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Does the United States have a tax incentives program geared towards rehabilitating older building structures?

Preservation Tax Incentives
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Peter J. Scalise
Yes, the Historic Preservation Tax Incentives Program jointly administered by the National Park Service and the State Historic Preservation Offices is the nation’s most effective Federal-level program to promote both urban and rural revitalization and to encourage private investment in rehabilitating historic buildings. These preservation tax incentives apply explicitly to preserving income-producing historic property and have generated billions of dollars in historic and rehabilitation preservation activity since the program’s commencement in 1976.

There are two categories of preservation tax credits as outlined below:

• Pursuant to I.R.C. § 47(a)(1), the Rehabilitation Tax Credit offers a 10% tax credit available for the rehabilitation of non-historic buildings with an additional requirement that the building must have been originally constructed before 1936; or

• Pursuant to I.R.C. § 47(a)(2), the Historic Tax Credit offers a 20% tax credit available for the rehabilitation of a Certified Historic Structure (e.g., one listed on the National Register of Historic Places or located in a Registered Historic District and determined to be of significance to the Historical District).

These aforementioned preservation tax incentives can significantly reduce a building owner’s perceived costs for the renovation of an older building and should certainly be considered when planning a renovation project.

In order to fully optimize the benefits of preservation tax incentives, both federal-level and state-level tax incentives should be qualified and quantified, as applicable, in the planning phase when considering a renovation project. For instance, it should be duly noted that most states currently offer preservation based tax incentives (e.g., ME, NH, VT, MA, RI, CT, NY, PA, DE, MD, WV, VA, NC, SC, GA, FL, MS, LA, AR, MO, IA, MN, WI, IN, KY, MI, OH, ND, KS, OK, CO, NM, UT & MT with several remaining states introducing legislation that would create a similar program in NJ, AL, IL, and TX) which can be utilized in conjunction with the federal-level incentives to further reduce the expenditures of a building owner’s renovation.

Please send a message to Peter J. Scalise, Federal Tax Credits & Incentives Practice Leader for Prager Metis CPAs, LLC for a complimentary consultation if you are contemplating a planned renovation project and would like to consider the benefits of preservation tax incentives.
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