The Massachusetts Historic Rehabilitation Tax Credit (“MAHRTC”) is available on a competitive basis for income-producing buildings which are determined a “qualified historic structure” by the Massachusetts Historical Commission (MHC) and which are substantially rehabilitated and determined a certified rehabilitation by the MHC. Under the Massachusetts tax credit program, up to 20 percent of the total qualified rehabilitation expenditures is returned to the owner in the form of a dollar-per-dollar credit on state income taxes with an annual cap of $55 million credits awarded. The three-part MAHRTC application, together with the additional supporting information required for the competitive process and photographic documentation, is submitted to the MHC to qualify for consideration in application rounds. Successful certification of the completed project by the MHC and securing the subsequent tax benefits is dependent upon rehabilitation work that meets the Secretary of the Interior’s Standards for Rehabilitation. There are three rounds annually: January 15, April 30 and August 31.
The program sunsets December 31, 2022.
Who can use the credit?
The credit is issued in the form of a certificate and can be sold for use by any Massachusetts tax payer. There is an active market for the credits in the Commonwealth.
A unique feature of the credit is that non-profits can use the program without forming a for-profit subsidiary, which is based on a 2006 letter ruling. This is especially helpful on smaller projects with a non-profit sponsor where the costs associated with the federal historic credit make using it on small projects prohibitive.
Projects that have accumulated credits but have yet to start construction can be sold to a new developer and the credits allocated to that project can be transferred to the new owner.
Client: Arch Street
Project Costs: $18.9 million
HTC equity: Over $6.6 million
Project Costs: $6.4 million
HTC equity: Over $2.2 million