Text: HF00481 Text: HF00483 Text: HF00400 - HF00499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Section 1. NEW SECTION. 404A.1 PROPERTY REHABILITATION
1 2 TAX CREDIT – ELIGIBLE PROPERTY.
1 3 1. A property rehabilitation tax credit is granted against
1 4 the income tax imposed under chapter 422, division II or
1 5 division III for the rehabilitation of eligible property
1 6 located in this state as provided in this chapter. Tax
1 7 credits in excess of tax liabilities may be carried forward
1 8 for up to seven years or back for up to three years.
1 9 2. Eligible property for which a taxpayer may receive the
1 10 property rehabilitation tax credit computed under this chapter
1 11 includes all of the following:
1 12 a. Property constructed prior to 1935 which is located in
1 13 a HUD eligible area.
1 14 b. Property located outside of HUD eligible areas and that
1 15 meets any of the following:
1 16 (1) Is listed on the national register of historic places
1 17 or is eligible for such listing.
1 18 (2) Is designated as of historic significance to a
1 19 district listed in the national register of historic places or
1 20 is eligible for such designation.
1 21 (3) Is located in a historical preservation district as
1 22 defined in section 303.20.
1 23 (4) Is designated a local landmark by a city or county
1 24 ordinance.
1 25 (5) Is a barn constructed prior to 1935.
1 26 3. For purposes of this section, "HUD eligible area" means
1 27 an impoverished area in an entitlement city as designated by
1 28 the United States department of housing and urban development.
1 29 Sec. 2. NEW SECTION. 404A.2 AMOUNT OF CREDIT.
1 30 The amount of the credit equals twenty-five percent of the
1 31 qualified rehabilitation costs made to eligible property. In
1 32 the case of commercial property, rehabilitation costs must
1 33 equal at least fifty percent of the assessed value of the
1 34 property, excluding the land. In the case of residential
1 35 property or barns, the rehabilitation costs must equal at last
2 1 ten thousand dollars or fifteen percent of the fair market
2 2 value, excluding the land, whichever is less. In computing
2 3 the tax credit for eligible property that is classified as
2 4 residential or as commercial with multi-family residential
2 5 units, the rehabilitation costs used shall not exceed one
2 6 hundred twenty thousand dollars per residential unit. In
2 7 computing the tax credit, the only costs which may be included
2 8 are the rehabilitation costs incurred between the period
2 9 ending on the project completion date and beginning on the
2 10 later of either the date of issuance of the approval of the
2 11 project as provided in section 404A.3 or two years prior to
2 12 the project completion date.
2 13 Sec. 3. NEW SECTION. 404A.3 APPROVAL OF REHABILITATION
2 14 PROJECT.
2 15 1. a. In order for costs of a rehabilitation project to
2 16 qualify for a tax credit, the rehabilitation project must
2 17 receive approval from all of the following bodies:
2 18 (1) The governing bodies of the city, council, and council
2 19 of governments in which the eligible property exists and which
2 20 has established approved selection criteria and standards for
2 21 rehabilitation projects involving eligible property.
2 22 (2) The department of economic development.
2 23 b. Applications for approvals from the department and the
2 24 appropriate governing bodies shall be on forms approved by the
2 25 department and shall contain information as required by the
2 26 department. The information shall at least include the
2 27 approximate date of the start of rehabilitation, the
2 28 approximate date of completion, as well as the cost.
2 29 2. The governing body of a city, county, or council of
2 30 governments may establish selection criteria and standards for
2 31 rehabilitation projects involving eligible property. If
2 32 standards are established, the main emphasis of the standards
2 33 shall be to ensure that a rehabilitation project maintains the
2 34 integrity of the eligible property. To the extent applicable,
2 35 the standards shall be consistent with the standards of the
3 1 United States secretary of the interior for rehabilitation of
3 2 eligible property that is listed on the national register of
3 3 historic places or is designated as of historic significance
3 4 to a district listed in the national register of historic
3 5 places shall be consistent with standards for issuance of
3 6 certificates of appropriation under sections 303.27 through
3 7 303.32. Upon establishing selection criteria and standards,
3 8 the governing body shall seek approval from the department of
3 9 economic development. Until a governing body's selection
3 10 criteria and project standards have been approved by the
3 11 department, a rehabilitation project on eligible property
3 12 within the jurisdiction of the governing body does not need
3 13 the approval of that governing body for the project to receive
3 14 the tax credit. However, if construction on the project has
3 15 not begun within sixty days of receiving the approval of the
3 16 department, the project must meet the standards of a governing
3 17 body if the governing body's standards have received
3 18 department approval within that sixty-day period.
3 19 Sec. 4. NEW SECTION. 404A.4 PROJECT COMPLETION AND TAX
3 20 CREDIT CERTIFICATION – CREDIT TRANSFER.
3 21 1. Upon completion of the rehabilitation project, a
3 22 certification of completion must be obtained from each of the
3 23 bodies which approved the project. The governing bodies each
3 24 shall determine that the project is actually complete and was
3 25 done according to the approved standards of each governing
3 26 body. Each governing body may issue a separate certificate of
3 27 completion or all of the governing bodies may issue a joint
3 28 certificate of completion. A completion certificate shall
3 29 identify the person claiming the tax credit under this chapter
3 30 and the rehabilitation costs incurred up to the two years
3 31 preceding the completion date.
3 32 2. Upon receipt of all separate certificates of completion
3 33 or a joint certificate of completion, the person claiming the
3 34 tax credit under this chapter shall present the completion
3 35 certificates or certificate to the department of economic
4 1 development. After verifying the eligibility for the tax
4 2 credit, the department shall issue a property rehabilitation
4 3 tax credit certificate to be attached to the person's tax
4 4 return. The tax credit certificate shall contain the
4 5 taxpayer's name, address, tax identification number, the date
4 6 of project completion, the amount of credit, other information
4 7 required by the department of revenue and finance, and a place
4 8 for the name and tax identification number of any transferee
4 9 and the amount of the tax credit being transferred.
4 10 3. A person receiving a property rehabilitation tax credit
4 11 under this chapter may transfer all or a portion of the unused
4 12 tax credit to any other person. The transferee may use the
4 13 amount of the tax credit transferred against the taxes imposed
4 14 under chapter 422, divisions II and III, for any tax year the
4 15 original transferor could have claimed the credit. Any
4 16 consideration received for the transfer of the tax credit
4 17 shall not be included as income under chapter 422, divisions
4 18 II and III. Any consideration paid for the transfer of the
4 19 tax credit shall not be deducted from income under chapter
4 20 422, divisions II and III.
4 21 Sec. 5. NEW SECTION. 404A.5 ECONOMIC IMPACT –
4 22 RECOMMENDATIONS.
4 23 The department of economic development shall be responsible
4 24 for keeping the general assembly and the legislative fiscal
4 25 bureau informed on the overall economic impact to the state of
4 26 the rehabilitation of eligible properties. An annual report
4 27 shall be filed which shall include, but is not limited to,
4 28 data on the number and potential value of rehabilitation
4 29 projects begun during the latest twelve-month period, the
4 30 total property rehabilitation tax credits originally granted
4 31 during that period, the potential reduction in state tax
4 32 revenues as a result of all tax credits still unused, and the
4 33 potential increase in local property tax revenues as a result
4 34 of the rehabilitated projects. The department, to the extent
4 35 it is able, shall provide recommendations on whether a limit
5 1 on tax credits should be established, the need for a broader
5 2 or more restrictive definition of eligible property, and other
5 3 adjustments to the tax credits under this chapter.
5 4 Sec. 6. NEW SECTION. 422.11D PROPERTY REHABILITATION TAX
5 5 CREDIT.
5 6 1. The taxes imposed under this division, less the credits
5 7 allowed under sections 422.12 and 422.12B, shall be reduced by
5 8 a property rehabilitation tax credit equal to the amount as
5 9 computed under chapter 404A for rehabilitating eligible
5 10 property. Any credit in excess of the tax liability is
5 11 nonrefundable and may be carried forward for up to seven tax
5 12 years or backward up to three tax years.
5 13 2. An individual may claim a property rehabilitation tax
5 14 credit allowed a partnership, limited liability company, S
5 15 corporation, estate, or trust electing to have the income
5 16 taxed directly to the individual. The amount claimed by the
5 17 individual shall be based upon the pro rata share of the
5 18 individual's earnings of a partnership, limited liability
5 19 company, S corporation, estate, or trust.
5 20 3. However, if the original taxpayer who receives the
5 21 property rehabilitation tax credit transfers all or a portion
5 22 of the tax credit, any transferee shall only be entitled to
5 23 use the amount of the tax credit transferred for a tax year
5 24 for which the original taxpayer could have claimed the credit.
5 25 4. For purposes of this section, "eligible property" means
5 26 the same as used in section 404A.1.
5 27 Sec. 7. Section 422.33, Code 1999, is amended by adding
5 28 the following new subsection:
5 29 NEW SUBSECTION. 8. a. The taxes imposed under this
5 30 division shall be reduced by a property rehabilitation tax
5 31 credit equal to the amount as computed under chapter 404A for
5 32 rehabilitating eligible property. Any credit in excess of the
5 33 tax liability is nonrefundable but may be carried forward for
5 34 up to seven tax years or backward up to three tax years.
5 35 b. However, if the original taxpayer who receives the
6 1 property rehabilitation tax credit transfers all or a portion
6 2 of the tax credit, any transferee shall only be entitled to
6 3 use the amount of the tax credit transferred for a tax year
6 4 for which the original taxpayer could have claimed the credit.
6 5 c. For purposes of this subsection, "eligible property"
6 6 means the same as used in section 404A.1.
6 7 EXPLANATION
6 8 The bill provides for an individual and corporate income
6 9 tax credit equal to 25 percent of the costs of rehabilitating
6 10 eligible properties. Eligible properties are properties
6 11 constructed prior to 1935 in HUD eligible areas; properties
6 12 located out of HUD eligible areas which are listed or eligible
6 13 to be listed on the national register of historic properties,
6 14 a contributing element in a local historic district, or a
6 15 local landmark; or a barn constructed prior to 1935. In the
6 16 case of commercial property, rehabilitation costs must equal
6 17 at least 50 percent of the assessed value of the property,
6 18 excluding the land. In the case of residential property or
6 19 barns, the rehabilitation costs must equal at least $10,000 or
6 20 15 percent of the fair market value, excluding the land,
6 21 whichever is less. In addition, the rehabilitation project
6 22 must be approved by the governing body of the city, county,
6 23 and councils of government in which the property is located if
6 24 the governing bodies have established rehabilitation standards
6 25 and selection criteria which have been approved by the
6 26 department of economic development.
6 27 The tax credits may be carried forward seven years or
6 28 carried back three tax years. In addition, the taxpayer may
6 29 transfer to another any unused tax credit to be applied to the
6 30 individual or corporate income tax of the transferee.
6 31 The department of economic development is responsible for
6 32 keeping the general assembly and legislative fiscal bureau
6 33 appraised of the overall economic impact of the tax credit as
6 34 it relates to rehabilitation to eligible properties.
6 35 LSB 1656HH 78
7 1 mg/jw/5
Text: HF00481 Text: HF00483 Text: HF00400 - HF00499 Text: HF Index Bills and Amendments: General Index Bill History: General Index
© 1999 Cornell College and League of Women Voters of Iowa
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