Historic Tax Credit Growth and Opportunity Act of 2023

To amend the Internal Revenue Code of 1986 to improve the historic rehabilitation tax credit, and for other purposes. 1. Short title This Act may be cited as the Historic Tax Credit Growth and Opportunity Act of 2023 2. Increase in the rehabilitation credit for certain small projects (a) In general Section 47 (e) Special rule regarding certain small projects (1) In general In the case of any qualified rehabilitated building or portion thereof— (A) which is placed in service after the date of the enactment of this subsection, and (B) which is a small project, subsection (a)(2) shall be applied by substituting 30 percent 20 percent (2) Maximum credit The credit under this section (after application of this subsection) with respect to any project for all taxable years shall not exceed $750,000. (3) Small project (A) In general For purposes of this subsection, the term small project (i) the total qualified rehabilitation expenditures taken into account for purposes of this section with respect to the rehabilitation do not exceed $3,750,000, and (ii) no credit was allowed under this section for either of the two immediately preceding taxable years with respect to such building. (B) Progress expenditures Credit allowable by reason of subsection (d) shall not be taken into account under subparagraph (A)(ii). . (b) Effective date The amendment made by this section shall apply to periods after the date of the enactment of this Act, under rules similar to the rules of section 48(m) 3. Increasing the type of buildings eligible for rehabilitation (a) In general Section 47(c)(1)(B)(i)(I) 50 percent of the adjusted basis (b) Effective date The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2022. 4. Elimination of rehabilitation credit basis adjustment (a) In general Section 50(c) (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) of such Code 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. 5. Modifications regarding certain tax-exempt use property (a) In general Section 47(c)(2)(B)(v) (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), 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 property placed in service after the date of the enactment of this Act.

Summary: Historic Tax Credit Growth and Opportunity Act of  2023 This bill increases the rehabilitation tax credit and modifies certain requirements for the credit. The bill increases the rate of the credit to 30%  for small projects (rehabilitation expenditures not exceeding $3.75 million) and caps the credit for such projects at $750,000 for all taxable years. 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 the eligibility of tax-exempt use property for the credit.