Historic Preservation Tax Credits
Nationally, the Federal Historic Preservation Tax Credit is the most popular historic preservation incentive program. Many states also have a state income tax credit program for the rehabilitation of historic properties that is based on the federal program. Currently, Iowa has an excellent state program, while Illinois does not have a statewide program. Both the federal and Iowa programs follow a similar three-part application process, and rehabilitation work must meet the Standards for Rehabilitation for the project to qualify for the program.
At this time, only income-producing (commercial, industrial, rental) properties qualify for the Federal Historic Preservation Tax Credit. Applicants who conduct a substantial rehabilitation of a property listed on the National
Register of Historic Places that is certified by the State Historic Preservation Office as meeting the Standards for Rehabilitation are eligible to receive a
income tax credit of 20% of the qualified rehabilitation costs. A standard application must be filled out for the tax credit, including a description of work to be undertaken and
photographs showing existing conditions, which must be approved by the State Historic Preservation Office. The three part application process includes: Part 1 (building and project eligibility), Part 2 (description of rehabilitation work), and Part 3 (certification of completed work). Applications may be submitted at any time. For commercial buildings built prior to 1936 that are certified as not
eligible for the National Register, a 10% tax credit may be taken for a qualified rehabilitation. More information on the federal historic tax credit program can be found at www.nps.gov/tps/tax-incentives.htm.
Iowa's rehabilitation tax credit program provides 25% of qualified rehabilitation costs as a refundable
state income tax credit for historic properties listed on or eligible for the National Register of Historic Places or any barn built prior to 1937. Commercial, residential, rental, church, school, and barn projects
qualify for this tax credit. Starting on July 1, 2013, commercial properties must spend at least $50,000 (or 50% of the assessed value of the building, if less), while non-commercial properties must spend at least $25,000 (or 25% of the assessed value of the building, if less) to meet minimum expenditures requirements to qualify to apply for the program. Each year, 5% of the annual funding allocation is reserved for "small projects" defined as $750,000 or less in qualified rehabilitation costs, and applications are typically accepted year round in this category. The enhanced three-part application process includes: Part 1 (building and project eligibility), Part 1.5 (meeting with SHPO to review proposed plans), Part 2 (description of rehabilitation work), Part 2B (reservation application), and Part 3 (certification of completed work). Part 1, Part 2, and Part 3 applications can be submitted at any time. Starting in 2013, Part 2B applications are submitted to reserve state tax credits for a project, after the Part 2 is approved. Small projects may apply at any time, while large projects typically must submit Part 2B applications during the spring or fall filing window to be considered for the program. Additional information on the Iowa historic tax credit can be found at:
iowaculture.gov/history/preservation/tax-incentives/state-tax-credit and https://www.iowaeda.com/historic-preservation-tax-credit. The 2019 report on the economic impact of Iowa's state historic preservation tax credit program is available at: https://tax.iowa.gov.
SPARK Consulting provides expertise in successfully completing applications for the Historic Preservation Tax Credit programs, including Part 1 (building and project eligibility), Part 2 (description of rehabilitation work), and Part 3 (certification of completed work). Rebecca Lawin McCarley is thoroughly knowledgeable about the Secretary of the Interior's Standards for Rehabilitation and has experience completing all three parts of the historic tax credit applications for the rehabilitation of historic buildings listed on and/or eligible for the National Register of Historic Places.
For additional information, contact SPARK Consulting.