The federal historic rehabilitation tax credits are available for income-producing buildings which are listed in the National Register of Historic Places and which are substantially rehabilitated according to the Secretary of Interior’s Standards for Rehabilitation. Under this program, 20% of the total qualified rehabilitation expenditures (QRE’s) are returned to the owner in the form of a dollar-for-dollar credit on federal income taxes.
Successful certification of the completed project and, obtaining the subsequent tax benefits, is dependent upon all interior and exterior rehabilitation work meeting the Secretary of the Interior’s Standards for Rehabilitation.
The three-part Preservation Certification Application (“HPCA”) is administered by the State Historic Preservation Office (SHPO) at the state level, which has review and comment authority, and by the Technical Preservation Branch of the National Park Service (NPS) at the federal level, which makes the final decision. More information about the program can be found here at the NPS-TPS website.
What types of projects qualify?
Here are the basic requirements:
- It is 20% credit on all hard and soft costs related to the rehabilitation of a historic building.
- The building is at least 50 years old or older.
- The building must be an income-producing property, such as an office, rental apartments, hotel, retail or industrial.
- The combined hard and soft costs, called qualified rehabilitation expenditures (QREs) or eligible costs on which the 20% credit is based, must exceed the developer’s adjusted basis in the building.
- It must be listed on the National Register of Historic Places to claim the credit. Any building that is a minimum of 50 years old and retains some of it original integrity may qualify for listing on the Register.
- Work must be reviewed and certified by the National Park Service (NPS).
HTCs can be monetized and used as project equity through an investment structure that allocates the credits to an investment partner in return for an equity contribution. See how we have helped our clients monetize HTCs for their historic rehabilitation projects.
Can the historic credits be used with other tax credit equity?
The federal historic tax credits are often twinned with other federal tax credit programs such as the Low Income Housing Tax Credit (LIHTC) or the New Market Tax Credit Program (NMTC). The programs work well together and can supply a significant amount of equity to a project.
Does my building qualify?
Contact us and we would be happy to discuss whether your project qualifies for any available historic tax credits.