I
103D CONGRESS
2D SESSION
H. R. 5249
To amend the Internal Revenue Code of 1986 to provide a credit against
income tax to individuals who rehabilitate historic homes or who are
the first purchasers of rehabilitated historic homes for use as a principal
residence.
IN THE HOUSE OF REPRESENTATIVES
OCTOBER 7, 1994
Mr. ANDREWS of Texas (for himself, Mrs. KENNELLY, and Mr. SHAW) 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
a credit against income tax to individuals who rehabili-
tate historic homes or who are the first purchasers of
rehabilitated historic homes for use as a principal resi-
dence.
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 ‘‘Historic Homeowner-
ship Assistance Act’’.
SEC. 
2. 
HISTORIC 
HOMEOWNERSHIP 
REHABILITATION
CREDIT.
(a) IN GENERAL.—Subpart A of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 (relating to nonrefundable personal credits) is
amended by inserting after section 22 the following new
section:
‘‘SEC. 23. HISTORIC HOMEOWNERSHIP REHABILITATION
CREDIT.
‘‘(a) GENERAL RULE.—In the case of an individual,
there shall be allowed as a credit against the tax imposed
by this chapter for the taxable year an amount equal to
20 percent of the qualified rehabilitation expenditures
made by the taxpayer with respect to a qualified historic
home.
‘‘(b) DOLLAR LIMITATION.—
‘‘(1) IN GENERAL.—The credit allowed by sub-
section (a) with respect to any residence of a tax-
payer shall not exceed $50,000 ($25,000 in the case
of a married individual filing a separate return).
‘‘(2) CARRYFORWARD OF CREDIT UNUSED BY
REASON
OF
LIMITATION
BASED
ON
TAX
LIABIL-
ITY.—If the credit allowable under subsection (a) for
any taxable year exceeds the limitation imposed by
section 26(a) for such taxable year reduced by the
sum of the credits allowable under this subpart
(other than this section), such excess shall be carried
to the succeeding taxable year and added to the
credit allowable under subsection (a) for such suc-
ceeding taxable year.
‘‘(c) QUALIFIED REHABILITATION EXPENDITURE.—
For purposes of this section:
‘‘(1) IN GENERAL.—The term ‘qualified reha-
bilitation expenditure’ means any amount properly
chargeable to capital account—
‘‘(A) in connection with the certified reha-
bilitation of a qualified historic home, and
‘‘(B) for property for which depreciation
would be allowable under section 168 if the
qualified historic home were used in a trade or
business.
‘‘(2) 
CERTAIN
EXPENDITURES
NOT
IN-
CLUDED.—
‘‘(A) EXTERIOR.—Such term shall not in-
clude any expenditure in connection with the re-
habilitation of a building unless at least 5 per-
cent of the total expenditures made in the reha-
bilitation process are allocable to the rehabilita-
tion of the exterior of such building.
‘‘(B) OTHER
RULES
TO
APPLY.—Rules
similar to the rules of clauses (ii) and (iii) of
section 47(c)(2)(B) shall apply.
‘‘(3) MIXED USE OR MULTIFAMILY BUILDING.—
If only a portion of a building is used as the prin-
cipal residence of the taxpayer, only qualified reha-
bilitation expenditures which are properly allocable
to such portion shall be taken into account under
this section.
‘‘(d) CERTIFIED REHABILITATION.—For purposes of
this section:
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in this subsection, the term ‘certified rehabili-
tation’ has the meaning given such term by section
47(c)(2)(C).
‘‘(2) FACTORS
TO
BE
CONSIDERED
IN
THE
CASE OF TARGETED AREA RESIDENCES, ETC.—
‘‘(A) IN GENERAL.—For purposes of ap-
plying section 47(c)(2)(C) under this section
with respect to the rehabilitation of a building
to which this paragraph applies, consideration
shall be given to—
‘‘(i) the feasibility of preserving exist-
ing architectural and design elements of
the interior of such building,
‘‘(ii) the risk of further deterioration
or demolition of such building in the event
that certification is denied because of the
failure to preserve such interior elements,
and
‘‘(iii) the effects of such deterioration
or demolition on neighboring historic prop-
erties.
‘‘(B) BUILDINGS
TO
WHICH
THIS
PARA-
GRAPH APPLIES.—This paragraph shall apply
with respect to any building—
‘‘(i) any part of which is a targeted
area residence within the meaning of sec-
tion 143(j)(1), or
‘‘(ii) which is located within an enter-
prise or empowerment zone,
but shall not apply with respect to any building
which is listed in the National Register or a
State or local register of historic places.
‘‘(3) COOPERATIVE
AGREEMENTS.—The term
‘certified rehabilitation’ includes a certification made
in accordance with a cooperative agreement between
the Secretary of the Interior and a State Historic
Preservation Officer which authorizes such officer
(or a local government certified pursuant to section
101(c)(1) of the National Historic Preservation
Act), subject to such terms or conditions as may be
specified in such agreement, to certify the rehabilita-
tion of buildings within the jurisdiction of such offi-
cer (or local government) for purposes of this sec-
tion.
‘‘(e) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section:
‘‘(1) QUALIFIED
HISTORIC
HOME.—The term
‘qualified historic home’ means a certified historic
structure—
‘‘(A) which has been substantially rehabili-
tated, and
‘‘(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); except that,
in the case of any building described in subsection
(d)(2), clause (i)(I) thereof shall not apply.
‘‘(3) PRINCIPAL RESIDENCE.—The term ‘prin-
cipal residence’ has the same meaning as when used
in section 1034.
‘‘(4) CERTIFIED
HISTORIC
STRUCTURE.—The
term ‘certified historic structure’ has the meaning
given such term by section 47(c)(3).
‘‘(5) ENTERPRISE OR EMPOWERMENT ZONE.—
The term ‘enterprise or empowerment zone’ means
any area designated under section 1391 as an enter-
prise community or an empowerment zone.
‘‘(6) REHABILITATION NOT COMPLETE BEFORE
CERTIFICATION.—A rehabilitation shall not be treat-
ed as complete before the date of the certification re-
ferred to in subsection (d).
‘‘(7) LESSEES.—A taxpayer who leases his
principal residence shall, for purposes of this section,
be treated as the owner thereof if the remaining
term of the lease (as of the date determined under
regulations prescribed by the Secretary) is not less
than such minimum period as the regulations re-
quire.
‘‘(f) WHEN
EXPENDITURES
TAKEN
INTO
AC-
COUNT.—In the case of a building other than a building
to which subsection (g) applies, qualified rehabilitation ex-
penditures shall be treated for purposes of this section as
made—
‘‘(1) on the date the rehabilitation is completed,
or
‘‘(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) ALLOWANCE OF CREDIT FOR PURCHASE OF RE-
HABILITATED HISTORIC HOME.—
‘‘(1) IN GENERAL.—In the case of a qualified
purchased historic home, the taxpayer shall be treat-
ed as having made (on the date of purchase) the
qualified rehabilitation expenditures made by the
seller of such home.
‘‘(2) 
QUALIFIED
PURCHASED
HISTORIC
HOME.—For purposes of this subsection, the term
‘qualified purchased historic home’ means any sub-
stantially rehabilitated certified historic structure
purchased by the taxpayer if—
‘‘(A) the taxpayer is the first purchaser of
such structure after the date rehabilitation is
completed, and the purchase occurs within 5
years after such date,
‘‘(B) the structure (or a portion thereof)
will, within a reasonable period, be the principal
residence of the taxpayer,
‘‘(C) no credit was allowed to the seller
under this section or section 47 with respect to
such rehabilitation, and
‘‘(D) the taxpayer is furnished with such
information as the Secretary determines is nec-
essary to determine the credit under this sub-
section.
‘‘(h) HISTORIC REHABILITATION MORTGAGE CREDIT
CERTIFICATE.—
‘‘(1) IN GENERAL.—The taxpayer may elect, in
lieu of the credit otherwise allowable under this sec-
tion, to receive a historic rehabilitation mortgage
credit certificate. An election under this paragraph
shall be made—
‘‘(A) in the case of a building to which
subsection (g) applies, at the time of purchase,
or
‘‘(B) in any other case, at the time reha-
bilitation is completed.
‘‘(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 the taxpayer a reduction
(determined as provided in such regulations) in
the rate of interest on the loan.
‘‘(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 sec-
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’.
‘‘(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.—Proceeds of fees levied for
the processing of applications for the certification of any
rehabilitation under this section—
‘‘(1) shall be deposited in a trust fund, and
‘‘(2) subject to appropriations Acts, may be
used only to defray expenses associated with the
processing of such applications.