H97 - 2015 Appropriations Act, Sec. 32.3: Historic Preservation Tax Credit (SL 2015-241)

Overview: Sec. 32.3 of S.L. 2015-241, as amended by Sec. 54.5 of S.L. 2015-264 and Sec. 10.1(b) of S.L. 2015-268, establishes a temporary tax credit for historic rehabilitation as described below. The tax credit becomes effective January 1, 2016, and applies to qualified rehabilitation expenditures incurred on or after that date. The credit will expire for expenses incurred on or after January 1, 2020.

• Income-Producing Propertyy. - A taxpayer is allowed a tax credit, capped at $4.5 million, that is equal to 15% of the first $10 million in qualified rehabilitation expenditures for an income-producing historic structure, plus 10% of the next $10 million, plus 5% for the first $20 million if the structure is located in a Tier 1 or 2 area, plus 5% for the first $20 million if the structure is located on an eligible targeted investment site.
• Non-Income Producing Propertyy. - A taxpayer is allowed a tax credit, capped at $22,500, that is equal to 15% of expenses to rehabilitate a building listed in the National Register of Historic Places or certified by the State Historic Preservation Officer as contributing to the historic significance of a National Register Historic District or a locally designated historic district certified by the United States Department of the Interior. The taxpayer must have at least $10,000 in expenses to qualify for the credit.

The credit also applies for certain 2014 and 2015 expenditures. Section 54.5 of S.L. 2015-264 (General Statutes Commission Technical Corrections Act of 2015) allows a taxpayer to claim the credit for expenses incurred in 2014 and 2015 if: (i) the historic structure is located in a Tier 1 or Tier 2 county; (ii) the structure is owned by a city; (iii) the rehabilitation activity commenced in 2014; and (iv) a certificate of occupancy is issued on or before December 31, 2015.

Finally, this section also modifies the expiration of the Mill Rehabilitation Tax Credit, which expired on January 1, 2015. Under prior law, as long as a taxpayer obtained an eligibility certification prior to the expiration date, the taxpayer could claim the credit whenever the project was ultimately placed in service. This section provides that eligibility certifications will expire on January 1, 2023, so the availability of the credit is not as open-ended.