Rural Historic Tax Credit Improvement Act
Sponsored By: Representative Rep. Carey, Mike [R-OH-15]
Introduced
Summary
Bigger, transferable tax credits for rehabilitating rural historic buildings. The bill would boost the historic rehabilitation credit for projects in rural areas and let owners sell credits to investors, with bigger benefits for projects that provide affordable housing.
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- Families in small towns: Could see more renovated housing aimed at lower-income households because the bill defines affordable housing as for households at or below 80% of area median income.
- Developers and property owners: Would raise the credit to 40% for projects that qualify as affordable housing and to 30% for other rural rehab projects. It caps qualified rehabilitation expenditures at $5 million per project and would apply to property placed in service after December 31, 2025.
- Investors and tax-credit markets: Would allow taxpayers to transfer all or part of the credit to buyers who can claim it. Sellers would exclude transfer payments from gross income and buyers could not deduct those payments. Affordable-housing projects that break the rules would face recapture equal to the lost credit unless fixed within 45 days of notice.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 2 benefits, 2 costs, 1 mixed.
New rural rehab tax credit up to 40%
This bill would create a separate rehab tax credit for rural historic projects. You could claim 40% of qualified costs if the project meets the affordable-housing test, or 30% if not. Only up to $5,000,000 of rehab costs would count. Projects must be in areas outside cities over 50,000 and their nearby urbanized areas. “Affordable” means housing for households at or below 80% of area median income. The affordable test can be met in two ways based on project square feet. You would claim the credit in the year the project is placed in service for property placed in service after December 31, 2025.
Pay back credits if affordable rules broken
If an affordable rural project breaks the affordable-housing rules before the recapture period ends, your tax would go up. The increase would equal 100% of the prior credit benefit tied to the rehab credit. You could avoid this if you fix the problem within 45 days after IRS notice. The IRS would set recordkeeping and reporting rules. Applies to projects placed in service after December 31, 2025.
Sell or transfer rural rehab tax credits
This bill would let you transfer all or part of a rural rehab credit to another taxpayer. The buyer would claim the credit in the year of transfer; you would not. Money you get from selling the credit would not be taxable income. The buyer could not deduct what they paid for the credit. Transfers would require a certificate with project, taxpayer, and credit details and follow Treasury rules. Reporting would be required by both parties. Applies to credits from property placed in service after December 31, 2025.
No basis reduction on rural rehab credit
This bill would stop the usual basis reduction rule from applying to this rural rehab credit. That could help owners keep a higher tax basis for depreciation or on sale. Applies to property placed in service after December 31, 2025.
Limits on tenants claiming rural rehab credit
This bill would turn off a special lease rule for this credit. Some tenants could lose a path to claim or be treated for the credit. Applies to property placed in service after December 31, 2025.
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Sponsors & CoSponsors
Sponsor
Rep. Carey, Mike [R-OH-15]
OH • R
Cosponsors
Rep. Horsford, Steven [D-NV-4]
NV • D
Sponsored 2/21/2025
Rep. Miller, Carol D. [R-WV-1]
WV • R
Sponsored 3/21/2025
Moore (WV)
WV • R
Sponsored 3/21/2025
Roll Call Votes
No roll call votes available for this bill.
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