Eligibility
Building must be a certified historic structure, substantially rehabilitated (expenditures exceed adjusted basis), and the credit must be claimed ratably over a 5-year period beginning when the building is placed in service.
Frequently Asked Questions
Who is eligible for the Historic Rehabilitation Tax Credit?
Building must be a certified historic structure, substantially rehabilitated (expenditures exceed adjusted basis), and the credit must be claimed ratably over a 5-year period beginning when the building is placed in service.
How does the Historic Rehabilitation Tax Credit work?
Provides a 20% tax credit for qualified rehabilitation expenditures (QREs) incurred during the restoration of a certified historic structure.
What law authorizes the Historic Rehabilitation Tax Credit?
The Historic Rehabilitation Tax Credit is authorized under IRC §47 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §47
Source: Internal Revenue Code, Title 26, United States Code
§ 47. Rehabilitation credit(a) General rule(1) In generalFor purposes of section 46, for any taxable year during the 5-year period beginning in the taxable year in which a qualified rehabilitated building is placed in service, the rehabilitation credit for such year is an amount equal to the ratable share for such year.
(2) Ratable shareFor purposes of paragraph (1), the ratable share for any taxable year during the period described in such paragraph is the amount equal to 20 percent of the qualified rehabilitation expenditures with respect to the qualified rehabilitated building, as allocated ratably to each year during such period.
(b) When expenditures taken into account(1) In generalQualified rehabilitation expenditures with respect to any qualified rehabilitated building shall be taken into account for the taxable year in which such qualified rehabilitated building is placed in service.
(2) Coordination with subsection (d)The amount which would (but for this paragraph) be taken into account under paragraph (1) with respect to any qualified rehabilitated building shall be reduced (but not below zero) by any amount of qualified rehabilitation expenditures taken into account under subsection (d) by the taxpayer or a predecessor of the taxpayer (or, in the case of a sale and leaseback described in section 50(a)(2)(C), by the lessee), to the extent any amount so taken into account has not been required to be recaptured under section 50(a).
(c) DefinitionsFor purposes of this section—(1) Qualified rehabilitated building(A) In generalThe term “qualified rehabilitated building” means any building (and its structural components) if—(i) such building has been substantially rehabilitated,
(ii) such building was placed in service before the beginning of the rehabilitation,
(iii) such building is a certified historic structure, and
(iv) depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.
(B) Substantially rehabilitated defined(i) In generalFor purposes of subparagraph (A)(i), a building shall be treated as having been substantially rehabilitated only if the qualified rehabilitation expenditures during the 24-month period selected by the taxpayer (at the time and in the manner prescribed by regulation) and ending with or within the taxable year exceed the greater of—(I) the adjusted basis of such building (and its structural components), or
(II) $5,000.
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