Rural Historic Tax Credit Improvement Act

This bill boosts the federal tax credit for fixing up historic buildings in rural areas. Projects that create or keep affordable housing can get a 40% credit on qualified rehab costs; other rural projects can get 30%. For each project, up to $5 million in costs can count toward the credit. A “rural area” means places outside cities of more than 50,000 people and their nearby urbanized areas. Affordable housing here means homes for households at or below 80% of the local median income, with clear square‑footage tests for how much of a project must be affordable to qualify for the higher rate .

The credit can be transferred to someone else using a certificate, so projects can raise money up front. The buyer gets the credit, the seller doesn’t owe tax on the sale, and the buyer can’t deduct what they paid for it. If a project that claimed the higher, affordable‑housing credit breaks those affordability rules during the recapture period, it must pay back the full credit unless the problem is fixed within 45 days after notice. The bill also lets these rural projects keep their building’s tax value (no basis reduction) after taking the credit. These changes apply to property placed in service after December 31, 2025 .

• Who is affected: Owners restoring historic buildings in rural areas; developers creating or preserving affordable housing in those buildings.
• What changes: Larger credits (40% or 30%), ability to transfer the credit, payback if affordability rules are broken, and no basis reduction for these projects .
• When: For property placed in service after December 31, 2025.