Saturday, October 13, 2007

Historic Tax Credit can help you preserve your historic home

Something that has helped me a great deal in preserving and fixing up my home, which was built in 1919 is Utah's tax credit for historic preservation. In essence, it has helped me wipe out 2 years income taxes. It is worth your exploration, and use.

What is the Utah Historic Preservation Tax Credit? A 20 % nonrefundable tax credit for the rehabilitation of historic buildings which are used as owner-occupied residences or residential rentals. Twenty percent of all qualified rehabilitation costs may be deducted from taxes owed on your Utah income or corporate franchise tax.
Example: $22,000 in qualified rehabilitation cost = $4,400 state income tax credit.
Does My Building Qualify? Buildings listed in the National Register of Historic Places, which, after rehabilitation, are used as a residence(s) qualify. The credit is not available for any property used for commercial purposes including hotels or bed-and-breakfasts. (If the historic B&B is also owner-occupied, this portion of the rehabilitation may qualify.) The building does not need to be listed in the National Register at the beginning of the project, but a complete National Register nomination must be submitted when the project is finished. The property must be listed in the National Register within three years of the approval of the completed project. Staff of the Historic Preservation Office can evaluate the eligibility of your building and provide instructions on nomination requirements. For more information about the National Register see
What Rehabilitation Work Qualifies? The work may include interior and/or exterior repair, rehabilitation orrestoration, including historic, decorative, and structural elements as wellas mechanical systems. All of the proposed, ongoing or completed work must meet the Secretary of the Interior's Standards for Rehabilitation and be approved by the State Historic Preservation Office (SHPO). Depending on the historic conditions and the specifics of the proposed rehab work, some examples of eligible work items include:
-repairing/upgrading windows -plumbing repairs and fixtures -refinishing floors, handrails, etc. -repairing or replacing roofs -compatible new kitchens & baths -reversing incompatible remodels-painting walls, trim, etc. -repointing masonry -reconstructing historic porches -new furnace, A/C, boiler, etc. -new floor and wall coverings -electrical upgrades
Necessary architectural, engineering, and permit fees may also be included. The purchase price of the building, site work (landscaping, sidewalks, fences, driveways, etc.), new additions, work on outbuildings, and the purchase and installation of moveable furnishings or equipment (window coverings, refrigerators, etc.) do not qualify for the credit.
All of the work must meet the Secretary of the Interior's Standards for Rehabilitation (Great Illustrated Guide from the NPS) or the tax credit cannot be taken on any portion of the work. A complete application should be submitted to the SHPO as early as possible. The state law requires application and approval by the SHPO prior to completion of the project.
It is strongly recommended that the application be submitted before starting work. Any work begun without prior SHPO approval is done at the owner's own risk. Once work is underway, changes to bring the project into conformance with the Secretary of the Interior's Standards for Rehabilitation can be difficult, expensive or occasionally impossible to make.
(The National Park Service has prepared an online course to help building owners identify the tangible elements or features that give historic buildings their unique visual character. Reading this will help you make design decisions regarding your historic house.)
Photographs showing all areas of work (interior and exterior) prior to the beginning of the rehabilitation and any construction drawings or other technical information necessary to completely understand the proposed project are also required as part of the application.How Much Money Must I Spend to Qualify? Total rehabilitation expenditures must exceed $10,000. (The tax credit applies equally to this first $10,000.) The purchase price of the building and any donated labor cannot be included. The project must be completed within 36 months. (There is no limit to subsequent $10,000+ projects; separate applications are required.) When Can I Claim the Credit? The credit may be taken for the tax year in which the project was completed and the SHPO approves the rehabilitation work (and a National Register nomination, if needed). A unique certification number will be issued to the owner at that time. Credit amounts greater than the amount of tax due in that year may be carried forward up to five years. Are There Any Restrictions Placed on My Building? All work done to the building during the rehabilitation project, and for three years following the certification of the project, must meet the Secretary of the Interior's Standards for Rehabilitation. Please consult with the State Historic Preservation Office if you have any questions. What if I Already Have Approval From my Local Landmarks Commission?The local review process will be helpful to tax credit application process but state law requires application to the State Historic Preservation Office. Local preservation commissions sometimes have different requirements and other considerations than the Secretary of the Interior's Standards for Rehabilitation. To qualify for the state tax credit, all of the work must meet the Standards and receive state approval. Application for the state tax credit must be made before the project is completed, preferably before work even begins (see above).
How do I Claim the Tax Credit? The original completed and signed form TC-40H, Historic Preservation Tax Credit, must be attached to your initial state income tax return. This form will be provided by the SHPO when the completed project is approved. If you carry forward an excess portion of this tax credit, you must attach a copy of the signed, original TC-40H form, with the new carry forward amount, to your subsequent tax return(s). Note that carry forward amounts must be applied against tax due before the application of any historic preservation tax credits earned in the current year and on a first-earned, first-used basis. Please consult with the State Tax Commission if you have any questions. Original records supporting the credit claimed must be maintained for three years following the date the return was filed claiming the credit.For More Information or an Application, Contact:
Nelson Knight at (801) 533-3562State Historic Preservation OfficeUtah Division of State History300 Rio GrandeSalt Lake City, Utah 84101fax: (801) 533-3503

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