Historic Tax Credits
The Historic Rehabilitation Tax Credit program creates an incentive for the owners of historic properties to invest in restoring and reusing these buildings. The program allows a property owner to claim a federal income tax credit equal to 20% of the expenses incurred in rehabilitating an historic building. In short: a) the building must be eligible for listing on the National Register of Historic Places (50 years old is a guide, not a requirement); b) the rehabilitation hard and soft costs must be greater than the owner's tax basis in the building; and c) the work must not damage the historic integrity of the building. If these requirements are satisfactorily met, the property owner who, for example, spends $10 million renovating a historic hotel, can claim a $2 million credit on their federal income taxes. Alternatively, there is a process whereby the owner can monetize the value of the credit based on its present value with a 3rd party investor.
There is a three-step application process, with each step being reviewed first by state preservation officials and then by the National Park Service:
Paradigm Tax Group can be retained to represent the property owner in the application process with the National Park Service, including preparation of all parts of the application. While we are not providing legal or accounting advice, Paradigm is available at any time to further discuss the potential benefits of this program with the ownership and its legal, accounting, real estate, design and accounting representatives, all of whom we work with as part of the team to successfully meet its goals.