Investment property historic tax credit projects are a powerful tool to bring back struggling neighborhoods and downtowns. These projects create jobs and generate economic activity, from professional offices to retail to manufacturing and housing. They also preserve important historic buildings that contribute to our cultural heritage. The federal Historic Rehabilitation Tax Credit (HTC) provides owners of income-producing real property with a 20% credit for the cost of substantial rehabilitation of historic buildings. It was originally introduced in 1976. After enactment of tax reform legislation at the end of 2017, it is now available for new construction as well as renovations of existing buildings. For more https://www.loraincountyhomebuyers.com/sell-my-house-fast-ohio/

In order to qualify for the HTC, a building must be either individually listed in the National Register of Historic Places or located within a local historic district and certified by the municipality as contributing to that district’s character. It must be a historic structure that has been substantially rehabilitated in accordance with the Secretary of Interior’s Standards for Rehabilitation and can be used as an incomeproducing real property. It cannot be a single-family home or a non-incomeproducing property like a bridge, monument, or railroad car.

To claim the HTC, taxpayers must file a Section 166 tax credit application with their income tax return. The amount of the credit depends on the amount of qualifying expenses for the year incurred in the rehabilitation project, which includes hard and soft costs. Hard costs are the direct repair and improvement costs to restore a historic building’s architectural, mechanical, electrical and plumbing systems to their original condition. Soft costs include design fees, architect and engineer fees, consultant fees, construction management, and developer fees. Only the amount of the qualified expenses can be claimed as an HTC, which is a dollar-for-dollar reduction in federal income taxes owed.

One of the most important aspects of successfully navigating a HTC project is choosing the right team to work on the project. Assemble a team of professionals who have worked on similar projects and understand the historic rehabilitation process. These should include a preservation consultant familiar with the HTC, architects and structural and mechanical, electrical and plumbing (MEP) engineers experienced in working on historic buildings, a real estate attorney knowledgeable about the tax code and the HTC, and a tax accountant familiar with historic tax credits.

The HTC program is an essential job-creating, community-revitalizing tool, and we must continue to support it. To do so, we need your help. Please contact your elected officials at home and in Washington to tell them about the benefits of the HTC program. You can use these resources to help your elected officials understand the impact of the HTC and why it’s critical to preserving our nation’s historic fabric.