– The rehabilitation tax credit is equal to 20% of qualified rehabilitation expenditures for a building that is a certified historic structure and used for business or income production.
– The building must be substantially rehabilitated, with QREs exceeding $5,000 or the adjusted basis of the existing building.
– QREs are capital expenses incurred in connection with the rehabilitation of the building, excluding land costs and building enlargement or acquisition costs.
– The 20% credit is allocated evenly over a five-year period, with 4% of QREs allowed as a credit each year.
– The credit can be used against both regular federal income tax and alternative minimum tax. – Tax Cuts and Jobs Act requires taxpayers to take the 20% credit over five years instead of in the year the building is placed into service
– The 10% rehabilitation credit for pre-1936 buildings has been eliminated
– Other federal tax benefits may be available for the space being considered, depending on energy needs and location
– State or local tax and non-tax subsidies may also be available
– Construction professionals can help determine if a specific old building can be rehabilitated to comply with tax credit requirements
– Assistance is available to monitor project costs and ensure compliance with tax credit requirements and other benefits.
Take Advantage of the Rehabilitation Tax Credit When Altering or Adding to Business Space
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