Revitalizing Communities: The Historic Tax Credit Growth and Opportunity Act
Published on by Cory Faulkner in Construction, Real Estate
The Historic Tax Credit (HTC) has long been a cornerstone of American preservation and revitalization efforts. Introduced in 1976, the HTC has facilitated the rehabilitation of over 49,000 historic properties, spurring economic development and preserving cultural heritage nationwide. However, over the past decade, HTC’s effectiveness has been diminished due to various factors, including unfavorable IRS rulings and changes in tax policy. The Historic Tax Credit Growth and Opportunity Act (HTC-GO), reintroduced in 2025, seeks to address these challenges and enhance the HTC’s impact.
Key provisions of the HTC-GO Act
1. Restoration of one-year credit delivery
Previously, HTC’s benefits were spread over five years, reducing immediate financial incentives for investors. The HTC-GO Act proposes returning to a one-year delivery system, allowing projects to receive their full credit in the year the property is placed into service. This change aims to increase investor confidence and accelerate development timelines.
2. Elimination of the basis adjustment requirement
Under current law, the amount of the HTC must be deducted from a building’s depreciable basis, reducing the property’s value for tax purposes. The HTC-GO Act eliminates this requirement, aligning the HTC with other credits such as the Low-Income Housing Tax Credit (LIHTC). This adjustment enhances the credit’s value and makes it easier to combine with other financing tools.
3. Lowering the substantial rehabilitation threshold
The existing substantial rehabilitation test requires that the cost of rehabilitation must exceed 100% of the property’s adjusted basis. The HTC-GO Act proposes reducing this threshold to 50%, broadening the scope of projects eligible for the HTC, and encouraging investment in a wider range of historic properties.
4. Modifications to tax-exempt use rules
Current tax code restrictions make it challenging for non-profit organizations to utilize the HTC, especially when they own and use historic properties. The HTC-GO Act seeks to modify these rules, facilitating greater participation by non-profits in historic preservation projects and enabling them to leverage the HTC for community-serving initiatives.
5. Increased credit for smaller and rural projects
To stimulate investment in smaller and rural communities, the HTC-GO Act proposes increasing the credit rate to 30% for projects with qualified rehabilitation expenditures (QREs) under $3.75 million. Additionally, projects in rural areas with QREs under $5 million would also be eligible for the 30% credit. These provisions aim to make the HTC more accessible and attractive for developers in underserved regions.
6. Transferability of credits for small and rural projects
The HTC-GO Act introduces provisions allowing for the transferability of credits for small and rural projects. This change enables developers to sell their credits to other investors, improving liquidity and making it easier to finance rehabilitation projects.
Looking ahead
The HTC-GO Act presents significant opportunities for revitalization and economic development. The increased credit rates for smaller and rural projects could incentivize developers to invest in rehabilitating historic buildings. By modernizing the HTC, the Act aims to restore its value, broaden its accessibility, and stimulate investment in historic properties nationwide.
The bill was introduced in April 2025 and has been referred to the Senate Finance Committee. As the HTC-GO Act progresses through the legislative process, it’s crucial for stakeholders in the industry to engage with policymakers, advocate for the bill’s passage, and prepare to leverage the enhanced HTC to benefit their communities. Have a question about the proposed bill, the historic tax credit program, or other credits available to residential construction properties? Contact us – our tax and affordable housing professionals are here to help.
