State of Wisconsin Historic Tax Credit legislation is nearly to the Governor’s desk. Your advocacy efforts encouraged members of Joint Finance to remove the Governor’s program cap, while including a $5 million / per project cap beginning in July 2018. If this holds, it will certainly be considered a victory for the HTC program in Wisconsin, which was in danger of being capped, thus harming the ability for many projects to be completed throughout the State. At the same time, changes to the Federal Historic Preservation Tax Incentives are being considered as part of tax reform. While we do not believe there will be many changes at the federal level, we continue to work with our NAR lobby team to engage them with local resources who are well-equipped to give data driven rationale for continuation of the program.
About the Federal Historic Preservation Tax Program:
The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. It creates jobs and is one of the nation’s most successful and cost-effective community revitalization programs. It has leveraged over $84 billion in private investment to preserve 42,293 historic properties since 1976. The National Park Service and the Internal Revenue Service administer the program in partnership with State Historic Preservation Offices.
20% Tax Credit
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.” The State Historic Preservation Offices and the National Park Service review the rehabilitation work to ensure that it complies with the Secretary’s Standards for Rehabilitation. The Internal Revenue Service defines qualified rehabilitation expenses on which the credit may be taken. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit. Learn more about this credit before you apply.
Each year, Technical Preservation Services approves approximately 1200 projects, leveraging nearly $6 billion annually in private investment in the rehabilitation of historic buildings across the country. Learn more about this credit in Historic Preservation Tax Incentives.
10% Tax Credit
The 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. In order to qualify for the tax credit, the rehabilitation must meet three criteria: at least 50% of the existing external walls must remain in place as external walls, at least 75% of the existing external walls must remain in place as either external or internal walls, and at least 75% of the internal structural framework must remain in place. There is no formal review process for rehabilitations of non-historic buildings. Learn more about this credit in Historic Preservation Tax Incentives.
Tax Benefits for Historic Preservation Easements
A historic preservation easement is a voluntary legal agreement, typically in the form of a deed, that permanently protects an historic property. Through the easement, a property owner places restrictions on the development of or changes to the historic property, then transfers these restrictions to a preservation or conservation organization. A historic property owner who donates an easement may be eligible for tax benefits, such as a Federal income tax deduction. Easement rules are complex, so property owners interested in the potential tax benefits of an easement donation should consult with their accountant or tax attorney. Learn more about easements in Easements to Protect Historic Properties: A Useful Historic Preservation Tool with Potential Tax Benefits.