Congress has before it a bill to allow buyers an income tax credit equal to 20 percent of the cost of rehabilitating a historic home in a historic district -- up to $20,000. The legislation is known as the Historic Homeownership Assistance Act, and opponents of yet another targeted tax advantage say the scheme raises some troubling questions -- even though the proposal seems charming on the surface.

• There are concerns that the tax offer would encourage gentrification of neighborhoods -- and displace, rather than help, low-income residents.

• Since the credit applies only to owners of historic homes in historic districts where the median household income is no more than twice the statewide median income, residences in upscale areas would not be eligible.

• But that produces a quirk in some areas -- with residents in the wealthy Georgetown area of Washington, D.C., for example, being able to qualify because the lower income of Georgetown University students pulls down the median income.

• Experts warn that state and local preservation boards vigorously enforce strict guidelines which drive up the price of rehabilitation projects -- often to the point of negating the benefits of the tax incentive.

A survey by the National Park Service identified 11,436 historic districts across the U.S., containing 870,012 historic buildings. Of those, 58 percent could qualify for the credit. The agency also estimates that about 300,000 homeowners would use the credit at a cost to taxpayers of $1.2 billion over 10 years.

Source: Haya El Nasser, "This Old House, This Distressed Area," USA Today, September 13, 2000.