The Federal Historic Preservation Tax Incentives Program provides a federal income tax credit for the sensitive rehabilitation of historic buildings. It ensures that character-defining features of buildings are retained and helps revitalize surrounding neighborhoods.
The federal tax credit program provides either a 20% historic tax credit or a 10% non-historic income tax credit, based on the qualified rehabilitation expenditures and dependent upon the type of building as described below. For both tax credit amounts, the buildings must be used for income-producing purposes and the rehabilitation must be “substantial" (see below).
1) For the 20% historic rehabilitation tax credit, the building must be listed on the National Register of Historic Places individually or as a contributing resource in a listed historic district, or it must be evaluated as meeting the qualifications set for National Register listing by the U.S. Secretary of Interior. In these cases, the property must be listed within 30 months after claiming the credit on IRS forms.
To qualify for the 20% tax credit for historic buildings, the rehabilitation must be approved as meeting The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings. This ensures that the work is consistent with the historic character of the building and, if applicable, the surrounding historic district.
Contact Elizabeth (Beth) Foster Hill, Tax Incentive Programs Manager/National Register Coordinator, at (515) 281-4137 or Beth.Foster@iowa.gov to find out your building’s National Register status or for information about how to nominate a property to the National Register of Historic Places.
2) For the 10% rehabilitation tax credit, the building must have been first used or occupied prior to 1936, the building cannot be used for residential purposes, and it cannot be listed on the National Register of Historic Places individually or as a contributing resource in a National Register-listed historic district. The State Historic Preservation Office does not review projects applying for the 10% credit. For more information go to the IRS website.
For both tax credits, there should be "substantial rehabilitation" of the building within a 24-month period. This means that the amount invested into the rehabilitation must exceed the "adjusted basis" or depreciated value of the building. In some instances, the substantial rehabilitation for 20% tax credits may extend up to 60 months and across several phases.
About the Federal Tax Incentives for Historic Preservation: http://www.cr.nps.gov/hps/tps/tax/brochure1.htm
Introduction to Federal Tax Credits for Rehabilitating Historic Buildings Series: Guides to the tax credits and the application process for first-time program users and small-project owners. Four guides are available in PDF format: barns, Main Street commercial buildings, rowhouses, and wood frame houses.
Historic Preservation Tax Credit, Technical Preservation Service's: Information on preserving historic buildings and the Historic Preservation Tax Incentives http://www.nps.gov/history/hps/tps/tax/index.htm
Historic Preservation Tax Credits, The IRS Connection: http://www.nps.gov/history/hps/tps/tax/IRS.htm
Historic Preservation Tax Credit Application Forms and Instructions, the same as listed below, can also be obtained at http://www.nps.gov/history/hps/tps/tax/hpcappl.htm.
To qualify for the Federal Historic Preservation Tax Incentives Program, property owners must complete the appropriate part or parts of the Historic Preservation Certification Application.
Online applications and instructions
The federal application and instructions were revised in 2011. After December 31, 2011, SHPO will no longer accept federal applications on the old form. You may want to consider hiring a consultant to assist in the preparation of the tax credit application and/or the National Register nomination.
Elizabeth (Beth) Foster Hill
Tax Incentive Programs Manager/National Register Coordinator
Department of Cultural Affairs
600 E. Locust Street
Des Moines, IA 50319-0290
Browse the list of Web sites to find helpful information related to tax incentives and other information.