CCT: Federal Historic Preservation Tax Incentive

Federal Historic Preservation Tax Incentive

 

Current federal tax incentives for historic rehabilitation projects were established by the Tax Reform Act of 1986 and Internal Revenue Code Section 47. The program is governed by both National Park Service regulations (36 CFR 67) and the Internal Revenue Code. Applications are filed with the Connecticut State Historic Preservation Office, which conducts a preliminary review. Applications are forwarded to the National Park Service, which makes the final determination on certification.

 

Program Specifics:

 

  • law provides a 20% tax credit for the certified rehabilitation of certified historic structures.
 
  • a certified historic structure is any structure (1) subject to depreciation after rehabilitation as defined by the Internal Revenue Code—usually in income-producing use such as rental residential, office, commercial, or manufacturing; and (2) listed individually on the National Register of Historic Places or is located in a registered historic district and certified by the National Park Service as contributing to the historical significance of the district.
 
  • a certified rehabilitation is a completed rehabilitation project that is approved by the National Park Service as being consistent with the historic character of the property.
 
  • qualified rehabilitation expenditures must meet the IRS definition of substantial in order to qualify. Substantial rehabilitation means that the qualified rehabilitation expenditures incurred in a two-year measuring period must exceed the adjusted basis of the building— usually the cost of acquisition minus the value of the land plus any improvements minus any prior depreciation.
 
  • qualified rehabilitation expenditures are those costs chargeable to capital account as defined by the Internal Revenue Code—generally all costs associated with rehabilitation work to the historic building and some soft costs, but excluding costs associated with site improvements.
 
  • the tax credit can be used against any federal tax liability, but the ability to use the credit may be affected by other aspects of the Internal Revenue Code.
 
  • credits can be claimed for the year in which the building was placed in service.

 

 

Eligibility Requirements:

 
 
  • credits can only be used by individuals or business firms which have ownership standing in the property.
 
  • the owner must hold title to the building for five years after completing the rehabilitation.

 

 

How to Apply:

 

The program is administered by the National Park Service and the Internal Revenue Service. There is a three step application process.


Historic Preservation Certification Application Instructions

Historic Preservation Certification Application Part 1

Historic Preservation Certification Application Part 2

Historic Preservation Certification Application Part 3

Historic Preservation Certification Application Amendment


Prior approval of rehabilitation work is strongly recommended.



 

For more information, contact
Julie Carmelich at 860-256-2762 or 
julie.carmelich@ct.gov





Content Last Modified on 4/10/2014 3:53:27 PM