‘‘(I) the adjusted basis of such 
building (and its structural compo-
nents), or 
‘‘(II) $15,000. 
The adjusted basis of the building (and its 
structural components) shall be determined 
as of the beginning of the 1st day of such 
24-month period, or of the holding period 
of the building, whichever is later. For 
purposes of the preceding sentence, the de-
termination of the beginning of the holding 
period shall be made without regard to any 
reconstruction by the taxpayer in connec-
tion with the conversion. 
‘‘(ii) SPECIAL
RULE
FOR
PHASED 
CONVERSION.—In the case of any conver-
sion which may reasonably be expected to 
be completed in phases set forth in archi-
tectural plans and specifications completed 
before the conversion begins, clause (i) 
shall be applied by substituting ‘60-month 
period’ for ‘24-month period’. 
‘‘(iii) LESSEES.—The Secretary shall 
prescribe by regulation rules for applying 
this subparagraph to lessees. 
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‘‘(C) RECONSTRUCTION.—Conversion in-
cludes reconstruction. 
‘‘(2) QUALIFIED
CONVERSION
EXPENDITURES 
DEFINED.— 
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘qualified conversion ex-
penditures’ means any amount properly charge-
able to capital account— 
‘‘(i) for property for which deprecia-
tion is allowable under section 168 and 
which is— 
‘‘(I) nonresidential real property 
(as defined in section 168), 
‘‘(II) residential rental property 
(as defined in section 168), or 
‘‘(III) an addition or improve-
ment to property described in clause 
(i) or (ii), and 
‘‘(ii) in connection with the conversion 
of a qualified converted building. 
‘‘(B) CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—The term ‘qualified conversion ex-
penditures’ does not include— 
‘‘(i) STRAIGHT
LINE
DEPRECIATION 
MUST BE USED.—Any expenditure with re-
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spect to which the taxpayer does not use 
the straight line method over a recovery 
period determined under subsection (c) or 
(g) of section 168. The preceding sentence 
shall not apply to any expenditure to the 
extent the alternative depreciation system 
of section 168(g) applies to such expendi-
ture by reason of subparagraph (B) or (C) 
of section 168(g)(1). 
‘‘(ii) COST
OF
ACQUISITION.—The 
cost of acquiring any building or interest 
therein. 
‘‘(iii) ENLARGEMENTS.—Any expendi-
ture attributable to the enlargement of an 
existing building. 
‘‘(iv) TAX-EXEMPT USE PROPERTY.— 
Any expenditure in connection with the 
conversion of a building which is allocable 
to the portion of such property which is (or 
may reasonably be expected to be) tax-ex-
empt use property (within the meaning of 
section 168(h)), except that— 
‘‘(I) ‘50 percent’ shall be sub-
stituted for ‘35 percent’ in paragraph 
(1)(B)(iii) thereof, and 
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‘‘(II) an eligible educational insti-
tution 
(as 
defined 
in 
section 
529(e)(5)) shall not be treated as a 
tax-exempt entity. 
This clause shall not apply for purposes of 
determining whether a building has been 
substantially converted. 
‘‘(v) EXPENDITURES
OF
LESSEE.— 
Any expenditure of a lessee of a building 
if, on the date the conversion is completed, 
the remaining term of the lease (deter-
mined without regard to any renewal peri-
ods) is less than the recovery period deter-
mined under section 168(c). 
‘‘(f) PROGRESS EXPENDITURES.— 
‘‘(1) IN GENERAL.—In the case of any building 
to which this subsection applies, except as provided 
in paragraph (3)— 
‘‘(A) if such building is self-converted 
property, any qualified conversion expenditure 
with respect to such building shall be taken into 
account for the taxable year for which such ex-
penditure is properly chargeable to capital ac-
count with respect to such building, and 
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‘‘(B) if such building is not self-converted 
property, any qualified conversion expenditure 
with respect to such building shall be taken into 
account for the taxable year in which paid. 
‘‘(2) PROPERTY
TO
WHICH
SUBSECTION
AP-
PLIES.— 
‘‘(A) IN GENERAL.—This subsection shall 
apply to any building which is being converted 
by or for the taxpayer if— 
‘‘(i) the normal conversion period for 
such building is 2 years or more, and 
‘‘(ii) it is reasonable to expect that 
such building will be a qualified converted 
building in the hands of the taxpayer when 
it is placed in service. 
Clauses (i) and (ii) shall be applied on the basis 
of facts known as of the close of the taxable 
year of the taxpayer in which the conversion be-
gins (or, if later, at the close of the first taxable 
year to which an election under this subsection 
applies). 
‘‘(B) NORMAL CONVERSION PERIOD.—For 
purposes of subparagraph (A), the term ‘normal 
conversion period’ means the period reasonably 
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expected to be required for the conversion of 
the building— 
‘‘(i) beginning with the date on which 
physical work on the conversion begins (or, 
if later, the first day of the first taxable 
year to which an election under this sub-
section applies), and 
‘‘(ii) ending on the date on which it is 
expected that the property will be available 
for placing in service. 
‘‘(3) SPECIAL
RULES
FOR
APPLYING
PARA-
GRAPH (1).—For purposes of paragraph (1)— 
‘‘(A) COMPONENT PARTS, ETC.—Property 
which is to be a component part of, or is other-
wise to be included in, any building to which 
this subsection applies shall be taken into ac-
count— 
‘‘(i) at a time not earlier than the 
time at which it becomes irrevocably de-
voted to use in the building, and 
‘‘(ii) as if (at the time referred to in 
clause (i)) the taxpayer had expended an 
amount equal to that portion of the cost to 
the taxpayer of such component or other 
property which, for purposes of this sub-
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part, is properly chargeable (during such 
taxable year) to capital account with re-
spect to such building. 
‘‘(B) 
CERTAIN
BORROWING
DIS-
REGARDED.—Any amount borrowed directly or 
indirectly by the taxpayer from the person con-
verting the property for him shall not be treat-
ed as an amount expended for such conversion. 
‘‘(C) LIMITATION FOR BUILDINGS WHICH 
ARE NOT SELF-CONVERTED.— 
‘‘(i) IN GENERAL.—In the case of a 
building which is not self-converted, the 
amount taken into account under para-
graph (1)(B) for any taxable year shall not 
exceed the amount which represents the 
portion of the overall cost to the taxpayer 
of the conversion which is properly attrib-
utable to the portion of the conversion 
which is completed during such taxable 
year. 
‘‘(ii) 
CARRYOVER
OF
CERTAIN 
AMOUNTS.—In the case of a building which 
is not a self-converted building, if for the 
taxable year— 
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‘‘(I) the amount which (but for 
clause (i)) would have been taken into 
account under paragraph (1)(B) ex-
ceeds the limitation of clause (i), then 
the amount of such excess shall be 
taken into account under paragraph 
(1)(B) for the succeeding taxable 
year, or 
‘‘(II) the limitation of clause (i) 
exceeds the amount taken into ac-
count under paragraph (1)(B), then 
the amount of such excess shall in-
crease the limitation of clause (i) for 
the succeeding taxable year. 
‘‘(D) DETERMINATION OF PERCENTAGE OF 
COMPLETION.—The determination under sub-
paragraph (C)(i) of the portion of the overall 
cost to the taxpayer of the conversion which is 
properly attributable to conversion completed 
during any taxable year shall be made, under 
regulations prescribed by the Secretary, on the 
basis of engineering or architectural estimates 
or on the basis of cost accounting records. Un-
less the taxpayer establishes otherwise by clear 
and convincing evidence, the conversion shall be 
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deemed to be completed not more rapidly than 
ratably over the normal conversion period. 
‘‘(E) NO
PROGRESS
EXPENDITURES
FOR 
CERTAIN PRIOR PERIODS.—No qualified conver-
sion expenditures shall be taken into account 
under this subsection for any period before the 
first day of the first taxable year to which an 
election under this subsection applies. 
‘‘(F) NO
PROGRESS
EXPENDITURES
FOR 
PROPERTY FOR YEAR IT IS PLACED IN SERVICE, 
ETC.—In the case of any building, no qualified 
conversion expenditures shall be taken into ac-
count under this subsection for the earlier of— 
‘‘(i) the taxable year in which the 
building is placed in service, or 
‘‘(ii) the first taxable year for which 
recapture 
is 
required 
under 
section 
50(a)(2) with respect to such property, 
or for any taxable year thereafter. 
‘‘(4) SELF-CONVERTED
BUILDING.—For pur-
poses of this subsection, the term ‘self-converted 
building’ means any building if it is reasonable to 
believe that more than half of the qualified conver-
sion expenditures for such building will be made di-
rectly by the taxpayer. 
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‘‘(5) ELECTION.—This subsection shall apply to 
any taxpayer only if such taxpayer has made an 
election under this paragraph. Such an election shall 
apply to the taxable year for which made and all 
subsequent taxable years. Such an election, once 
made, may be revoked only with the consent of the 
Secretary. 
‘‘(g) DENIAL OF DOUBLE BENEFIT.—A credit shall 
not be allowed under this section for any qualified conver-
sion expenditure for which a credit is allowed under sec-
tion 42 or 47.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 49(a)(1)(C) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘and’’ at the 
end of clause (vii), by striking the period at the end 
of clause (viii) and inserting ‘‘, and’’, and by adding 
after clause (viii) the following new clause: 
‘‘(ix) the portion of the basis of any 
qualified converted property attributable to 
qualified conversion expenditures under 
section 48F.’’. 
(2) Section 50(a)(2)(E) of such Code is amend-
ed by striking ‘‘or 48E(e)’’ and inserting ‘‘48E(e), 
or 48F(e)’’. 
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(3) Section 50(b)(2) of such Code is amended 
by striking ‘‘and’’ at the end of subparagraph (C), 
by striking the period at the end of subparagraph 
(D) and inserting ‘‘; and’’, and by adding after sub-
paragraph (D) the following new subparagraph: 
‘‘(E) a qualified converted building to the 
extent of that portion of the basis which is at-
tributable to qualified conversion expendi-
tures.’’. 
(4) Section 50(b)(3) is amended by inserting ‘‘, 
or, solely with respect to the commercial-to-residen-
tial credit, an eligible educational institution (as de-
fined in section 529(e)(5))’’ after ‘‘section 521’’. 
(5) The table of sections for subpart E of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 48E the following new item: 
‘‘Sec. 48F. Commercial-to-residential credit.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to qualified conversion expendi-
tures incurred after the date of enactment in taxable years 
ending after such date. 
SEC. 3. COMMERCIAL TO RESIDENTIAL CONVERSION ADVI-
SORY BOARD. 
(a) ESTABLISHMENT.—Not later than 1 year after 
the date of the enactment of this Act, the Secretary of 
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Housing and Urban Development shall establish an advi-
sory board to carry out the duties described in subsection 
(c). 
(b) MEMBERSHIP.—The advisory board shall be com-
posed of not less than 20 members, appointed by the Sec-
retary. 
(c) DUTIES.—The advisory board shall provide 
logistical support, technical assistance, best practices, and 
training to State and local housing agencies with respect 
to— 
(1) identifying the best candidates for commer-
cial to residential conversions that are financially 
and logistically feasible and meet demonstrated 
housing demand in localities within the State or lo-
cality; 
(2) conducting floor plan and feasibility anal-
yses for prospective commercial to residential con-
versions; 
(3) expediting State or local regulatory proc-
esses and permitting processes to allow for faster 
approval and construction of commercial to residen-
tial conversions; 
(4) reforming of local regulatory and zoning 
barriers to allow for more commercial to residential 
conversions; and 
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(5) identifying Federal and State funding 
sources that can be used by localities to provide fi-
nancial assistance on commercial to residential con-
version projects. 
(d) AUTHORIZATION OF APPROPRIATIONS.—There is 
authorized to be appropriated to carry out this section 
$5,000,000 for each of fiscal years 2025 through 2029. 
Æ 
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