A desire to spur home renovations in low-income neighborhoods has led Sen. Eric Kearney, D-Cincinnati, to introduce Senate Bill 298 into the Ohio General Assembly.

The proposed bill would authorize a 25 percent, nonrefundable tax credit for the rehabilitation of owner-occupied homes built before 1950 and located in low-income census tracts.

Kearney said in an economic climate where some homeowners find themselves struggling to pay their mortgage, it can be trying to maintain or increase the value of the property through home improvements.

"Both the property and the greater community benefit from home renovations," he said in a statement. "When homeowners invest in their properties the monetary value of the neighborhood increases along with its reputation."

Kearney said it would be ideal if the proposed bill served as a catalyst to spur development.

The measure would apply to homes built on or before Dec. 31, 1949 that are used as the owner's primary residence.

The legislation states that qualified rehabilitation expenditures would include architectural or engineering fees paid or incurred in connection with the renovation, and, if applicable, expenses incurred during preparing the property for nomination to the National Register of Historic Places.

The bill goes on to state that rehabilitation efforts would not include construction of new buildings, but applies to repairing or altering an older home, making an efficient use while preserving those portions and features of the structure, site and environment that are significant to its historic, architectural and cultural values.

"This legislation is drafted with the intent of addressing a need to rehabilitate and beautify owner-occupied homes built before 1950 in low-income census tracts. Providing incentives to homeowners to invest in lower-income neighborhoods will add value to Ohio's communities," Kearney said.

The Ohio Department of Taxation would have the authority to establish the procedures for applying for the tax credit, the criteria for reviewing, evaluating and approving applications, eligibility requirements, monitoring procedures and any other measures it deemed necessary.

Basic guidelines stated in SB 298 would have the tax commissioner confirm the age of the property and determine whether the tax credit is a "major factor" in the homeowner's decision to rehabilitate their property.

The taxation department would oversee the issuance the rehabilitation tax credit certificates. The credit would equal 25 percent of the dollar amount indicated on the certificate. No amount of credit for any homeowner would be allowed to exceed $30,000 and a maximum of 5,000 certificates would be approved each year.

John Kohlstrand, Department of Taxation spokesman, said the department has not taken an official stance on the proposed legislation.

"We are aware of the bill but we have not had a chance to study it carefully," he said. "It's too soon, we need to give it a careful look."

And while the department is not for or against SB 298, Kohlstrand said Ohio's financial state is always a factor in such proposals and noted that the bill could involve "potentially millions of dollars in revenue."

The legislation states that for any application period, beginning with fiscal year 2011, the homeowner of a qualified property could apply to the tax commissioner for a rehabilitation tax credit certificate for renovation expenditures paid or incurred after June 30. Each application would be required to state the amount of expenditures paid or incurred and the commissioner could request documentation of such figures.

Kearney said homeowners would have the benefit of being able to carry forward any balance of the credit in excess of the amount claimed during a certain year for up to five years.

If the renovation were not initially planned to be completed in stages, homeowners would be given a two-year rehabilitation period and if the work was slated to be finalized in phases, the homeowner would have a five-year rehabilitation period.

SB 298 states that no credit certificate could be issued before a rehabilitation project is completed. A homeowner's approval to receive a tax credit could be rescinded and awarded to another qualified applicant if the homeowner fails to provide evidence that they have secured and closed on financing for the renovations within 18 months.