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Historic Homeownership 2002 Assistance Act

This bipartisan legislative proposal would create a historic homeowners tax credit directed toward housing stock in deteriorating neighborhoods and communities located in more than 11,000 federal, state and local historic districts in all 50 states and the District of Columbia. The proposal would allow homebuyers and homeowners to take a 20% federal tax credit on residential properties they rehabilitate for use as their primary residence. The number of properties eligible for the historic homeowners credit is approximately one third of the almost one million structures in historic districts nationwide, of which almost three-fifths are in census tracts with a poverty rate of 20 percent or greater. If enacted, a historic homeowners tax credit would be a useful tool to preserve historic neighborhoods and homes in small towns and urban areas; make homeownership more affordable for less affluent families; revitalize deteriorating older neighborhoods; strengthen the tax base for local governments; and combat sprawl and urban blight.

Key Provisions and Features of the Historic Homeownership Tax Credit

• A maximum credit of $40,000. Homeowners in affluent historic districts (where the median income exceeds two times the state median income) would be ineligible for the credit.
• Rehabilitation would have to comply with the Secretary of the Interior's Standards for Rehabilitation.
• Credit would be limited to properties located in historic district across the country or individual landmarks.
• Rehabilitation would have to be substantial. However, in distressed neighborhoods a minimum investment of $5,000 would qualify.
• Ratable recapture if the homeowner lives in the home less than 5 years.
• Developers could rehabilitate historic properties, sell them, and pass the credit on to homebuyers. This feature would allow nonprofit housing providers to utilize the credit to further the goal of affordable homeownership.
• An option to convert the tax credit to a mortgage credit certificate which could be transferred to a bank or mortgage lender to reduce the mortgage interest rate, lowering monthly mortgage payments to benefit low- and moderate-income families who do not have enough tax liability to use the credit. In Empowerment Zones, Enterprise Communities, Community Renewal areas and distressed census tracts, the credit could also be used to lower the cost of the down payment.
• A revenue loss of approximately $100 million a year or $1 billion to the Treasury over ten years, according to the Joint Committee on Taxation.

Legislative History

In the 106th Congress, the "Historic Homeownership Assistance Act" (H.R. 1172/S. 664) had 226 cosponsors in the House and 39 in the Senate. The homeownership tax credit proposal also was included in two community renewal tax bills (S. 3152, S. 2936) but was dropped from the tax package formulated in the closing weeks of the 106th Congress. A version of the homeownership tax incentive also was included in a tax bill vetoed by President Clinton at the end of the first session of the 106th in 1999.

Prepared by the Public Policy Department of the National Trust for Historic Preservation

Prepared by the Public Policy Department of the National Trust for Historic Preservation