Thursday, August 18, 2011

Tax Credits for Historic Home Rehabilitation

Here's something more people in Waterbury should know about. For full details, visit the Connecticut Trust for Historic Preservation website.



CT Historic Homes Rehabilitation Tax Credit Program
Public Act 99-173 established a Historic Homes Rehabilitation Tax Credit for the rehabilitation of owner-occupied historic residential buildings containing 1-4 units.

What is the Incentive? A tax credit equal to 30% of the eligible rehabilitation costs up to a maximum of $30,000 per unit of housing. For example a four-family house could qualify for up to $120,000 in tax credits.

What properties are eligible? Properties that are listed on the National Register of Historic Places or State Register of Historic Places are eligible. Targeted areas in 29 towns and cities are eligible, including the entire municipality of Waterbury.

Who can utilize the credits? Any owner, including private developers and non-profit housing corporations, can apply for the credits. If applicable, the owner can claim the credits against the owner's business corporation taxes due or the owner can assign the tax credit to a business corporation that is providing funds to help finance the rehabilitation. A lender, for example, might agree to accept the tax credit as partial payment against the principal of a loan. The tax credit cannot be used against the personal income tax.

What is the minimum expenditure? The owner must incur qualified rehabilitation costs of at least $25,000. Eligible costs include interior and exterior work to the historic home but exclude site improvements or soft costs, such as architect's fees or loan-processing fees.

What is the owner-occupancy requirement? At least one unit of the building must be the personal residence of the owner for five years after the credit voucher is issued. Private developers and non-profit housing corporations are required to sell the property to a new owner who will make the historic home the new owner's personal residence during the occupancy period.



Connecticut Historic Structures Rehabilitation Tax Credit Program
Public Act 06-186 section 82 establishes a tax credit for the conversion of historic commercial and industrial buildings to residential use, including rental or condominium units. Partial tax credits are available for buildings converted to mixed residential and commercial uses.
• 25% tax credit of the total qualified rehabilitation expenditures
• buildings must be listed on the National or State Register of Historic Places, either individually or as part of an historic district
• projects under construction but not placed in service as of July 1, 2006, may qualify
• state tax credits may be combined with the 20% federal historic preservation tax credits provided the project qualifies under federal law as a substantial rehabilitation of depreciable property as defined by the Internal Revenue Service
• annual aggregate cap of $15 million in tax credit reservations
• per building cap is up to $2.7 million in tax credits
• tax credit vouchers are issued after completion of rehabilitation work or, in phased projects, completion of rehabilitation work to an identifiable portion of the building placed in residential use
• tax credits are available for the tax year in which the building or, in phased projects, an
identifiable portion of the building is placed in service
• tax credits can only be used by C corporations with tax liability under Chapters 207 through 212 of the Connecticut General Statutes
• tax credits can be assigned, transferred or conveyed in whole or in part by the owner to others


Low Income Housing Investment Tax Credit
The Tax Reform Act of 1986 (IRC Section 42) also established an investment tax credit for acquisition, construction or rehabilitation of low- income housing. The credit is approximately 9% per year for 10 years for each unit acquired, constructed, or rehabilitated without other Federal subsidies and approximately 4% for 10 years for units involving the 20% rehabilitation tax credit, Federal subsidies or tax exempt bonds. Units must meet tests for cost per unit and number of units occupied by individuals with incomes below area median income. The law sets a 15 -year compliance period. Credits are allocated by State Housing Credit Agencies.

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