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Historic Tax Credits
Preservation Tax Incentives
The Federal Historic Preservation Tax Incentives program is one of the Federal governments most successful and cost-effective community revitalization programs. The Preservation Tax Incentives reward private investment in rehabilitating historic properties such as offices, rental housing, and retail stores.
What Are Historic Tax Credits?
Through the Internal Revenue Code Section 47, the federal government offers rehabilitation tax credits to encourage the preservation and adaptive reuse of historic and old buildings. The tax credit is a dollar-for-dollar reduction of federal income tax liability.
How Much Are Historic Tax Credits?
Calculated as a percentage of the eligible rehabilitation expenses, federal tax law offers a 20% tax credit for substantial rehabilitations of historic buildings, and a 10% tax credit for substantial rehabilitations of non-historic, non-residential buildings built before the year 1936.
What Makes A Building Historic?
A certified historic structure is a building that is listed individually in the National Register of Historic Places or a building that is located in a registered historic district and certified by the National Park Service as contributing to the historic significance of that district.
How Can These Tax Credits Be Used?
Many Real Estate Investment Trust and Hedge Funds are also involved in lending and providing equity for multifamily projects. Usually, these financing participants require an equity interest in the project.
What Are Tax Credits Use Restrictions?
Because the Internal Revenue Code's Passive Activity Rules and Alternative Minimum Tax Regulations limit and, sometimes, prohibit the use of tax credits by individuals, most building owners syndicate the tax credits to a third-party corporate investor.
Who Manages This Program?
The tax credit program for historic buildings is administered by each state's historic preservation office and requires approval from the National Park Service. In addition, several states have adopted legislation establishing state historic rehabilitation tax credits.


 
 
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