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The Developers Preservation Toolbox is for property developers and real estate professionals. Each TOOL below includes a brief overview with links to more detailed information from the most qualified sources identified to date. Each tool includes STRATEGIES, examples of best practices and proven solutions, along with potential PARTNERS for collaboration.
Tool ♦ Federal Historic Preservation Tax Incentives
Offset rehabilitation costs or raise equity on qualifying projects.
The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. 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.” A 10% tax credit is available for the rehabilitation of non-historic buildings placed in service before 1936 (the building must be rehabilitated for non-residential use and not qualify as a certified historic structure).
The first step for a developer is to determine if the project building is or has potential to be certified as historic. If so, planning for the 20% credit can begin. Obtaining the 20% tax credit on qualifying expenses involves a three part process. This Project Cost Summary Worksheet will help in determining initial qualifying expenses. Before applying, consult your accountant or tax adviser to make sure that this federal tax credit is beneficial to you. Certain income and other restrictions may have a bearing on whether an owner is able to use the credit. IRS administers the Department of the Treasury’s involvement with the Federal Historic Preservation Tax Incentives Program.
Strategies ♦ Developers have used this to transform neighborhoods and communities. Take a look at some national tax incentive case studies. Notable local tax credit projects include the Tennessee Theater and regional developer’s have experienced success with this financing tool. Knox Heritage is seeking “Preservation Project Investment Program” participants in order to connect regional investors to local, smaller-scale preservation development projects. Learn more about this program HERE.
Partners ♦ The Federal historic preservation tax incentives program is a partnership among the National Park Service (NPS), the State Historic Preservation Officer (Tennessee Historical Commission), and the Internal Revenue Service (IRS). Each plays an important role. Please be sure to read the “Who Does What” section of the NPS Tax Incentives brochure. Knox Heritage and the East Tennessee Preservation Alliance is qualified to administer the tax credit process. Please contact our organization for additional information on this service.
See it in Action: Novogradac & Company LLP has a new free online Novogradac Historic Tax Credit Mapping Tool featuring more than 12,000 federal historic tax credit (HTC) investments made from 2001 through 2015. The searchable tool uses Part 3 data from the National Park Service and allows users to view detailed information about HTC properties, with the ability to sort by congressional district, state and various eligibility criteria.