Provisions of the credit
Ÿ
a federal income tax credit equal to 20% of the total amount
spent on the rehabilitation of a commercial property listed or eligible
to be listed on the National Register of Historic Places or
a federal income tax credit equal to 10% of the total amount spent on the rehabilitation
of a non-historic, non-residential building built before 1936
Ÿ
there is an allowance for pass-through of the credit to a
new purchaser as long as no other party has claimed the credit
Ÿ
the tax credit is claimed on IRS form 3468 for the tax
year in which the rehabilitated building is placed in service
Administration
Ÿ
in Indiana, the Federal Historic Rehabilitation Tax Credit
is administered through the State Historic Preservation Office (SHPO) of the Division of
Historic Preservation and Archaeology (DHPA) of the Department of Natural
Resources (DNR)
Application Procedure
Ÿ
Part 1 - “Evaluation of Significance”
- usually submitted prior to the start of
any rehabilitation work
-
provides the SHPO and National Park Service (NPS) with
descriptions of the
building and a statement of its historical and/or architectural significance
-
the SHPO staff make a recommendation on whether the
building is eligible for the National Register of Historic Places on an
individual basis or as a contributing part of a certified historic district
Ÿ
Part 2 - “Description of Rehabilitation”
- usually submitted prior to the start of any rehabilitation work
- provides the SHPO and NPS with the
following:
-
written descriptions of current “character-defining
features” of the building
-
descriptions of all proposed rehabilitation work affecting
any of the identified “character-defining features”
- drawings of the proposed work
-
photographs of the existing parts of the building that
would be affected by the rehabilitation
-
the SHPO encourages
applicants to obtain approval of Part 2 before
beginning any rehabilitation work whenever possible
so as to avoid causing
irrevocable alterations to the historic character of the
building, thus resulting
in the denial of the tax credit
Ÿ
Part 3 - “Request for Certification of Completed Work”
- submitted after completion of the
rehabilitation
-
provides the
SHPO and NPS with photographs of all parts of the building after the
rehabilitation is complete to demonstrate that the project carried
out the proposed and approved work from Part 2 of the
application
Eligibility Requirements
Ÿ
For the 20% Rehabilitation Tax Credit, the applicant must
carry out a substantial rehabilitation on a certified historic
structure
-
substantial means that the greater of
either $5,000 or the adjusted basis of the property was spent on
rehabilitation
-
the adjusted basis is calculated by subtracting the
value of the land from the total value of the property, then subtracting any
depreciation taken on the building
-
certified historic structure means a
building that has been approved by the SHPO and the NPS through Part 1 of the
application for the Federal Historic Rehabilitation Tax Credit as being listed
either individually on the National Register of Historic Places or as a
contributing part of a National Register historic district or a local historic
district
Ÿ
the rehabilitated property must be income-producing
Ÿ
the rehabilitated property must be listed in the National
Register of Historic Places either individually or as a contributing part of a
National Register historic district or a local historic district
Ÿ
the Federal Rehabilitation Tax Credit application and the
resulting rehabilitation must be certified by the SHPO and NPS
-
certified means that the rehabilitation
has conformed to The Secretary of the
Interior’s Standards for Rehabilitation
·
For the 10% Rehabilitation Tax Credit, a physical test for
retention of external walls and internal structural framework must be met:
·
at least 50% of the building’s walls existing at the time
the rehabilitation began must
remain in place as external walls at the work’s conclusion,
and
·
at least 75% of the building’s external walls must remain
in place as either external or
internal walls, and
·
at least 75% of the building’s internal structural
framework must remain in place
Other Requirements
Ÿ
the costs which are eligible for credit are those directly
related to the historic structure including architectural and
engineering fees, legal expenses, site survey fees, and development fees as
long as they are added to the basis of the property
Ÿ
ineligible costs include those for:
- property acquisition
- new construction
- parking lots or sidewalks
- landscaping
Ÿ
the rehabilitation must be completed within a 24 month
time frame, or within 60 months if the project is filed as a phased project
Ÿ
the owner must retain the property for 5 years after completing
the rehabilitation, otherwise the tax credit will be recaptured
-
if the owner sells the building within one year of
completion, 100% of the credit is recaptured
-
if the building is sold between one and five years after
completion, the
recapture amount is reduced by 20% per year
Ÿ
the tax credit may also be recaptured if the SHPO or NPS
find at any time that the rehabilitation did not
conform to The Secretary of the Interior’s Standards for Rehabilitation
Contact Information
Division of Historic Preservation and Archaeology (DHPA)
402 West Washington Street
Room W274
Indianapolis, IN 46204
(317) 232-1646
More information about the Federal Historic Rehabilitation
Tax Credit may be found at http://www2.cr.nps.gov/tps/tax/.