Federal Rehab Tax Credit Amendments Move in House
House Ways and Committee Approves Three Amendments to Federal Rehab Tax Credit
The House Ways and Means Committee approved three amendments to the federal rehabilitation tax credit on April 9th as part of an affordable housing package entitled "the Housing Assistance Act of 2008" (H.R. 5720). The approved amendments are a major advancement in our advocacy efforts for the "Community Restoration and Revitalization Act" (H.R. 1043/S. 584) because it increases our leveraging ability to get the rest of the proposed amendments in H.R. 1043/S. 584 included in subsequent phases of the legislative process.
Provisions of H.R. 1043 included in the "Housing Assistance Act of 2008" are as follows:
1. Historic Tax Credits and the Alternative Minimum Tax (AMT)
- Eliminate costs imposed on housing programs by the alternative minimum tax. The alternative minimum tax (AMT) can increase the cost of implementing housing programs. Under current law, interest on low-income housing tax credits and the rehab tax credit cannot be taken against the AMT. This limits the marketability and incentive effect of these credits. The bill would allow the low-income housing tax credit and the rehabilitation tax credit to be used to offset the AMT.
2. Easing the Non-Profit Rules on Historic Tax Credits
- Encouraging the rehabilitation of government-leased and tax-exempt buildings. Under current law, taxpayers are not eligible for the full amount of the rehabilitation credit if more than 35% of a rehabilitated building is leased to a State or local government. In such a situation, expenditures that are allocable to the portion of the building that is leased by the government will not be counted in calculating the rehabilitation credit. In general, the bill would allow taxpayers to qualify for the full amount of the rehabilitation credit so long as less than 50% of the rehabilitated building is leased to State and local governments or other tax-exempt entities.
3. Favoring Housing Credit Allocations to Historic Projects
- Requires that one of the 12 considerations under State Qualified Allocation Plans (QAPs) for allocation affordable housing credits is the "historic nature" of the building or project.
