I 
118TH CONGRESS 
1ST SESSION 
H. R. 419 
To amend the Internal Revenue Code of 1986 to provide an investment 
credit for the conversion of office buildings into other uses. 
IN THE HOUSE OF REPRESENTATIVES 
JANUARY 20, 2023 
Mr. GOMEZ (for himself, Mr. LARSON of Connecticut, and Mr. KILDEE) intro-
duced the following bill; which was referred to the Committee on Ways 
and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to provide 
an investment credit for the conversion of office buildings 
into other uses. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Revitalizing Down-
towns Act’’. 
SEC. 2. CREDIT FOR QUALIFIED OFFICE CONVERSION. 
(a) IN GENERAL.—Section 46 of the Internal Rev-
enue Code of 1986 is amended by redesignating paragraph 
(7) as paragraph (8), by redesignating the paragraph (6) 
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relating to the advanced manufacturing investment credits 
as paragraph (7), by striking ‘‘and’’ at the end of para-
graph (7) (as so redesignated), by striking the period at 
the end of paragraph (8) (as so redesginated) and insert-
ing ‘‘, and’’, and by adding at the end the following new 
paragraph: 
‘‘(9) the qualified office conversion credit.’’. 
(b) AMOUNT OF CREDIT.—Subpart E of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code 
of 1986 is amended by inserting after section 48E the fol-
lowing new section: 
‘‘SEC. 48F. QUALIFIED OFFICE CONVERSION CREDIT. 
‘‘(a) IN GENERAL.—For purposes of section 46, the 
qualified office conversion credit for any taxable year is 
equal to 20 percent of the qualified conversion expendi-
tures with respect to a qualified converted building. 
‘‘(b) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.— 
‘‘(1) IN
GENERAL.—Qualified conversion ex-
penditures with respect to any qualified converted 
building shall be taken into account for the taxable 
year in which such qualified converted building is 
placed in service. 
‘‘(2) COORDINATION WITH SUBSECTION (d).— 
The amount which would (but for this subpara-
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graph) be taken into account under subparagraph 
(A) with respect to any qualified converted building 
shall be reduced (but not below zero) by any amount 
of qualified conversion expenditures taken into ac-
count under subsection (d) by the taxpayer or a 
predecessor of the taxpayer (or, in the case of a sale 
and leaseback described in section 50(a)(2)(C), by 
the lessee), to the extent any amount so taken into 
account has not been required to be recaptured 
under section 50(a). 
‘‘(c) DEFINITIONS.— 
‘‘(1) QUALIFIED CONVERTED BUILDING.— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
converted building’ means any building (and its 
structural components) if— 
‘‘(i) prior to conversion, such building 
was nonresidential real property (as de-
fined in section 168) which was leased, or 
available for lease, to office tenants, 
‘‘(ii) such building has been substan-
tially converted from an office use to a res-
idential, retail, or other commercial use, 
‘‘(iii) in the case of conversion to a 
residential use, such converted building 
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meets the requirements of subparagraph 
(D), 
‘‘(iv) such building was initially placed 
in service at least 25 years before the be-
ginning of the conversion, and 
‘‘(v) depreciation (or amortization in 
lieu of depreciation) is allowable with re-
spect to such building. 
‘‘(B) SUBSTANTIALLY
CONVERTED
DE-
FINED.— 
‘‘(i) IN
GENERAL.—For purposes of 
paragraph (1)(A)(ii), a building shall be 
treated as having been substantially con-
verted only if the qualified conversion ex-
penditures during the 24-month period se-
lected by the taxpayer (at the time and in 
the manner prescribed by regulation) and 
ending with or within the taxable year ex-
ceed the greater of— 
‘‘(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 
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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. 
‘‘(C) RECONSTRUCTION.—Conversion in-
cludes reconstruction. 
‘‘(D) RESIDENTIAL CONVERSION REQUIRE-
MENTS.— 
‘‘(i) IN GENERAL.—A building meets 
the requirements of this subparagraph if— 
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‘‘(I) 20 percent or more of the 
residential units are both rent-re-
stricted and occupied by individuals 
whose income is 80 percent or less of 
area median gross income, or 
‘‘(II) such building is subject to a 
written binding State or local agree-
ment with respect to the provision or 
financing of affordable housing and 
such agreement is documented in such 
form and manner as the Secretary 
may provide. 
‘‘(ii) RENT
AND
INCOME
LIMITA-
TION.—For purposes of this subparagraph, 
rules similar to the rules of subsection (g) 
of section 42 shall apply to determine 
whether a unit is rent-restricted, treatment 
of units occupied by individuals whose in-
comes rise above the limit, and the treat-
ment of units where Federal rental assist-
ance is reduced as tenant’s income in-
creases. 
‘‘(2) QUALIFIED
CONVERSION
EXPENDITURES 
DEFINED.— 
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‘‘(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-
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 
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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 
‘‘(II) an eligible educational insti-
tution 
(as 
defined 
in 
section 
529(e)(5)) shall not be treated as a 
tax-exempt entity. 
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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). 
‘‘(d) 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 
‘‘(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. 
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‘‘(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 
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 
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