THIS IS A RE-POST OF A WHAT WE ORIGINALLY POSTED SEPTEMBER 2012:
*Throughout the article denotes changes that have occurred since our original posting of this article.
Tax Incentives for Preserving Historic Properties
The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. It creates jobs and is one of the nation’s most successful and cost-effective community revitalization programs. It has leveraged over $62 billion in private investment to preserve 39,600 historic properties since 1976. The National Park Service and the Internal Revenue Service administer the program in partnership with State Historic Preservation Offices.
20% Tax Credit
A 20% income tax credit is available for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.” The State Historic Preservation Offices and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation. The Internal Revenue Service defines qualified rehabilitation expenses on which the credit may be taken. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit. Learn more about this credit before you apply.* Each year, Technical Preservation Services approves approximately 1000 projects, leveraging nearly $4 billion annually in private investment in the rehabilitation of historic buildings across the country.
*NOTE: Before applying, the National Park Service refers to modifications to the 20% tax credit Public Law No: 115-97 (December 22, 2017) They advise interested applicants consult an accountant or tax advisor to make sure that this federal tax credit is beneficial to individual circumstances.
10% Tax Credit
*NOTE: There previously was a 10% tax credit available for non-historic buildings built before 1936. Since our original posting of this article in 2012, on December 22, 2017, Public Law No. 115-97 amended the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Section 13402 changed the ITC and repealed a 10% credit for non-historic buildings. Several websites suggest that change will likely impact a taxpayer’s ability to take advantage of the HTC. As such, it is best to discuss concerns with an accountant, tax attorney, legal counsel, or the Internal revenue Service to clarify these changes.
Tax Benefits for Historic Preservation Easements
A historic preservation easement is a voluntary legal agreement, typically in the form of a deed, that permanently protects an historic property. Through the easement, a property owner places restrictions on the development of or changes to the historic property, then transfers these restrictions to a preservation or conservation organization. A historic property owner who donates an easement may be eligible for tax benefits, such as a Federal income tax deduction. Easement rules are complex, so property owners interested in the potential tax benefits of an easement donation should consult with their accountant or tax attorney. Learn more about easements in Easements to Protect Historic Properties: A Useful Historic Preservation Tool with Potential Tax Benefits.
Further Information
Visit last week’s re-posting of our podcast with John E. Walters of LeWalt Consulting Groupe, LLC with more information on tax benefits related to historic properties.
Tell us your thoughts…
Have you been involved in a project that used the federal rehabilitation tax credit?
What questions do you have about the federal income tax credit for historic properties?
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