Section 1 Short title
This Act may be cited as the “Historic Tax Credit Growth and Opportunity Act of 2021”.
Historic Tax Credit Growth and Opportunity Act of 2021
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.
Sec. 2 Increase in rehabilitation credit
In general— Section 47(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:
“(3) Increased percentage for qualified rehabilitation expenditures before 2027
“(A) In general—In the case of any qualified rehabilitated building with respect to which there are qualified rehabilitation expenditures paid or incurred in any taxable year beginning after December 31, 2019, and before January 1, 2027—
“(i) paragraph (2) shall be applied by substituting “the applicable percentage” for “20 percent” with respect to such expenditures, and
“(ii) the ratable share of such expenditures shall be determined separately under paragraph (2) by applying the applicable percentage for each such taxable year to the expenditures for each such taxable year.
“(B) Applicable percentage—For purposes of this paragraph, the term “applicable percentage” means the percentage determined in accordance with the following table:”
Effective date— The amendments made by this section shall apply to property placed in service after March 31, 2021.
Sec. 3 Increase in the rehabilitation credit for certain small projects
In general— Section 47 is amended by adding at the end the following new subsection:
“(e) Special rule regarding certain small projects
“(1) In general—In the case of any small project—
“(A) the percentage under subsection (a)(2) shall be 30 percent, and
“(B) the qualified rehabilitation expenditures taken into account under this section with respect to such project shall not exceed $2,500,000.
“(2) Small project—For purposes of this subsection, the term small project means the rehabilitation of any qualified rehabilitated building if—
“(A) the qualified rehabilitation expenditures taken into account under this section (or which would be so taken into account but for paragraph (1)(B)) with respect to such rehabilitation do not exceed $3,750,000,
“(B) no credit was allowed under this section with respect to such building to any taxpayer for either of the 2 taxable years immediately preceding the first taxable year in which expenditures described in subparagraph (A) were paid or incurred, and
“(C) the taxpayer elects (at such time and manner as the Secretary may provide) to have this subsection apply with respect to such rehabilitation.”
Effective date— The amendment made by this section shall apply to taxable years beginning after December 31, 2021.
Sec. 4 Modification of definition of substantially rehabilitated
In general— Section 47(c)(1)(B)(i)(I) is amended by inserting “50 percent of” before “the adjusted basis”.
Effective date— The amendment made by subsection (a) shall apply to determinations with respect to 24-month periods (referred to in clause (i) of section 47(c)(1)(B) of the Internal Revenue Code of 1986) and 60-month periods (referred to in clause (ii) of such section) which begin after the date of the enactment of this Act.
Sec. 5 Elimination of rehabilitation credit basis adjustment
In general— Section 50(c) is amended by adding at the end the following new paragraph:
“(6) Exception for rehabilitation credit—In the case of the rehabilitation credit, paragraph (1) shall not apply.”
Treatment in case of credit allowed to lessee— Section 50(d) is amended by adding at the end the following: “In the case of the rehabilitation credit, paragraph (5)(B) of the section 48(d) referred to in paragraph (5) of this subsection shall not apply.”.
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. 6 Modifications regarding certain tax-exempt use property
In general— Section 47(c)(2)(B)(v) is amended by adding at the end the following new subclause:
“(III) Disqualified lease rules to apply only in case of government entity—For purposes of subclause (I), except in the case of a tax-exempt entity described in section 168(h)(2)(A)(i) (determined without regard to the last sentence of section 168(h)(2)(A)), the determination of whether property is tax-exempt use property shall be made under section 168(h) without regard to whether the property is leased in a disqualified lease (as defined in section 168(h)(1)(B)(ii)).”
Effective date— The amendments made by this section shall apply to leases entered into after the date of the enactment of this Act.