A federal historic rehabilitation tax credit is available for income-producing buildings which are designated historic by the federal government and which are substantially rehabilitated according to the Secretary of Interior’s Standards for Rehabilitation. Under this program, 20 percent 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.

The three-part Historic 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 National Park Service (NPS) at the federal level, which makes the final decision. More information about the program can be found here at the 

Types of qualifying projects

  • Generally, the building must be at least 50 years old.
  • The building must be an income-producing property, such as an office, rental apartments, hotel, retail or industrial. Owner-occupied residences do not qualify.
  • 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.
  • The building must be listed on the National Register of Historic Places (either individually or in a district), or be in a federally certified local district, to claim the credit. Any building that is a minimum of 50 years old and retains some of it original integrity may qualify for designation.
  • Work must be reviewed and certified by the National Park Service (NPS).

Impact of 2017 Tax Reform

While many aspects of the program remain unchanged, these are the new provisions for projects that become eligible for the program after January 1, 2018:

  • Credit must be claimed over five years.
  • A former 10% non-certified rehabilitation credit for pre-1936 buildings was repealed.
  • Transition rules to qualify for prior law require building ownership before January 1, 2018 and project completion within strict timeframes. Implications of certain aspects of the transition rules will be clarified in the coming months.
  • A strict set of requirements for retaining existing internal structure and external walls in place.

Stacking tax credit equity

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. 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). These programs work well together and can supply a significant amount of equity to a project.


Federal Historic Tax Credit News