S.Amdt. 2698

This amendment aims to make changes to historic tax credits. It sets the general rule for the rehabilitation credit at 20 percent of qualified rehabilitation expenditures for property placed in service after December 31, 2025.

For certain small projects, the amendment increases the rehabilitation credit to 30 percent, with total qualified rehabilitation expenditures not to exceed $3,750,000. For rural projects, that expenditure limit is increased to $5,000,000. A rural area is defined as any area other than a city or town with a population greater than 50,000 inhabitants or its contiguous urbanized area.

• Taxpayers can transfer all or a portion of the credit for qualifying small projects using a certificate that includes specific taxpayer and project information.
• The amendment allows taxpayers to transfer the certificate to any other taxpayer.
• Transferred credits are allowable to the transferee as a credit for the taxable year in which it is transferred, and the transferee cannot claim a deduction for the consideration paid.
• Gross income does not include any amount received related to the transfer of the certificate.
• The amendment increases the types of buildings eligible for rehabilitation by inserting "50 percent of" before "the adjusted basis".
• The amendment provides an exception for the rehabilitation credit regarding basis adjustments.
• The amendment modifies rules for certain tax-exempt use property so that disqualified lease rules apply only in the case of a government entity.