Limitations on Use of the Rehabilitation Tax Credit for Property Used by Exempt Organizations or Governmental Units or Foreign Persons or Entities

• Author: William F. Machen
• Pages: 27-30

The Code generally provides that no investment tax credit is avail‑

able with respect to property “used by” a tax‑exempt organization

(other than a cooperative described in Code §521) “unless such

property is used predominantly in an unrelated trade or business,

the income of which is subject to tax under section 511.”62 How‑

ever, if a qualied rehabilitated building is used by a tax‑exempt

organization pursuant to a lease (emphasis added), such limita‑

tion will not apply.

63

Similarly, in general, no credit is available

with respect to “any property used (i)by the United States, any

State or political subdivision thereof, any possession of the United

States, or any agency or instrumentality of any of the foregoing,

62. I.R.C. §50(b)(3).

63. Id.

27

Limitations on Use of the

Rehabilitation Tax Credit

for Property Used by

Exempt Organizations or

Governmental Units or

Foreign Persons or Entities

5

Machen_RehabTaxCr_20150513_08-49_ConfirmationPass.indd 27 5/14/15 8:56 AM