HB1454, titled the Rural Historic Tax Credit Improvement Act, would amend the Internal Revenue Code to expand the federal rehabilitation tax credit for certified historic buildings located in rural areas. For qualifying rural projects, the bill creates a higher credit rate than the standard rehabilitation credit: 40 percent of qualified rehabilitation expenditures for projects that are affordable housing projects, and 30 percent for other rural projects. It also caps eligible rehabilitation expenditures at $5 million per project and defines rural areas by excluding cities and towns over 50,000 people and their adjacent urbanized areas.
The bill also allows the rural rehabilitation credit to be transferred to another taxpayer, subject to certification, reporting, and Treasury guidance. In addition, it adds recapture rules if an affordable housing project fails to meet the bill’s affordability requirements during the recapture period, with a 45-day cure period after notice from the Secretary of the Treasury. Separate provisions eliminate the usual rehabilitation credit basis adjustment for these rural projects and make conforming changes to related tax code sections. The amendments generally apply to property placed in service after December 31, 2025.
Impact
If enacted, the bill would change federal tax law by creating a special, enhanced historic rehabilitation credit for qualifying buildings in rural areas and by modifying recapture, transferability, and basis rules for those projects. It would affect developers, historic preservation projects, rural communities, and affordable housing projects by increasing the potential tax subsidy available for rehabilitation and by making the credit more usable through transferability. The bill would amend sections 47, 50, and related provisions of the Internal Revenue Code, with Treasury directed to issue regulations and guidance.
Sentiment
No committee transcript or vote record is provided, so there is no documented debate or recorded sentiment in the available materials. Based on the bill’s sponsors and structure, the measure appears to be framed as a bipartisan economic development and preservation incentive, with support implied for rural revitalization and affordable housing. The bill was introduced in the House and referred to the Committee on Ways and Means.
Contention
The main policy issues likely to draw scrutiny are the size of the enhanced credit, the $5 million project cap, and the definition of what counts as a rural area. The affordable housing requirements and the recapture penalty for noncompliance could also be contentious, especially for developers balancing preservation costs with housing affordability obligations. Transferability of the credit may be viewed favorably as a financing tool, but it could also raise concerns about complexity, compliance, and revenue cost.
An act to amend Section 17053.91 of, and to add and repeal Sections 17053.92 and 23692 of, the Revenue and Taxation Code, relating to taxation, to take effect immediately, tax levy.