Does anyone have any experience in getting a structure certified as a historic structure? I am about to be under contract on an apartment building that meets the requirements to become certified assuming I rehab it correctly. I would be interested in learning from someone about there experience actually going through the process. Once you are certified, I've read about the strictness that you may fall under and experiences with that.
It looks like you can carry that tax credit forward indefinitely as well?
Overall is the whole process worth the extra 10% over the non historic credit?
You need to apply to get the structure certified through your state's historic preservation office. If it's not on the National Register, and it's not a contributing part of a registered district, it will need to be accepted for inclusion by the National Park Service. When you restore it, the work plan has to be approved by the NPS and you have to spend more than your adjusted basis in the property on the restoration work. You have to follow the Secretary of the Interior's guidelines in performing the work. It has to pass inspection upon completion, and they can audit the site for up to five years after completion.
There is no 10% credit anymore. The 20% credit is spread evenly over five years. There is also a Colorado tax credit up to 30%. The state cap is $10 million in credits per year, and it is available on a first-come, first-serve basis.
I suggest you take the time to do some research on the credit capture process at the federal and state levels, get familiar with some of your points of contact at those agencies to find out from them how to maximize your chances of success, and get a warm coat. The Colorado applications are timestamped and if I were you, I'd be standing outside their office at six in the morning on January 2nd with a federally approved plan in hand.
Aaron thanks for the reply! Property is in TN actually, it is historically significant, but not on the registrar/in a historical district (current owner has been approached before on the subject). I was unaware of the adjusted basis provision - that's good to know.
I have a contact with the state, and will definitely start there - glad to know there are others with experience here.
I just made it through robert hall's book on restoring historic commercial property. The book, albeit is quite basic, it makes the task seem a whole less daunting of a task. Do you have any resources/consultants in the area that be of help?
That's a good place to start. I wouldn't expect that there is any state incentive available as TN has no tax on personal income. Novogradac is a good resource, but take what you get from their website with a grain of salt. They misinterpreted how the SC credits work, and they may have for other states as well. The code section you need to read is IRC §47.
4 years ago I did a historic tax rehab in Richmond Va, 20% income tax credit, and 25% state income tax credit. I did not know how it worked at all and ended up hiring a consultant. He was a huge help. He took care of all the paperwork, pictures, and when there was an issue he took care of it. $3000 was his fee but man was it worth it. We sold the state income tax credits for 70c on the dollar and used the federal income tax credits. What a great program, if you are unsure of the process at all, I highly recommend a consultant. He stopped us from making big mistakes in the rehab that would cost us thousands of dollars.
If you are restoring a historic tax credit project in the central US and need wood window restoration or reproduction wood windows, Wood Window Rescue out of OKC travels regionally and has completed several tax credit projects.
@Nick P. Did you end up listing your building? I have experience with this as a historic tax credit consultant if you have any questions. Pursuing historic tax credits is a bit of a process and it can be very helpful working with someone that is familiar with the system.
@Mark Fagan are there any downsides or risks to applying for the Historical Tax Credits that you are aware of?