This section defines “eligible costs and expenses” as qualified rehabilitation expenditures, with special rules for certain tax-exempt entities and higher education institutions, and excludes some lease-related rehabilitation expenditures.
Sec. 172.102. ELIGIBLE COSTS AND EXPENSES. (a) Subject to Subsections (b) and (c), in this chapter, "eligible costs and expenses" means qualified rehabilitation expenditures as defined by Section 47(c)(2), Internal Revenue Code. Text of subsection effective until January 01, 2035 (b) Except as provided by Subsection (c), the depreciation and tax-exempt use provisions of Section 47(c)(2), Internal Revenue Code, do not apply to costs and expenses incurred by an entity exempted from the federal income tax under Section 501(a), Internal Revenue Code, or by an institution of higher education or university system as defined by Section 61.003, Education Code, and those costs and expenses are eligible costs and expenses if the other provisions of Section 47(c)(2), Internal Revenue Code, are satisfied. Text of subsection effective on January 01, 2035 (b) Except as provided by Subsection (c), the depreciation and tax-exempt use provisions of Section 47(c)(2), Internal Revenue Code, do not apply to costs and expenses incurred by an entity exempted from the federal income tax under Section 501(a), Internal Revenue Code, and those costs and expenses are eligible costs and expenses if the other provisions of Section 47(c)(2), Internal Revenue Code, are satisfied. (c) Expenditures by an entity described by Subsection (b) to rehabilitate a structure that is leased to a tax-exempt entity in a disqualified lease, as those terms are defined by Section 168(h), Internal Revenue Code, are not eligible costs and expenses. Added by Acts 2013, 83rd Leg., R.S., Ch. 1232 (H.B. 500), Sec. 14(a), eff. January 1, 2015. Amended by: Acts 2015, 84th Leg., R.S., Ch. 805 (H.B. 3230), Sec. 1, eff. January 1, 2016. Acts 2017, 85th Leg., R.S., Ch. 773 (H.B. 1003), Sec. 8(a), eff. June 14, 2017. Acts 2017, 85th Leg., R.S., Ch. 773 (H.B. 1003), Sec. 8(b), eff. January 1, 2022. Redesignated and amended by Acts 2021, 87th Leg., R.S., Ch. 497 (H.B. 3777), Sec. 1, eff. January 1, 2022. Transferred, redesignated and amended from Tax Code, Subchapter S, Chapter 171 by Acts 2023, 88th Leg., R.S., Ch. 83 (S.B. 1013), Sec. 2, eff. September 1, 2023. Amended by: Acts 2025, 89th Leg., R.S., Ch. 646 (H.B. 4044), Sec. 1(a), eff. January 1, 2026. Acts 2025, 89th Leg., R.S., Ch. 646 (H.B. 4044), Sec. 1(b), eff. January 1, 2035.