‘‘(2) HISTORIC
REHABILITATION
MORTGAGE
CREDIT
CERTIFICATE.—For purposes of this sub-
section, the term ‘historic rehabilitation mortgage
credit certificate’ means a certificate—
‘‘(A) issued to the taxpayer, in accordance
with procedures prescribed by the Secretary,
with respect to a certified rehabilitation,
‘‘(B) the face amount of which shall be
equal to the credit which would (but for this
subsection) be allowable under subsection (a) to
the taxpayer with respect to such rehabilitation,
‘‘(C) which may only be transferred by the
taxpayer to a lending institution in connection
with a loan—
‘‘(i) that is secured by the building
with respect to which the credit relates,
and
‘‘(ii) the proceeds of which may not be
used for any purpose other than the acqui-
sition or rehabilitation of such building,
and
‘‘(D) in exchange for which such lending
institution provides to the taxpayer—
‘‘(i) a reduction in the rate of interest
on the loan which results in interest pay-
ment reductions which are substantially
equivalent on a present value basis to the
face amount of such certificate, or
‘‘(ii) if the taxpayer so elects with re-
spect to a specified amount of the face
amount of such a certificate relating to a
building—
‘‘(I) which is a targeted area res-
idence (within the meaning of section
143(j)(1)), or
‘‘(II) which is located in an en-
terprise or empowerment zone,
a payment which is substantially equivalent
to such specified amount to be used to re-
duce the taxpayer’s cost of purchasing the
building (and only the remainder of such
face amount shall be taken into account
under clause (i)).
‘‘(3) USE OF CERTIFICATE BY LENDER.—The
amount of the credit specified in the certificate shall
be allowed to the lender only to offset the regular
tax (as defined in section 55(c)) of such lender. The
lender may carry forward all unused amounts under
this subsection until exhausted.
‘‘(i) 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 (or, if sub-
section (g) applies, the date of purchase of such
building by the taxpayer)—
‘‘(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,
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
section 50(a)(1)(B), deeming such table to be
amended—
‘‘(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’.
‘‘(j) BASIS ADJUSTMENTS.—For purposes of this
subtitle, if a credit is allowed under this section for any
expenditure with respect to any property (including any
purchase under subsection (g) and any transfer under sub-
section (h)), the increase in the basis of such property
which would (but for this subsection) result from such ex-
penditure shall be reduced by the amount of the credit
so allowed.
‘‘(k) 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.
‘‘(l) DENIAL OF DOUBLE BENEFIT.—No credit shall
be allowed under this section for any amount for which
credit is allowed under section 47.
‘‘(m) 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 AMENDMENT.—Subsection (a) of
section 1016 of such Code is amended by striking ‘‘and’’
at the end of paragraph (25), by striking the period at
the end of paragraph (26) and inserting ‘‘, and’’, and by
adding at the end the following new item:
‘‘(27) to the extent provided in section 24(j).’’
(c) CLERICAL AMENDMENT.—The table of sections
for subpart A of part IV of subchapter A of chapter 1
of such Code is amended by inserting after the item relat-
ing to section 23 the following new item:
‘‘Sec. 24. Historic homeownership rehabilitation credit.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply with respect to rehabilitations the
physical work on which begins after the date of enactment
of this Act.
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