|
What is the Federal Historic Rehabilitation Investment Tax Credit?
- An incentive to taxpayers who contribute to the preservation of historic
buildings by rehabilitating them.
- Provides a dollar-for-dollar reduction of federal income tax owed
equal to 20 percent of the cost of rehabilitating "certified historic
structures".
- Project must go through the three-part "Historic Preservation Certification
Application" process at the state and federal levels - the State Historic
Preservation Office (SHPO) and the Secretary of the Interior/National
Park Service (NPS).
Who may apply for the tax credit?
- Owners of potential "certified historic structures."
- Lessees with a lease term of 27.5 years for residential property and
39 years for nonresidential property.
What buildings are eligible?
- Buildings listed individually in the National Register of Historic
Places or potentially eligible to be listed. Buildings not listed are
required to be listed as part of the final certification.
- Buildings located in a "registered historic district" or a potentially
eligible district that contribute to the significance of the district.
- Must be a "certified historic structure" as determined by the Secretary
of the Interior/National Park Service through the "Historic Preservation
Certification Application Part 1 - Evaluation of Significance."
- Must be used in a trade or business or held for the production of
income for either rental residential or nonresidential purposes.
What rehabilitations qualify?
- Must be substantially rehabilitated - expenditures must exceed the
greater, the "adjusted basis" of the building or $5,000, within 24 months
or 60 months for phased projects.
- Rehabilitation must be consistent with the historic character of the
building and where applicable, with the district in which the building
is located as determined by the Secretary of the Interior/National Park
Service through the "Historic Preservation Certification Application
Part 2 - Description of Rehabilitation."
- Must meet The Secretary
of the Interior's Standards for Rehabilitation.
What rehabilitation expenditures qualify?
- Any expenditure incurred in connection with the rehabilitation of
a "certified historic structure" that are properly chargeable to a capital
account.
- Includes: rehabilitation costs; construction interest and taxes; architectural
and engineering fees; legal and professional fees; developer's fees;
and general and administrative costs.
- Does not include: acquisition costs; enlargement costs; acquisition
interest and taxes; realtor's fees; paving and landscaping costs; sales
and marketing costs; or new building construction costs.
When can a taxpayer claim the tax credit?
- Generally, for the taxable year in which the rehabilitated building
is placed in service. If all of the credit cannot be used, the excess
can be carried back one year and then forward 20 years.
- For phased projects, before completion of the entire project on the
basis of "qualified progress expenditures" if construction is planned
for two or more years.
- Must be a "certified rehabilitation" as determined by the Secretary
of the Interior/National Park Service through the "Historic Preservation
Certification Application - Request for Certification of Completed Work."
A copy of this certified application must be filed with the tax return
claiming the tax credit.
When are the tax credits subject to recapture?
- Never, if a qualified rehabilitated building is held by the taxpayer
for longer than five years after the building is placed in service.
- One hundred percent is recaptured if the owner disposes of the property
within one year and the amount of such recapture is reduced by 20 percent
for each full year that elapses thereafter.
What are the fees for processing rehabilitation certification requests?
- The National Park Service's fee for review of rehabilitation projects
ranges from $500 to $2,500 for projects with rehabilitation construction
costs ranging from $20,000 to $1,000,000 plus.
What is the 10 percent federal tax credit?
- Available for non-historic buildings built before 1936 used for nonresidential
purposes. No "Historic Preservation Certification Application" is required.
How does the State of North Carolina Rehabilitation Investment Tax
Credit work?
For more information and applications, contact:
Tim Simmons, Senior Preservation Architect and Federal Tax Credit Coordinator
Restoration Branch
State Historic Preservation Office
Office of Archives and History
4613 Mail Service Center
Raleigh NC 27699-4613
Telephone: (919) 733-6547
Fax: (919) 715-4801
e-mail: tim.simmons@ncmail.net
|