Historic Tax Credit Growth and Opportunity Act of 2021

I 117TH CONGRESS 1ST SESSION H. R. 2294 To amend the Internal Revenue Code of 1986 to modify the rehabilitation credit for certain small projects, to eliminate the requirement that the taxpayer’s basis in a building be reduced by the amount of the rehabilita- tion credit determined with respect to such building, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 1, 2021 Mr. BLUMENAUER (for himself, Mr. LAHOOD, Ms. SEWELL, and Mr. HIGGINS of New York) 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 for certain small projects, to eliminate the requirement that the taxpayer’s basis in a building be reduced by the amount of the rehabilitation credit determined with respect to such building, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Historic Tax Credit 4 Growth and Opportunity Act of 2021’’. 5 VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2294 IH SEC. 2. INCREASE IN REHABILITATION CREDIT. 1 (a) IN GENERAL.—Section 47(a) of the Internal Rev- 2 enue Code of 1986 is amended by adding at the end the 3 following new paragraph: 4 ‘‘(3) INCREASED PERCENTAGE FOR QUALIFIED 5 REHABILITATION EXPENDITURES BEFORE 2027.— 6 ‘‘(A) IN GENERAL.—In the case of any 7 qualified rehabilitated building with respect to 8 which there are qualified rehabilitation expendi- 9 tures paid or incurred in any taxable year be- 10 ginning after December 31, 2019, and before 11 January 1, 2027— 12 ‘‘(i) paragraph (2) shall be applied by 13 substituting ‘the applicable percentage’ for 14 ‘20 percent’ with respect to such expendi- 15 tures, and 16 ‘‘(ii) the ratable share of such expend- 17 itures shall be determined separately under 18 paragraph (2) by applying the applicable 19 percentage for each such taxable year to 20 the expenditures for each such taxable 21 year. 22 ‘‘(B) APPLICABLE PERCENTAGE.—For 23 purposes of this paragraph, the term ‘applicable 24 percentage’ means the percentage determined in 25 accordance with the following table: 26 VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2294 IH ‘‘In the case of a taxable year beginning in: The applicable percentage is— 2020 through 2024 ................................................................... 30 2025 .......................................................................................... 26 2026 .......................................................................................... 23 2027 and thereafter .................................................................. 20’’. (b) EFFECTIVE DATE.—The amendments made by 1 this section shall apply to property placed in service after 2 March 31, 2021. 3 SEC. 3. INCREASE IN THE REHABILITATION CREDIT FOR 4 CERTAIN SMALL PROJECTS. 5 (a) IN GENERAL.—Section 47 is amended by adding 6 at the end the following new subsection: 7 ‘‘(e) SPECIAL RULE REGARDING CERTAIN SMALL 8 PROJECTS.— 9 ‘‘(1) IN GENERAL.—In the case of any small 10 project— 11 ‘‘(A) the percentage under subsection 12 (a)(2) shall be 30 percent, and 13 ‘‘(B) the qualified rehabilitation expendi- 14 tures taken into account under this section with 15 respect to such project shall not exceed 16 $2,500,000. 17 ‘‘(2) SMALL PROJECT.—For purposes of this 18 subsection, the term ‘small project’ means the reha- 19 bilitation of any qualified rehabilitated building if— 20 ‘‘(A) the qualified rehabilitation expendi- 21 tures taken into account under this section (or 22 VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2294 IH which would be so taken into account but for 1 paragraph (1)(B)) with respect to such rehabili- 2 tation do not exceed $3,750,000, 3 ‘‘(B) no credit was allowed under this sec- 4 tion with respect to such building to any tax- 5 payer for either of the 2 taxable years imme- 6 diately preceding the first taxable year in which 7 expenditures described in subparagraph (A) 8 were paid or incurred, and 9 ‘‘(C) the taxpayer elects (at such time and 10 manner as the Secretary may provide) to have 11 this subsection apply with respect to such reha- 12 bilitation.’’. 13 (b) EFFECTIVE DATE.—The amendment made by 14 this section shall apply to taxable years beginning after 15 December 31, 2021. 16 SEC. 4. MODIFICATION OF DEFINITION OF SUBSTANTIALLY 17 REHABILITATED. 18 (a) IN GENERAL.—Section 47(c)(1)(B)(i)(I) is 19 amended by inserting ‘‘50 percent of’’ before ‘‘the ad- 20 justed basis’’. 21 (b) EFFECTIVE DATE.—The amendment made by 22 subsection (a) shall apply to determinations with respect 23 to 24-month periods (referred to in clause (i) of section 24 47(c)(1)(B) of the Internal Revenue Code of 1986) and 25 VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2294 IH 60-month periods (referred to in clause (ii) of such sec- 1 tion) which begin after the date of the enactment of this 2 Act. 3 SEC. 5. ELIMINATION OF REHABILITATION CREDIT BASIS 4 ADJUSTMENT. 5 (a) IN GENERAL.—Section 50(c) is amended by add- 6 ing at the end the following new paragraph: 7 ‘‘(6) EXCEPTION FOR REHABILITATION CRED- 8 IT.—In the case of the rehabilitation credit, para- 9 graph (1) shall not apply.’’. 10 (b) TREATMENT IN CASE OF CREDIT ALLOWED TO 11 LESSEE.—Section 50(d) is amended by adding at the end 12 the following: ‘‘In the case of the rehabilitation credit, 13 paragraph (5)(B) of the section 48(d) referred to in para- 14 graph (5) of this subsection shall not apply.’’. 15 (c) EFFECTIVE DATE.—The amendments made by 16 this section shall apply to property placed in service after 17 the date of the enactment of this Act. 18 SEC. 6. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT 19 USE PROPERTY. 20 (a) IN GENERAL.—Section 47(c)(2)(B)(v) is amend- 21 ed by adding at the end the following new subclause: 22 ‘‘(III) DISQUALIFIED LEASE 23 RULES TO APPLY ONLY IN CASE OF 24 GOVERNMENT ENTITY.—For purposes 25 VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2294 IH of subclause (I), except in the case of 1 a tax-exempt entity described in sec- 2 tion 168(h)(2)(A)(i) (determined with- 3 out regard to the last sentence of sec- 4 tion 168(h)(2)(A)), the determination 5 of whether property is tax-exempt use 6 property shall be made under section 7 168(h) without regard to whether the 8 property is leased in a disqualified 9 lease (as defined in section 10 168(h)(1)(B)(ii)).’’. 11 (b) EFFECTIVE DATE.—The amendments made by 12 this section shall apply to leases entered into after the date 13 of the enactment of this Act. 14 Æ VerDate Sep 11 2014 01:40 May 26, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H2294.IH H2294 pbinns on DSKJLVW7X2PROD with BILLS