Federal Historic Tax Credits
Hotel Peter and Paul © Sara Essex Bradley | New Orleans, Louisiana
A federal historic rehabilitation tax credit is available for income-producing buildings that are designated historic by the federal government and are substantially rehabilitated according to the Secretary of Interior’s Standards for Rehabilitation. Under this program, 20% of the total qualified rehabilitation expenditures (QREs) are returned to the owner in the form of a dollar-for-dollar credit on federal income taxes.
Successful certification of the completed project and acquirement of subsequent tax benefits are dependent on all interior and exterior rehabilitation work meeting the Secretary of the Interior’s Standards for Rehabilitation.
The three-part Historic Preservation Certification Application (HPCA) is administered by the State Historic Preservation Office (SHPO) at the state level, which has review and comment authority, and by the National Park Service (NPS) that makes the final decision at the federal level.
Information about the program from NPS Technical Preservation Services can be found here.
Types of Qualifying Projects
- Generally, the building must be at least 50 years old.
- The building must be an income-producing property, such as an office, rental apartment, hotel, retail, or industrial. Owner-occupied residences do not qualify.
- The combined hard and soft costs, called QREs or eligible costs on which the 20% credit is based, must exceed the developer’s adjusted basis in the building.
- The building must be listed on the National Register of Historic Places (either individually or in a district), or be in a federally certified local district, to claim the credit. Any building that is a minimum of 50 years old and retains some of its original integrity may qualify for designation.
- Work must be reviewed and certified by the NPS.
