Make sure you check your state tax code as well. Here in NC there are also credits that you can take on your state return for the restoration of historic homes.
Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
12y
Thank you for tax credit advice. I found more information on IRS website. See below.
"Rehabilitation Tax Credit - Real Estate Tax Tips
The rehabilitation credit applies to costs you incur for rehabilitation and reconstruction of certain buildings. Rehabilitation includes renovation, restoration, and reconstruction. It does not include enlargement or new construction.
Generally, the percentage of costs you can take as a credit is:
10% for buildings placed in service before 1936
20% for certified historic structures" http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Rehabilitation-Tax-Credit-Real-Estate-Tax-Tips
Make sure you check your state tax code as well. Here in NC there are also credits that you can take on your state return for the restoration of historic homes.
Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
12y
Thank you for the advice
New York State has one
"Rehabilitation of historic properties credit
You're entitled to this nonrefundable credit if you or your business:
is allowed a federal credit under IRC section 47, for a structure located in New York State, and
all or part of the rehabilitation project is either a targeted area residence within the meaning of IRC section 143(j), or is located within a census tract identified as being at or below 100% of the state median family income in the most recent federal census
How much is the credit?
For tax years beginning on or after January 1, 2010, and before January 1, 2015, the credit equals 100% of the federal credit amount allowed. However, the total amount of New York State credit allowed can't exceed $5 million dollars per structure"
You're entitled to this nonrefundable credit if you or your business:
is allowed a federal credit under IRC section 47, for a structure located in New York State, and
all or part of the rehabilitation project is either a targeted area residence within the meaning of IRC section 143(j), or is located within a census tract identified as being at or below 100% of the state median family income in the most recent federal census
How much is the credit?
For tax years beginning on or after January 1, 2010, and before January 1, 2015, the credit equals 100% of the federal credit amount allowed. However, the total amount of New York State credit allowed can't exceed $5 million dollars per structure"
Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
12y
Steven,
I just face the issue of not able to find enough information about this rehabilitation credit. I found Tax Aspects of Historic Preservation but my property is not historic building. It is single family that I had to renovate to live in it. I did not use architect or engineer because it wan not necessary. However, I used licensed contractor and licensed electrician to do the job. All work was done on banks money (203k loan)
I have two questions
Can I apply for the credit?
Could you send me link to website or document with more information?
Rental Property Investor · Staten Island, NY · Member since 2013 · 480 posts · 197 votes
12y
I found instruction for form 3468. There is explanation for Qulified Rahabilitated Building. Please correct me if I misunderstand something. My comments is bold font.
To be a qualified rehabilitated building, your building must meet
all five of the following requirements.
1. The building must have been placed in service (see
requirement 4) prior to 1936 unless it is a certified historic
structure. My building was build and places in service around 1920. The first requirement met.
2. The building must be substantially rehabilitated. A
building is considered substantially rehabilitated if your qualified
rehabilitation expenditures during a self-selected 24-month
period that ends with or within your tax year are more than the
greater of $5,000 or your adjusted basis in the building and its
structural components. Figure adjusted basis on the first day of
the 24-month period or the first day of your holding period,
whichever is later. I bought my house in August 2012. Renovation started October 2012 and ended February 2013. Cost of renovation is 75k. The second requirement met.
3. Depreciation must be allowable with respect to the
building. Depreciation is not allowable if the building is
permanently retired from service. If the building is damaged, it is
not considered permanently retired from service where the
taxpayer repairs and restores the building and returns it to actual
service within a reasonable period of time. What does "depreciation must be allowable with respect to the building?"
4. The building must have been placed in service before the
beginning of rehabilitation. This requirement is met if the building
was placed in service by any person at any time before the
rehabilitation began. I did not live there before rehabilitation but the building have been placed in service before. The 4th requirement met.
5. For a building other than a certified historic structure (a) at
least 75% of the external walls must be retained with 50% or
more kept in place as external walls, and (b) at least 75% of the
existing internal structural framework of the building must be
retained in place. A and B are correct for my building. The 5th requirement met.