. </p> <p> The bill increases the rate of the credit for qualified rehabilitation expenditures in taxable years beginning after December 31, 2020, and before January 1, 2028, after which the rate reverts to 20%. </p> <p>The bill increases the rate of the credit to 30% for certain small projects whose qualified rehabilitation expenditures do not exceed $2.5 million. </p> <p>The bill also expands the types of buildings eligible for rehabilitation by decreasing the rehabilitation threshold from 100% to 50% of project expenses. It also eliminates the basis adjustment requirement for the credit and modifies rules relating to tax-exempt use property eligible for the credit.</p>

<html><body><pre>[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1785 Introduced in House (IH)]

&lt;DOC&gt;






118th CONGRESS
  1st Session
                                H. R. 1785

To amend the Internal Revenue Code of 1986 to modify the rehabilitation 
 credit for certain small projects, to eliminate the requirement that 
  the taxpayer's basis in a building be reduced by the amount of the 
rehabilitation credit determined with respect to such building, and for 
                            other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 24, 2023

Mr. LaHood (for himself, Mr. Blumenauer, Mr. Kelly of Pennsylvania, Ms. 
    Sewell, Mr. Turner, and Mr. Higgins of New York) 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 for certain small projects, to eliminate the requirement that 
  the taxpayer's basis in a building be reduced by the amount of the 
rehabilitation credit determined with respect to such building, and for 
                            other purposes.

    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 ``Historic Tax Credit Growth and 
Opportunity Act of 2023''.

SEC. 2. INCREASE IN REHABILITATION CREDIT.

    (a) In General.--Section 47(a) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new paragraph:
            ``(3) Increased percentage for qualified rehabilitation 
        expenditures before 2028.--
                    ``(A) In general.--In the case of any qualified 
                rehabilitated building with respect to which there are 
                qualified rehabilitation expenditures paid or incurred 
                in any taxable year beginning after December 31, 2020, 
                and before January 1, 2028--
                            ``(i) paragraph (2) shall be applied by 
                        substituting `the applicable percentage' for 
                        `20 percent' with respect to such expenditures, 
                        and
                            ``(ii) the ratable share of such 
                        expenditures shall be determined separately 
                        under paragraph (2) by applying the applicable 
                        percentage for each such taxable year to the 
                        expenditures for each such taxable year.
                    ``(B) Applicable percentage.--For purposes of this 
                paragraph, the term `applicable percentage' means the 
                percentage determined in accordance with the following 
                table:


------------------------------------------------------------------------
                                                          The applicable
    ``In the case of a taxable   year beginning in:      percentage is--
------------------------------------------------------------------------
2020 through 2025......................................               30
2026...................................................               26
2027...................................................               23
2028 and thereafter....................................            20''.
------------------------------------------------------------------------

    (b) Effective Date.--The amendments made by this section shall 
apply to property placed in service after December 31, 2023.

SEC. 3. INCREASE IN THE REHABILITATION CREDIT FOR CERTAIN SMALL 
              PROJECTS.

    (a) In General.--Section 47 is amended by adding at the end the 
following new subsection:
    ``(e) Special Rule Regarding Certain Small Projects.--
            ``(1) In general.--In the case of any small project--
                    ``(A) the percentage under subsection (a)(2) shall 
                be 30 percent, and
                    ``(B) the qualified rehabilitation expenditures 
                taken into account under this section with respect to 
                such project shall not exceed $2,500,000.
            ``(2) Small project.--For purposes of this subsection, the 
        term `small project' means the rehabilitation of any qualified 
        rehabilitated building if--
                    ``(A) the qualified rehabilitation expenditures 
                taken into account under this section (or which would 
                be so taken into account but for paragraph (1)(B)) with 
                respect to such rehabilitation do not exceed 
                $3,750,000,
                    ``(B) no credit was allowed under this section with 
                respect to such building to any taxpayer for either of 
                the 2 taxable years immediately preceding the first 
                taxable year in which expenditures described in 
                subparagraph (A) were paid or incurred, and
                    ``(C) the taxpayer elects (at such time and manner 
                as the Secretary may provide) to have this subsection 
                apply with respect to such rehabilitation.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2023.

SEC. 4. MODIFICATION OF DEFINITION OF SUBSTANTIALLY REHABILITATED.

    (a) In General.--Section 47(c)(1)(B)(i)(I) is amended by inserting 
``50 percent of'' before ``the adjusted basis''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to determinations with respect to 24-month periods (referred to 
in clause (i) of section 47(c)(1)(B) of the Internal Revenue Code of 
1986) and 60-month periods (referred to in clause (ii) of such section) 
which begin after the date of the enactment of this Act.

SEC. 5. ELIMINATION OF REHABILITATION CREDIT BASIS ADJUSTMENT.

    (a) In General.--Section 50(c) is amended by adding at the end the 
following new paragraph:
            ``(6) Exception for rehabilitation credit.--In the case of 
        the rehabilitation credit, paragraph (1) shall not apply.''.
    (b) Treatment in Case of Credit Allowed to Lessee.--Section 50(d) 
is amended by adding at the end the following: ``In the case of the 
rehabilitation credit, 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 the date of the enactment of 
this Act.

SEC. 6. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT USE PROPERTY.

    (a) In General.--Section 47(c)(2)(B)(v) is amended by adding at the 
end the following new subclause:
                                    ``(III) Disqualified lease rules to 
                                apply only in case of government 
                                entity.--For purposes of subclause (I), 
                                except in the case of a tax-exempt 
                                entity described in section 
                                168(h)(2)(A)(i) (determined without 
                                regard to the last sentence of section 
                                168(h)(2)(A)), the determination of 
                                whether property is tax-exempt use 
                                property shall be made under section 
                                168(h) without regard to whether the 
                                property is leased in a disqualified 
                                lease (as defined in section 
                                168(h)(1)(B)(ii)).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to leases entered into after the date of the enactment of this 
Act.
                                 &lt;all&gt;
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