Last week, we received welcome news that a bill was introduced in Congress by U.S. Senators Bill Cassidy, M.D. (R-LA), Ben Cardin (D-MD), and Susan Collins (R-ME), and U.S. Representatives Darin LaHood (R-IL) and Earl Blumenauer (D-OR) to address existing basis-adjustment requirements of theHistoric Rehabilitation Tax Credit (HTC). The newly introduced legislation eliminates this requirement, enhancing the credit after uncertainty about investment potential with the change of terms in last year's new tax reform law that required the credit be taken over five years. The Low-Income Housing Tax Credit (LIHTC) was the model for this provision as it too has a multi-year claiming structure.
National Trust Community Investment Corporation (NTCIC) has created these helpful talking points:
- The HTC provides owners of historic buildings with an incentive to invest in the difficult task of rehabilitating their properties according to the Secretary of Interior’s Standards for Rehabilitation.
- While the 20 percent historic tax credit was maintained in the final tax reform bill, it was modified, and this is expected to reduce the amount of reinvestment flowing into our historic communities and neighborhoods.
- Presently, the tax code requires that building owners subtract the amount of federal historic tax credits from a building’s basis (the amount a property is worth for tax purposes). Eliminating this requirement will increase the basis of rehabilitated historic buildings for building owners, providing a tax benefit, and attract more capital from tax credit investors. Rep. LaHood (R-IL) and Rep. Blumenauer (D-OR), and Sen. Cassidy (R-LA) and Sen. Cardin (D-MD), have introduced the Historic Tax Credit Enhancement Act (H.R. 6081 and S. 3058) to eliminate the basis adjustment for federal HTC transactions.
- This legislative change still preserves the vast majority of the savings achieved by the Tax Cut and Jobs Act and eliminating the basis adjustment will also bring the HTC in line with the Low-Income Housing Tax Credit (LIHTC), which does not require a basis adjustment.
- Enacting this legislation will strengthen the credit and improve the incentive for building owners who are revitalizing historic properties in communities nationwide. Please co-sponsor the Historic Tax Credit Enhancement Act, sponsored by Cassidy/Cardin in the Senate (S. 3058) and LaHood/Blumenauer in the House (H.R. 6081).