‘‘(B) APPLICABLE RURAL PROJECT.— 
‘‘(i) IN
GENERAL.—For purposes of 
this section, the term ‘applicable rural 
project’ means a qualified rehabilitated 
building which is located in a rural area. 
‘‘(ii) LIMITATION.—In the case of any 
applicable rural project, the total amount 
of qualified rehabilitation expenditures 
which may be taken into account under 
this section with respect to such project 
may not exceed $5,000,000. 
‘‘(iii) RURAL AREA.—For purposes of 
this paragraph, the term ‘rural area’ 
means any area other than— 
‘‘(I) a city or town that has a 
population of greater than 50,000 in-
habitants, or 
‘‘(II) the urbanized area contig-
uous and adjacent to a city or town 
described in subclause (I), as defined 
by the Bureau of the Census based on 
the latest decennial census of the 
United States. 
‘‘(C) AFFORDABLE HOUSING PROJECT.— 
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‘‘(i) IN
GENERAL.—For purposes of 
this paragraph, the term ‘affordable hous-
ing project’ means a project— 
‘‘(I) in which— 
‘‘(aa) not less than 50 per-
cent of the aggregate square feet 
of the completed project is hous-
ing, and 
‘‘(bb) with respect to the 
housing described in item (aa), 
not less than 50 percent of the 
aggregate square feet of such 
housing— 
‘‘(AA) is new affordable 
housing, or 
‘‘(BB) continues to pro-
vide affordable housing, or 
‘‘(II) in which not less than 33 
percent of the aggregate square feet 
of the completed project— 
‘‘(aa) 
is 
new 
affordable 
housing, or 
‘‘(bb) continues to provide 
affordable housing. 
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‘‘(ii) 
AFFORDABLE
HOUSING.—For 
purposes of this paragraph, the term ‘af-
fordable housing’ means a decent, safe, 
and sanitary dwelling, apartment, or other 
living accommodation for a household 
whose income does not exceed 80 percent 
of the median income for the market area 
(as defined by the Secretary of Housing 
and Urban Development under section 8 of 
the United States Housing Act of 1937 
(42 U.S.C. 1437f)). 
‘‘(4) TRANSFER OF CREDIT FOR APPLICABLE 
RURAL PROJECTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B) and such regulations or other guid-
ance as the Secretary may provide, the taxpayer 
may transfer all or a portion of the credit deter-
mined under paragraph (3) for an applicable 
rural project. 
‘‘(B) CERTIFICATION.— 
‘‘(i) IN GENERAL.—A transfer under 
subparagraph (A) shall be accompanied by 
a certificate which includes— 
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‘‘(I) the certification for the cer-
tified historic structure referred to in 
subsection (c)(3), 
‘‘(II) the taxpayer’s name, ad-
dress, tax identification number, date 
of project completion, and the amount 
of credit being transferred, 
‘‘(III) the transferee’s name, ad-
dress, tax identification number, and 
the amount of credit being trans-
ferred, and 
‘‘(IV) such other information as 
may be required by the Secretary. 
‘‘(ii) TRANSFERABILITY OF CERTIFI-
CATE.—A certificate issued under this sec-
tion to a taxpayer shall be transferable to 
any other taxpayer. 
‘‘(C) TAX TREATMENT RELATING TO CER-
TIFICATE.— 
‘‘(i) 
DISALLOWANCE
OF
DEDUC-
TION.—No deduction shall be allowed for 
the amount of consideration paid or in-
curred by the transferee. 
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‘‘(ii) ALLOWANCE
OF
CREDIT.—The 
amount of credit transferred under sub-
paragraph (A)— 
‘‘(I) shall not be allowed to the 
transferor for any taxable year, and 
‘‘(II) shall be allowable to the 
transferee as a credit determined 
under this section for the taxable year 
of the transferee in which such credit 
is transferred. 
‘‘(iii) 
EXCLUSION.—Gross 
income 
shall not include any amount received in 
connection with the transfer of the certifi-
cate. 
‘‘(D) RECAPTURE
AND
OTHER
SPECIAL 
RULES.—The taxpayer who claims a credit de-
termined under this section by reason of a 
transfer of an amount of credit under subpara-
graph (A) with respect to an applicable rural 
project shall be treated as the taxpayer with re-
spect to such project for purposes of section 50. 
‘‘(E) 
INFORMATION
REPORTING.—The 
transferor and the transferee shall each make 
such reports regarding the transfer of an 
amount of credit under paragraph (A) and con-
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taining such information as the Secretary may 
require. The reports required by this subsection 
shall be filed at such time and in such manner 
as may be required by the Secretary. 
‘‘(F) REGULATIONS.—The Secretary shall 
prescribe regulations or other guidance to carry 
out this paragraph in a manner which is con-
sistent with applicable requirements with re-
spect to transfer of credits under section 
6418.’’. 
(b) RECAPTURE FOR FAILURE TO COMPLY WITH 
AFFORDABLE HOUSING REQUIREMENTS.— 
(1) IN GENERAL.—Section 50(a) of the Internal 
Revenue Code of 1986 is amended— 
(A) 
by 
redesignating 
paragraphs 
(4) 
through (6) as paragraphs (5) through (7), re-
spectively, and 
(B) by inserting after paragraph (3) the 
following new paragraph: 
‘‘(4) FAILURE TO COMPLY WITH AFFORDABLE 
HOUSING
REQUIREMENTS
UNDER
REHABILITATION 
CREDIT.— 
‘‘(A) IN GENERAL.—In the case of any ap-
plicable rural project which is an affordable 
housing project (as such terms are defined in 
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section 47(a)(3)) which is eligible for the reha-
bilitation credit under section 47(a), if such 
project violates the requirements under section 
47(a)(3)(C) before the close of the recapture 
period (as described in paragraph (1)), then the 
tax under this chapter for the taxable year in 
which such violation occurs shall be increased 
by 100 percent of the aggregate decrease in the 
credits allowed under section 38 for all prior 
taxable years which would have resulted solely 
from reducing to zero any credit determined 
under section 46 which is attributable to the re-
habilitation credit under section 47(a) with re-
spect to such project. 
‘‘(B) 
EXCEPTION.—Subparagraph 
(A) 
shall not apply if the taxpayer demonstrates to 
the satisfaction of the Secretary that the viola-
tion 
of 
the 
requirements 
under 
section 
47(a)(3)(C) has been rectified within 45 days of 
a determination and notice by the Secretary. 
‘‘(C) REGULATIONS AND GUIDANCE.—The 
Secretary shall issue such regulations or other 
guidance as the Secretary determines necessary 
or appropriate to carry out the purposes of this 
paragraph, including regulations or other guid-
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ance which provide for requirements for record-
keeping or information reporting for purposes 
of administering the requirements of this para-
graph.’’. 
(2) CONFORMING AMENDMENTS.— 
(A) Section 50(a)(5) of such Code, as re-
designated by paragraph (1), is amended— 
(i) by striking ‘‘or any applicable 
transaction to which paragraph (3)(A) ap-
plies’’ and inserting ‘‘any applicable trans-
action to which paragraph (3)(A) applies, 
or any violation to which paragraph (4)(A) 
applies’’, and 
(ii) by striking ‘‘cessation or applica-
ble transaction’’ and inserting ‘‘cessation, 
applicable transaction, or violation’’. 
(B) Section 50(a)(7)(C) of such Code, as 
redesignated by paragraph (1), is amended by 
striking ‘‘or (3)’’ and inserting ‘‘(3), or (4)’’. 
(C) Section 1371(d)(1) of such Code is 
amended by striking ‘‘section 50(a)(5)’’ and in-
serting ‘‘section 50(a)(6)’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
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SEC. 3. ELIMINATION OF REHABILITATION CREDIT BASIS 
ADJUSTMENT. 
(a) IN GENERAL.—Section 50(c) of the Internal Rev-
enue Code of 1986 is amended by adding at the end the 
following new paragraph: 
‘‘(6) EXCEPTION FOR REHABILITATION CRED-
IT.—In the case of the rehabilitation credit with re-
spect to any applicable rural project (as defined in 
section 47(a)(3)), paragraph (1) shall not apply.’’. 
(b) TREATMENT IN CASE OF CREDIT ALLOWED TO 
LESSEE.—Section 50(d) of such Code is amended by add-
ing at the end the following: ‘‘In the case of the rehabilita-
tion credit with respect to any applicable rural project (as 
defined in section 47(a)(3)), paragraph (5)(B) of the sec-
tion 48(d) referred to in paragraph (5) of this subsection 
shall not apply.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to property placed in service after 
December 31, 2025. 
Æ 
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