Rural Historic Tax Credit Improvement Act

Increased incentives for affordable housing in rural areas: The bill provides a 40 percent credit for qualified rehabilitation expenditures for affordable housing projects, which is higher than the 30 percent credit offered for non-affordable housing projects (Section 2(a)(3)(A)).

Financial flexibility through credit transfers: Taxpayers involved in applicable rural projects are permitted to transfer all or a portion of their rehabilitation credit to another taxpayer (Section 2(a)(4)(A)).

Support for lower-income households: The bill defines affordable housing as decent, safe, and sanitary living accommodations for households with incomes not exceeding 80 percent of the median income for the market area (Section 2(a)(3)(C)(ii)).

Clarification of tax treatment for transferred credits: The bill specifies that gross income does not include amounts received in connection with the transfer of the certificate, and the transferee can claim the credit (Section 2(a)(4)(C)).

Limits on total expenditures for rural projects: There is a cap on the amount of qualified rehabilitation expenditures that may be taken into account, which cannot exceed $5,000,000 for any applicable rural project (Section 2(a)(3)(B)(ii)).

Financial penalties for violating housing requirements: If an affordable housing project violates specific requirements before the close of the recapture period, the taxpayer's tax may be increased by 100 percent of the aggregate decrease in credits allowed from prior years (Section 2(b)(1)(A)).