S.631 - Rural Historic Tax Credit Improvement Act (119th Congress)
Summary
S.631, the Rural Historic Tax Credit Improvement Act, aims to amend the Internal Revenue Code of 1986 to enhance the rehabilitation credit for buildings located in rural areas. The bill introduces increased tax credits for qualified rehabilitation expenditures, particularly for affordable housing projects in rural areas, and allows for the transfer of these credits. It also addresses recapture rules for non-compliance with affordable housing requirements and eliminates the basis adjustment for the rehabilitation credit in applicable rural projects.
Expected Effects
The bill is likely to stimulate investment in the rehabilitation of historic buildings in rural areas. This will be achieved by making such projects more financially attractive through enhanced tax credits. The transferability of credits could further incentivize investment by allowing developers to monetize the credits more easily.
Potential Benefits
- Increased Investment in Rural Areas: The enhanced tax credits will likely attract more investment in the rehabilitation of historic buildings in rural communities.
- Affordable Housing Development: The higher credit for affordable housing projects could spur the creation or preservation of affordable housing options in rural areas.
- Economic Development: Rehabilitation projects can create jobs and stimulate local economies in rural areas.
- Preservation of Historic Buildings: The bill encourages the preservation and reuse of historic buildings, maintaining the cultural heritage of rural communities.
- Transferability of Credits: The ability to transfer tax credits makes the incentive more accessible to a wider range of investors.
Potential Disadvantages
- Complexity: The bill introduces complex rules and definitions, potentially increasing compliance costs for developers.
- Limited Scope: The benefits are limited to rural areas, potentially creating disparities with urban areas.
- Potential for Abuse: The transferability of credits could create opportunities for tax fraud or abuse, requiring careful oversight.
- Cap on Expenditures: The $5,000,000 cap on qualified rehabilitation expenditures may limit the scope of some projects.
- Recapture Provisions: The recapture provisions for failure to comply with affordable housing requirements could deter some developers from undertaking such projects.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble). It aims to promote economic development and affordable housing, which can be argued to contribute to the general well-being of the population. The bill does not appear to infringe upon any specific constitutional rights or limitations.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).