The Federal Historic Rehabilitation Tax Credit is a useful incentive for encouraging the preservation of the state's historic buildings. Nationwide, over 43,000 projects have been completed since its inception in 1976, and the program has generated over $89.97 billion in the rehabilitation of income-producing historic projects. The largest federal program specifically supporting historic preservation, the historic tax credit also generates much needed jobs, 106,846 in 2017 alone, enhances property values in older communities, creates affordable housing, and augments revenue for Federal, state, and local Governments. The program has been instrumental in preserving historic places that give cities, towns, and communities their special character.

On December 22, 2017, Public Law No: 115-97 (Pub. L. 115-97) was signed and enacted, amending the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Pub. L. 115-97 (Sec. 13402) modifies the 20% Historic Rehabilitation Tax Credit as well as provides certain transition rules. These and other changes to the Internal Revenue Code may affect a taxpayer's ability to use of the 20% Historic Tax Credit. Pub. L. 115-97 also repeals the 10% Rehabilitation Tax Credit for non-historic buildings. The text of Pub. L. 115-97 is available at www.congress.gov.

Applicants requesting historic preservation certifications by the National Park Service as well as others interested in the use of these tax credits are strongly advised to consult an accountant, tax attorney, or other professional tax adviser, legal counsel, or the Internal Revenue Service regarding the changes to the Internal Revenue Code related to Pub. L. 115-97.

The Federal Historic Rehabilitation Tax Credit program gives:

How do I qualify?

There are four requirements for a project to become certified:

1. The property must be listed in the National Register of Historic Places, either individually or as a contributing property to a district.

2. Property must be income producing for at least five years following rehabilitation. This may include but not be limited to proposed uses such as hotel or bed and breakfast, restaurant or bar, retail, office, rental residential, industrial, or agricultural. Owner-occupied residential properties do not qualify.

3. The project must be substantial. This means the amount spent on "Qualified Rehabilitation Expenditures"* (QREs) must equal or be greater than the "Adjusted Basis" value** of the property.

*Qualified Rehabilitation Expenditures (QREs)can be soft or hard project development costs, and not necessarily reserved for historic character defining features of a property.

**Adjusted Basis value is an IRS term to determine the "value" of a historic property using this basic formula:

A – B – C + D = adjusted basis, whereas:
A = purchase price of the property (building and land)
B = cost of land at time of purchase
C = depreciation taken for an income-producing property
D = cost of any capital improvements made since purchase

4. The rehabilitation work must be done according to the Secretary of the Interior's Standards for Rehabilitation. For further information on how to interpret these Standards, please contact our office, visit the NPS website, or hire a qualified architect or historic preservation consultant.