Creating American Prosperity through Preservation Act - Amends the Internal Revenue Code, with respect to tax credits for building rehabilitation expenditures, to: (1) allow an increased 30% credit for projects involving $7.5 million or less in rehabilitation expenditures, (2) provide for an additional 2% credit amount for a building that is a qualified energy efficient rehabilitated building (increased energy efficiency of 30% or more), (3) change the placed-in-service requirement for non-historic rehabilitated buildings from before 1936 to 50 years prior to the year in which qualified rehabilitation expenditures are taken into account, and (4) exempt from tax the proceeds of a state historic tax credit.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5655 Introduced in House (IH)]
113th CONGRESS
2d Session
H. R. 5655
To amend the Internal Revenue Code of 1986 to expand the rehabilitation
credit, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 18, 2014
Mr. Schock (for himself, Mr. Blumenauer, Mr. Kelly of Pennsylvania, and
Mr. Kind) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to expand the rehabilitation
credit, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Creating American Prosperity through
Preservation Act''.
SEC. 2. INCREASE IN THE REHABILITATION CREDIT FOR CERTAIN SMALLER
PROJECTS.
(a) In General.--Section 47 of the Internal Revenue Code of 1986
(relating to rehabilitation credit) is amended by adding at the end the
following new subsection:
``(e) Special Rule Regarding Certain Smaller Projects.--
``(1) In general.--In the case of any qualified
rehabilitated building or portion thereof--
``(A) which is placed in service after the date of
the enactment of this subsection, and
``(B) which is a smaller project,
subsection (a)(2) shall be applied by substituting `30 percent'
for `20 percent'.
``(2) Maximum credit.--The credit determined under this
subsection with respect to any smaller project for all taxable
years shall not exceed $1,500,000.
``(3) Smaller project defined.--
``(A) In general.--For purposes of this subsection,
the term `smaller project' means any qualified
rehabilitated building or portion thereof if--
``(i) the qualified rehabilitation
expenditures taken into account for purposes of
this section (or would have been so taken into
account if this subsection had been in effect
for all prior periods) with respect to the
rehabilitation are not over $7,500,000, and
``(ii) no credit was allowed under this
section for either of the 2 prior taxable years
with respect to such building.
``(B) Progress expenditures.--Credit allowable by
reason of subsection (d) shall not be taken into
account under subparagraph (A)(ii).''.
(b) Effective Date.--The amendment made by this section shall apply
to periods after the date of the enactment of this Act, under rules
similar to the rules of section 48(m) of the Internal Revenue Code of
1986 (as in effect on the day before the date of the enactment of the
Revenue Reconciliation Act of 1990).
SEC. 3. ADDITION OF ENERGY EFFICIENCY SUPPLEMENT TO REHABILITATION
CREDIT.
(a) In General.--Subsection (a) of section 47 of the Internal
Revenue Code of 1986 is amended by striking ``and'' at the end of
paragraph (1), by striking the period at the end of paragraph (2) and
inserting ``, and'', and by adding at the end the following new
paragraph:
``(3) 2 percent of the qualified rehabilitation
expenditures if the building is a qualified energy efficient
rehabilitated building.''.
(b) Qualified Energy Efficient Rehabilitated Building.--Section 47
of such Code, as amended by section 2, is amended by adding at the end
the following new subsection:
``(f) Qualified Energy Efficient Rehabilitated Building.--
``(1) In general.--The term `qualified energy efficient
rehabilitated building' means any building (and its structural
components) if--
``(A) the building is a qualified rehabilitated
building, and
``(B)(i) the rehabilitation is certified (in
accordance with paragraph (4)) as being designed to
achieve at least a 30 percent energy use reduction in
the building's energy use, or
``(ii) the building meets the requirements of
paragraph (2)(B)(ii) and is determined under paragraph
(2)(B) to achieve at least a 30 percent energy use
reduction after being rehabilitated.
``(2) Determination of energy use reduction.--For purposes
of paragraph (1)--
``(A) Design-based standards.--
``(i) Buildings within the scope of
standard 90.1-2007.--If the building is within
the scope of Standard 90.1-2007, the designed
reduction in energy use shall be determined
using methods of calculation under paragraph
(3) in comparison to a reference building which
meets the minimum requirements of such
standard.
``(ii) RESNET buildings.--If the building
is within the scope of RESNET, the designed
reduction in energy use shall be determined
using methods prescribed by the Secretary which
are based on the Residential Energy Services
Network Technical Guidelines.
``(iii) Other buildings.--If neither clause
(i) or (ii) apply to the building, the designed
reduction in energy use shall be determined
using methods of calculation prescribed by the
Secretary in a manner which is consistent with
principles under paragraph (3).
``(B) Measured reductions.--
``(i) In general.--In the case of buildings
which meet the requirements of clause (ii), the
taxpayer may determine the reduction in energy
usage by comparing the energy usage during the
period selected by the taxpayer under clause
(ii)(I) with the energy usage during the period
selected by the taxpayer under clause (ii)(II).
``(ii) Building requirements.--A building
meets the requirements of this clause if--
``(I) the building is at least 75
percent occupied during any period (but
not less than 12 months) selected by
the taxpayer which ends during the 5-
year period ending on the date that the
rehabilitation begins, and
``(II) the building is at least 75
percent occupied during the comparable
period selected by the tax- payer which
begins during the 5-year period
beginning on the date that the
rehabilitation is completed.
``(iii) Energy star buildings.--The
reduction in energy use for buildings within
the scope of Energy Star Portfolio Manager may
be determined for purposes of this subparagraph
by using the Energy Star Portfolio Manager
Buildings Benchmark Tool.
``(iv) Special rules.--The Secretary shall
prescribe regulations which preclude the use of
this subparagraph, or modify the methods
otherwise applicable under this subparagraph,
in circumstance where vacancies, changes in
use, and other factors which might otherwise
yield in materially misleading results.
``(v) Year credit allowable.--In the case
of a building which is a qualified energy
efficient rehabilitated building solely by
reason of this subparagraph, the increase in
the credit under subsection (a)(3) with respect
to such building shall be taken into account
for the taxable year which includes the end of
the period selected by the taxpayer under
clause (ii)(II) in lieu of the taxable year in
which the rehabilitated building is placed in
service.
``(3) Methods of calculations.--
``(A) In general.--The Secretary, after
consultation with the Secretary of Energy, shall
promulgate regulations which describe in detail methods
for calculating and verifying energy and power
consumption and cost, based on Appendix G of Standard
90.1-2007 (or any subsequent version of such Appendix
which is in effect at the time of the certification).
``(B) Computer software.--
``(i) In general.--Any calculation under
subparagraph (A) shall be prepared by qualified
computer software.
``(ii) Qualified computer software.--For
purposes of subparagraph (A), the term
`qualified computer software' means software--
``(I) which is included (at the
time of the certification) on the
published list of qualified software by
the Department of Energy,
``(II) which provides such
information as the Secretary may
require, including information that
allows the user to document the energy
efficiency features of the building and
its projected annual energy costs, and
``(III) which provides standardized
outputs for building energy performance
and, to the maximum extent practicable,
relies on industry best practices and
existing guidelines.
``(4) Certifications.--
``(A) In general.--The Secretary shall prescribe
the manner and method for the making of certifications
under this subsection.
``(B) Procedures.--The Secretary shall include as
part of the certification process procedures for
inspection and testing by qualified individuals
described in subparagraph (C) to ensure compliance of
buildings with energy-savings plans and targets. Such
procedures shall be comparable, given the difference
between commercial and residential buildings, to the
requirements in the Mortgage Industry National
Accreditation Procedures for Home Energy Rating
Systems.
``(C) Qualified individuals.--Individuals qualified
to determine compliance shall be only those individuals
who are recognized by an organization certified by the
Secretary for such purposes. For purposes of the
preceding sentence, an individual shall not be
qualified with respect to a building unless the
individual is--
``(i) a registered professional engineer,
``(ii) not a direct employee of the owner
of the commercial building or multifamily
building, and
``(iii) licensed in the State in which such
building is located.
``(5) Standard 90.1-2007.--For purposes of this subsection,
the term `Standard 90.1-2007' means Standard 90.1-2007 of the
American Society of Heating, Refrigerating, and Air
Conditioning Engineers and the Illuminating Engineering Society
of North America (or any subsequent version of such Standard
which is in effect at the time of the certification).
``(6) Allocation of credit for tax-exempt property.--
Paragraphs (3) and (4) of section 50(b), and clause (v) of
subsection (c)(2)(B), shall not apply to those qualified
rehabilitation expenditures that are taken into account for
purposes of certifying a building as a qualified energy
efficient rehabilitated building under this subsection. Any
rehabilitation credit which is allowable by reason of the
preceding sentence may be assigned to any other person, and
such other person shall be treated as the taxpayer with respect
thereto.
``(7) Coordination.--The Secretary shall designate
processes for tracking the numbers and locations of buildings
claiming the rehabilitation by reason of this subsection, as
well as providing information on projected and actual savings
of energy and its value over time in coordination with the
Department of Energy.
``(8) Regulations.--The Secretary, after consultation with
the Administrator of the Environmental Protection Agency and
the Secretary of the Interior, shall promulgate such
regulations as may be necessary or appropriate to carry out the
purposes of this subsection, including regulations--
``(A) to take into account new technologies
regarding energy efficiency and renewable energy for
purposes of determining energy efficiency and savings
under this subsection, and
``(B) to provide for a recapture of the credit
determined under this subsection if the design referred
to in paragraph (1)(B) is not fully implemented.''.
(c) Substantial Rehabilitation Requirement Not To Apply to Energy
Efficiency Supplement.--Subparagraph (A) of section 47(c)(1) of such
Code (defining qualified rehabilitated building) is amended by adding
at the end the following new flush sentence:
``Clause (i) shall not apply to so much of the
rehabilitation credit as is determined under subsection
(a)(3).''.
(d) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to property placed
in service after the date of the enactment of this Act.
(2) Waiver of substantial rehabilitation requirement.--The
waiver of the requirement of section 47(c)(1)(A)(i) of the
Internal Revenue Code of 1986 made by section 47(f)(1)(A) of
such Code, as added by this Act, shall apply with respect to
rehabilitations the physical work on which begins after the
date of the enactment of this Act.
SEC. 4. MODIFICATION TO DEFINITION OF QUALIFIED REHABILITATION
EXPENDITURE.
(a) In General.--Clause (i) of section 47(c)(2)(A) of the Internal
Revenue Code of 1986 (relating to the definition of qualified
rehabilitation expenditures) is amended by striking ``or'' at the end
of subclause (III), by striking subclause (IV), and by inserting after
subclause (III) the following new subclauses:
``(IV) rehabilitated building
energy efficiency property, or
``(V) an addition or improvement to
property described in subclause (I),
(II), (III), or (IV), and''.
(b) Rehabilitated Building Energy Efficiency Property.--Section
47(c)(2) of such Code is amended by adding at the end the following new
subparagraph:
``(E) Rehabilitated building energy efficiency
property.--
``(i) In general.--For purposes of
subparagraph (A), the term `rehabilitated
building energy efficiency property' means
property which is certified as being--
``(I) affixed to, adjacent to, or
integral to the provision of renewable
energy to a qualified rehabilitated
building, or
``(II) installed as part of a plan
designed to achieve any energy use
reduction (within the meaning of
subsection (f)).
Subparagraph (B)(i) shall not apply to
rehabilitated building energy efficiency
property.
``(ii) Certification.--The Secretary shall
prescribe the manner and method for the making
of certifications under clause (i).''.
(c) Enlargements.--Clause (iii) of section 47(c)(2)(B) of such Code
is amended by adding at the end the following new sentence: ``The
preceding sentence shall not apply to any rehabilitated building energy
efficiency property which is an addition or improvement to a
building.''.
(d) Effective Date.--The amendments made by this section shall
apply to qualified rehabilitated buildings placed in service after the
date of the enactment of this Act.
SEC. 5. COORDINATION OF ENERGY CREDIT WITH REHABILITATION CREDIT.
(a) In General.--Paragraph (2) of section 48(a) of the Internal
Revenue Code of 1986 is amended by striking subparagraph (B).
(b) Conforming Amendments.--Paragraph (2) of section 48(a) of such
Code is amended--
(1) by redesignating subparagraph (A)(ii) as subparagraph
(B) and moving such subparagraph 2 ems to the left,
(2) by redesignating subclauses (I) through (IV) of
subparagraph (A)(i) as clauses (i) through (iv), respectively,
and by moving such clauses 2 ems to the left, and
(3) by striking so much of such paragraph as precedes ``30
percent in the case of--'' and inserting the following:
``(2) Energy percentage.--The energy percentage is--
``(A) 30 percent in the case of--''.
(c) Basis Reduction.--Paragraph (3) of section 50(c) of such Code
is amended by adding at the end the following new flush sentence:
``In the case of property that qualifies for both the energy
credit and the rehabilitation credit, the preceding sentence
shall be applied by substituting `none' for `only 50 percent'
each place it appears.''.
(d) 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. DATE BY WHICH BUILDING MUST BE FIRST PLACED IN SERVICE.
(a) In General.--Subparagraph (B) of section 47(c)(1) of the
Internal Revenue Code of 1986 (relating to the date by which building
must be first placed in service) is amended--
(1) by striking ``Building must be first placed in service
before 1936'' and inserting ``Date by which building must first
be placed in service'', and
(2) by striking ``before 1936'' and inserting ``no less
than 50 years prior to the year in which qualified
rehabilitation expenditures are taken into account under
subsection (b)(1)''.
(b) Effective Date.--The amendment made by this section shall apply
to property placed in service after the date of the enactment of this
Act.
SEC. 7. MODIFICATIONS REGARDING CERTAIN TAX-EXEMPT USE PROPERTY.
(a) In General.--Subclause (I) of section 47(c)(2)(B)(v) of the
Internal Revenue Code of 1986 (relating to tax-exempt use property) is
amended by inserting ``and subclauses (I), (II), and (III) of section
168(h)(1)(B)(ii) shall not apply'' after ``thereof''.
(b) 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. 8. SPECIAL RULES FOR DISPOSITIONS OF STATE HISTORIC TAX CREDITS.
(a) In General.--Part III of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to items specifically excluded
from gross income) is amended by inserting after section 139D the
following new section:
``SEC. 139E. DISPOSITIONS OF STATE HISTORIC TAX CREDITS.
``(a) Exclusion From Income; Basis Reduction.--
``(1) In general.--In the case of a taxpayer who receives a
State historic tax credit and transfers such credit by sale,
allocation, or otherwise, or receives a refund of all or a
portion of such credit--
``(A) no portion of the net proceeds of such
allocation, disposition, or refund of such credit shall
constitute income to such taxpayer under section 61(a),
and
``(B) the taxpayer's basis in the property with
respect to which the State historic tax credit is
allowed shall be reduced as determined under paragraph
(2).
``(2) Determination of reduction in basis.--The reduction
in basis under paragraph (1) shall be applied--
``(A) first, against the basis in the land,
``(B) second, against so much of the basis of any
building or interest therein as was not treated as a
qualified rehabilitation expenditure by reason of
clause (ii) or (iii) of section 47(c)(2)(B), and
``(C) third, against the remaining basis in the
property.
``(D) Adjustment in basis of interest in
partnership or s corporation.--The adjusted basis of--
``(i) a partner's interest in a
partnership, or
``(ii) stock in an S corporation (as
defined in section 1361(a)(1)),
shall be appropriately adjusted to take into account
adjustments made under this subsection in the basis of
property held by the partnership or S corporation (if
any).
``(b) Election To Include in Income.--
``(1) In general.--In the case of a taxpayer elects to have
this subsection apply--
``(A) the net proceeds of the allocation,
disposition, or refund described in subsection (a)
received by such taxpayer shall constitute income to
such taxpayer under section 61(a), and
``(B) subsection (a)(1)(B) shall not apply.
``(2) Making of election.--An election under this
subsection shall be made at such time and in such manner as the
Secretary of the Treasury may by regulation prescribe. Such
election shall apply for the taxable year for which it is made
and for all subsequent taxable years and may be revoked only
with the consent of the Secretary of the Treasury.
``(c) Effect on Qualified Rehabilitation Expenditures and
Rehabilitation Credits.--For purposes of determining the rehabilitation
credit allowable to a taxpayer under section 47, the transfer or
allocation of State historic tax credits with respect to any property
by a taxpayer shall not affect or reduce the amount of qualified
rehabilitation expenditures (as defined in section 47(c)(2)) incurred
in connection with such property, nor shall such transfer or
disposition, nor any basis adjustments under subsection (a), be treated
as an early disposition of investment credit property for purposes of
the recapture provisions of section 50.
``(d) State Historic Tax Credits Defined.--For purposes of this
section, the term `State historic tax credit' means any credit against
State or local tax liabilities which--
``(1) is allowable under the laws of any State or political
subdivision thereof to a taxpayer with respect to expenditures
made for the rehabilitation of property identified by such
laws, and
``(2) can be allocated, disposed, or refunded under such
laws.''.
(b) Clerical Amendment.--The table of sections for such part III is
amended by inserting after the item relating to section 139E the
following new item:
``Sec. 139E. Dispositions of State historic tax credits.''.
(c) Effective Date.--This section shall apply to transfers or
dispositions made, or refunds received, after the date of the enactment
of this Act.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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