Historic Tax Credit Overview: The purpose of the Historic Tax Credit (HTC) program is to promote preservation and economic development by making adaptive reuse of historic structures financially feasible. HTC programs exist at both the federal and state levels. Tax Credits are taken against income taxes owed, either at the federal or state level depending on the program being used.
Federal Historic Tax Credit – there are two categories under which projects may qualify for the federal program:
(a) 20% program – To comply with this program, which generates a tax credit equal to 20% of the qualified rehabilitation expense incurred in a project, a building must either: (1) be eligible to be listed on the National Register of Historic Places, or (2) be a contributing building located in a historic district. Buildings renovated under this program must comply with the Secretary of Interior’s Standards for Historic Rehabilitation. These standards allow for fairly significant building modifications as long as the historic character of the building is preserved. Compliance with the applicable standards is reviewed by the applicable State Historic Preservation Office and the National Park Service.
(b) 10% Program – Buildings are eligible for this program that generates a tax credit of 10% of the total qualified rehabilitation expense for a project if they were built before 1936 but are not listed on the National Register of Historic Places. Renovation plans under this program do not have to comply with the Secretary of the Interior’s Standards.
State Historic Tax Credit programs – Over 30 states throughout the U.S. now have historic tax credit programs that can be used in conjunction with the federal program. State programs vary, but typically permit investors to use the applicable tax credits over a period of years. BW&A has experience with most state HTC programs and therefore, will be able to help maximize a project’s benefit from the use of these programs. Some state HTC programs provide for certificated credits, which essentially allow credits to be bought and sold. Other states require investors to be partners with the project sponsor in a similar manner to the federal HTC. Please contact us if you would like to discuss available programs in your state.
Investors will often make investments in projects in exchange in part for their ability to take advantage of the Federal Tax Credits and/or State Tax Credits. Brian Wishneff & Associates works with a large number of investors that have interest in a wide variety of projects, and can therefore ensure the highest pricing for your project. Federal HTCs from a project are available in the year that project is placed in service. Investors may carry Federal HTCs back one year and forward 20 years to fully utilize the credits. The Federal investor must remain as a partner in a project for a minimum of 5 years after construction, which is the compliance period for the Federal HTC program.
If you have a project that you are interesting in using HTCs to help facilitate the renovation, please feel free to contact any BW&A professionals to discuss the specific application of these programs to your building.