Commercial Properties

The Federal Investment Tax Credit Program authorizes a twenty percent investment tax credit for substantial rehabilitation of commercial historic properties listed on the National Register of Historic Places.

The rehabilitation plans and specifications are reviewed and approved by the State Historic Preservation Office and then are forwarded to the National Park Service for final certification. The rehabilitation work must be done according to the Secretary of the Interior's Standards for Rehabilitation.

In return for the credit, the historic building must be used for an income-producing purpose for at least five years. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit.

The typical savings for a property owner depends upon the amount of money invested in the rehabilitation of the building. It also makes a difference when the money is invested into the home or historic building. The earlier the investment is made, the more money is saved.

An Example

If an investor purchases an historic commercial property for $100,000, and invests $150,000 to rehabilitate it, through this program he would be able to claim $30,000 (20%) credit for this project which would be subtracted from the amount of individual Federal income tax he would have to pay.

If this commercial historic property owner has an income of less than $200,000, he may use the tax credit to offset the tax owed on up to $25,000 of his income. So, for this taxpayer in the 36% tax bracket, he could use $9,000 of tax credits per year (36% x $25,000 = $9,000). Any unused credits are carried forward to the next year.*

*Ms. Fitzgerald is not a professional tax advisor. Please consult your CPA for expert advice on property tax information and property investments.