I 
109TH CONGRESS 
1ST SESSION H. R. 3159
To amend the Internal Revenue Code of 1986 to modify the rehabilitation 
credit and the low-income housing credit. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 30, 2005
Mr. ENGLISH of Pennsylvania (for himself, Mr. JEFFERSON, Mr. MCCRERY, 
Mr. TURNER, Mrs. JONES of Ohio, Mrs. JOHNSON of Connecticut, Mr. 
CARNAHAN, Mr. MCGOVERN, Mr. UDALL of Colorado, Mr. JENKINS, Mr. 
MILLER of North Carolina, Mr. MILLER of Florida, Mr. ANDREWS, Mr. 
MENENDEZ, Mr. NEAL of Massachusetts, Mr. WOLF, Mr. LEWIS of Geor-
gia, Mr. ROSS, Mr. BAKER, Mr. PAUL, Mr. DAVIS of Alabama, Ms. 
HERSETH, and Mr. BOEHLERT) introduced the following bill; which was 
referred to the Committee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to modify 
the rehabilitation credit and the low-income housing credit.
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 ‘‘Community Restora-
tion and Revitalization Act of 2005’’.
SEC. 2. MODIFICATIONS TO RULES FOR DETERMINING THE 
APPLICABLE 
PERCENTAGE 
FOR 
CERTAIN 
BUILDINGS 
ELIGIBLE 
FOR 
LOW-INCOME 
HOUSING CREDIT. 
(a) IN GENERAL.—Subparagraph (B) of section 
42(b)(2) of the Internal Revenue Code of 1986 (relating 
to the method of prescribing the applicable percentage) is 
amended by striking ‘‘and’’ at the end of clause (i), by 
striking the period at the end of clause (ii) and inserting 
a comma, and by adding at the end the following new 
clauses: 
‘‘(iii) 87.5 percent of the qualified 
basis of a building described in paragraph 
(1)(A), if the basis of the building is sub-
ject to the basis adjustment for rehabilita-
tion credit property required under section 
50(c), and 
‘‘(iv) 37.5 percent of the qualified 
basis of a building described in paragraph 
(1)(B), if the basis of the building is sub-
ject to the basis adjustment for rehabilita-
tion credit property required under section 
50(c).’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to—
(1) housing credit dollar amounts allocated 
after December 31, 2004, and 
(2) buildings placed in service after such date 
to the extent paragraph (1) of section 42(h) of the 
Internal Revenue Code of 1986 does not apply to 
any building by reason of paragraph (4) thereof, but 
only with respect to bonds issued after such date. 
SEC. 3. MODIFICATION TO BASIS ADJUSTMENT RULE. 
(a) IN GENERAL.—Paragraph (3) of subsection 50(c) 
of the Internal Revenue Code of 1986 (relating to special 
rules for determining basis) is amended by striking ‘‘en-
ergy credit or reforestation credit’’ and inserting ‘‘energy 
credit, reforestation credit, or rehabilitation credit’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to taxable years beginning after 
December 31, 2004. 
SEC. 4. INCREASE IN THE REHABILITATION CREDIT FOR 
CERTAIN SMALLER PROJECTS. 
(a) IN GENERAL.—Section 47 of the Internal Rev-
enue Code of 1986 (relating to rehabilitation credit) is 
amended by adding at the end the following new sub-
section: 
‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALLER 
PROJECTS.—
‘‘(1) IN GENERAL.—In the case of any qualified 
rehabilitated building or portion thereof—
‘‘(A) which is placed in service after the 
date of the enactment of this subsection, and 
‘‘(B) which is a smaller project, 
subsection (a)(2) shall be applied by substituting ‘40 
percent’ for ‘20 percent’ with respect to qualified re-
habilitation expenditures not over $1,000,000, and 
‘20 percent’ with respect to qualified rehabilitation 
expenditures of over $1,000,000. 
‘‘(2) SMALLER PROJECT DEFINED.—For pur-
poses of this section, the term ‘smaller project’ 
means any qualified rehabilitated building or portion 
thereof as to which—
‘‘(A) the qualified rehabilitation expendi-
tures reported by the taxpayer for purposes of 
calculating the credit under this section are not 
over $2,000,000, except that for purposes of 
making this determination, qualified rehabilita-
tion expenditures attributable to the provisions 
of subsection (c)(2)(E) shall be disregarded, 
and 
‘‘(B) no credit was allowable under this 
section during any of the two prior taxable 
years, provided that this subparagraph shall not
apply to any building as to which the election 
provided for in subsection (d)(5) shall have 
been made. 
‘‘(3) COORDINATION WITH SUBSECTION (d).—
With respect to any building as to which the election 
provided for in subsection (d)(5) shall have been 
made, such building shall be deemed a smaller 
project only if the qualified rehabilitation expendi-
tures reported by the taxpayer for purposes of calcu-
lating the credit under this section with respect to 
the taxable years to which such election shall apply 
are, in the aggregate, not over $2,000,000.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 5. USE FOR LODGING NOT TO DISQUALIFY FOR REHA-
BILITATION CREDIT PROPERTY WHICH IS 
NOT A CERTIFIED HISTORIC STRUCTURE. 
(a) IN GENERAL.—Subparagraph (C) of section 
50(b)(2) of the Internal Revenue Code of 1986 (relating 
to property eligible for the investment credit) is amended 
by striking ‘‘certified historic structure’’ and inserting 
‘‘qualified rehabilitated building’’.
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 6. DATE BY WHICH BUILDING MUST BE FIRST PLACED 
IN SERVICE. 
(a) IN GENERAL.—Subparagraph (B) of section 
47(c)(1) of the Internal Revenue Code of 1986 (relating 
to the date by which building must be first placed in serv-
ice) is amended—
(1) by striking ‘‘BUILDING
MUST
BE
FIRST 
PLACED IN SERVICE BEFORE 1936’’ and inserting 
‘‘DATE
BY
WHICH
BUILDING
MUST
FIRST
BE 
PLACED IN SERVICE’’, and 
(2) by striking ‘‘before 1936’’ at the end of the 
subparagraph and inserting ‘‘no less than 50 years 
prior to the year in which qualified rehabilitation ex-
penditures are taken into account under subsection 
(b)(1)’’. 
(b) EFFECTIVE DATE.—The amendments made by 
section shall apply to property placed in service after the 
date of the enactment of this Act. 
SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 
USE PROPERTY. 
(a) 
IN
GENERAL.—Clause 
(I) 
of 
section 
47(c)(2)(B)(v) of the Internal Revenue Code of 1986 (re-
lating to tax-exempt use property) is amended by striking 
the period at the end and inserting ‘‘(1)(B)(ii)(IV), except 
that for purposes of this clause, ‘50 percent’ shall be sub-
stituted 
for 
‘35 
percent’ 
in 
applying 
section 
168(h)(1)(B)(iii))’’. 
(b) EFFECTIVE DATE.—The amendments made by 
section shall apply to property placed in service after the 
date of the enactment of this Act. 
SEC. 8. INCREASE IN REHABILITATION CREDIT FOR BUILD-
INGS IN HIGH COST AREAS. 
(a) IN GENERAL.—Paragraph (2) of subsection 47(c) 
of the Internal Revenue Code of 1986 (relating to the defi-
nition of qualified rehabilitation expenditures) is amended 
by adding at the end the following new subparagraph: 
‘‘(E) INCREASE IN CREDIT FOR BUILDINGS 
IN HIGH COST AREAS.—
‘‘(i) IN GENERAL.—In the case of any 
qualified rehabilitated building located in a 
qualified census tract or difficult develop-
ment area which is designated for purposes 
of this subparagraph, the qualified reha-
bilitation expenditures for purposes of this 
section shall be 130 percent of such ex-
penditures determined without regard to 
this subparagraph.
‘‘(ii) RULES.—For purposes of clause 
(i), rules similar to the rules of section 
42(d)(5)(C) (excluding clause (i) thereof) 
shall be applied.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
the date of the enactment of this Act. 
SEC. 9. RECAPTURE OF REHABILITATION CREDIT FOR CER-
TIFIED HISTORIC STRUCTURE NOT TRIG-
GERED BY CONDOMINIUM TRANSACTION. 
(a) IN GENERAL.—Subsection (a) of section 50 of the 
Internal Revenue Code of 1986 (relating to recapture of 
credits upon disposition of property) is amended by adding 
at the end thereof the following new paragraph: 
‘‘(6) SPECIAL RULE FOR CERTIFIED HISTORIC 
STRUCTURES.—In the case of the rehabilitation 
credit determined under section 47(a)(2), para-
graphs (1) and (2) shall not apply to a transaction 
in which a portion of the building is transferred as 
a condominium unit.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to transfers after the date of enact-
ment of this Act.
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