‘‘(B) which (or any portion of which)— 
‘‘(i) is owned by the taxpayer, and 
‘‘(ii) is used (or will, within a reason-
able period, be used) by such taxpayer as 
his principal residence. 
‘‘(2) SUBSTANTIALLY
REHABILITATED.—The 
term ‘substantially rehabilitated’ has the meaning 
given such term by section 47(c)(1)(C). 
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used 
in section 121. 
‘‘(4) CERTIFIED HISTORIC STRUCTURE.— 
‘‘(A) IN
GENERAL.—The term ‘certified 
historic structure’ means any building (and its 
structural components) which— 
‘‘(i) is listed in the National Register, 
or 
‘‘(ii) is located in a registered historic 
district (as defined in section 47(c)(3)(B)) 
and is certified by the Secretary of the In-
terior as being of historic significance to 
the district. 
‘‘(5) REHABILITATION NOT COMPLETE BEFORE 
CERTIFICATION.—A rehabilitation shall not be treat-
VerDate Sep 11 2014 
00:01 Oct 06, 2016
Jkt 069200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H6267.IH
H6267
SSpencer on DSK7TPTVN1PROD with BILLS
ed as complete before the date of the certification re-
ferred to in subsection (c). 
‘‘(6) TENANT-STOCKHOLDER IN COOPERATIVE 
HOUSING
CORPORATION.—If the taxpayer holds 
stock as a tenant-stockholder (as defined in section 
216) in a cooperative housing corporation (as de-
fined in such section), such stockholder shall be 
treated as owning the house or apartment which the 
taxpayer is entitled to occupy as such stockholder. 
‘‘(e) CARRYFORWARD OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the limita-
tion imposed by section 26(a) for the taxable year reduced 
by the sum of the credits allowable under this subpart 
(other than this section and sections 25D and 1400C), 
such excess shall be carried to each of the 5 succeeding 
taxable years and, subject to rules similar to the rules of 
section 39(a)(2), shall be added to the credit allowable by 
subsection (a) for such succeeding taxable year. 
‘‘(f) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.—Qualified rehabilitation expenditures shall be 
treated for purposes of this section as made— 
‘‘(1) on the date the rehabilitation is completed, 
or 
VerDate Sep 11 2014 
00:01 Oct 06, 2016
Jkt 069200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H6267.IH
H6267
SSpencer on DSK7TPTVN1PROD with BILLS
‘‘(2) to the extent provided by the Secretary by 
regulation, when such expenditures are properly 
chargeable to capital account. 
Regulations under paragraph (2) shall include a rule simi-
lar to the rule under section 50(a)(2) (relating to recap-
ture if property ceases to qualify for progress expendi-
tures). 
‘‘(g) RECAPTURE.— 
‘‘(1) IN GENERAL.—If, before the end of the 5- 
year period beginning on the date on which the reha-
bilitation of the building is completed— 
‘‘(A) the taxpayer disposes of such tax-
payer’s interest in such building, or 
‘‘(B) such building ceases to be used as the 
principal residence of the taxpayer or ceases to 
be a certified historic structure, 
the taxpayer’s tax imposed by this chapter for the 
taxable year in which such disposition or cessation 
occurs shall be increased by the recapture percent-
age of the credit allowed under this section for all 
prior taxable years with respect to such rehabilita-
tion. 
‘‘(2) RECAPTURE PERCENTAGE.—For purposes 
of paragraph (1), the recapture percentage shall be 
determined in accordance with the table under sec-
VerDate Sep 11 2014 
00:01 Oct 06, 2016
Jkt 069200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H6267.IH
H6267
SSpencer on DSK7TPTVN1PROD with BILLS
tion 50(a)(1)(B), deeming such table to be amend-
ed— 
‘‘(A) by striking ‘If the property ceases to 
be investment credit property within—’ and in-
serting ‘If the disposition or cessation occurs 
within—’, and 
‘‘(B) in clause (i) by striking ‘One full year 
after placed in service’ and inserting ‘One full 
year after the taxpayer becomes entitled to the 
credit’. 
‘‘(3) TRANSFER BETWEEN SPOUSES OR INCI-
DENT TO DIVORCE.—In the case of any transfer de-
scribed in subsection (a) of section 1041 (relating to 
transfers between spouses or incident to divorce)— 
‘‘(A) the foregoing provisions of this sub-
section shall not apply, and 
‘‘(B) the same tax treatment under this 
subsection with respect to the transferred prop-
erty shall apply to the transferee as would have 
applied to the transferor. 
‘‘(h) BASIS ADJUSTMENTS.—For purposes of this 
subtitle, if a credit is allowed under this section for any 
expenditure with respect to any property, the increase in 
the basis of such property which would (but for this sub-
VerDate Sep 11 2014 
00:01 Oct 06, 2016
Jkt 069200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H6267.IH
H6267
SSpencer on DSK7TPTVN1PROD with BILLS
section) result from such expenditure shall be reduced by 
the amount of the credit so allowed. 
‘‘(i) PROCESSING FEES.—Any State may impose a 
fee for the processing of applications for the certification 
of any rehabilitation under this section provided that the 
amount of such fee is used only to defray expenses associ-
ated with the processing of such applications. 
‘‘(j) DENIAL OF DOUBLE BENEFIT.—No credit shall 
be allowed under this section for any amount for which 
credit is allowed under section 47. 
‘‘(k) REGULATIONS.—The Secretary shall prescribe 
such regulations as may be appropriate to carry out the 
purposes of this section, including regulations where less 
than all of a building is used as a principal residence and 
where more than 1 taxpayer use the same dwelling unit 
as their principal residence.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Subsection (a) of section 1016 of such Code 
is amended by striking ‘‘and’’ at the end of para-
graph (36), by striking the period at the end of 
paragraph (37) and inserting ‘‘, and’’, and by add-
ing at the end the following new item: 
‘‘(38) to the extent provided in section 
25E(h).’’. 
VerDate Sep 11 2014 
00:01 Oct 06, 2016
Jkt 069200
PO 00000
Frm 00009
Fmt 6652
Sfmt 6201
E:\BILLS\H6267.IH
H6267
SSpencer on DSK7TPTVN1PROD with BILLS