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Benchmark Historic Tax Credit Presentation


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Historic Tax Credit Overview--ref Oklahoma

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Benchmark Historic Tax Credit Presentation

  1. 1. Preservation TaxPreservation Tax Incentives forIncentives for Historic BuildingsHistoric Buildings Christopher C. FieldsChristopher C. Fields Benchmark Community DevelopmentBenchmark Community Development (405) 625-1793(405) 625-1793
  2. 2. Preservation TaxPreservation Tax IncentivesIncentives  Created in 1976, Revised by Tax Reform Act of 1986  20% Tax Credit for Certified Rehabilitation of certified historic structures  10% Tax Credit for rehabilitation of non-historic non-residential building built before 1936  Both Credits must meet a substantial rehabilitation test and involve a depreciable building
  3. 3. Oklahoma FactoidsOklahoma Factoids  Only 30% of the buildings rehabilitated were ON the National Register BEFORE participating in the tax credit program.  65% of Oklahoma’s tax credit rehabilitation projects have been for buildings located in National Register historic districts.
  4. 4. Definition of Key TermsDefinition of Key Terms  Tax Credit  lowering of the tax owed ($ for $)  Historic Structure  a building that is listed individually in the National Register of Historic Places  a building that is located in a registered historic district and certified by the National Park Service as contributing to the historic significance of that district.  Certified Historic Rehabilitation  a rehabilitation of a certified historic structure that is approved by the National Park Service as being consistent with the historic character of the property and, where applicable, the district in which it is located
  5. 5. Definition of Key TermsDefinition of Key Terms  Substantial Rehabilitation During a 24 month period of time, selected by the taxpayer, rehabilitation expenditures must exceed the greater of:  $5,000.00 OR the adjusted basis of the building and its structural components (purchase price, minus cost of land, plus improvements already made, minus depreciation already taken)  Once the substantial test is met, all qualified expenditures, including those incurred outside of the measuring period, qualify for the credit.
  6. 6. GovernanceGovernance SHPO (State Historic Preservation Office) NPS (National Park Service) IRS First Point of Contact, Provides Forms & Program Info, Technical Assistance Reviews all applications for conformance to Secretary of Interior’s Standards Publishes Rules, Regulations and Procedures for 20% & 10% Tax Credit Maintains National Historic Districts & Buildings for State Issues all Certification Decisions Answers Inquiries re: Legal & Financial aspects of programs Makes Certification Recommendations to NPS Develops and Publishes program regulations, standards, applications and related information Ensures only those eligible for the Tax Credits utilize them
  7. 7. Sample ProjectSample Project  Built in 1928  Façade renovation ’54  Former Auto Dealership  In Historic District  Certified as Historic Structure  Needs minor external restoration  Owner intends to sell property post rehabilitation
  8. 8. Application ProgressionApplication Progression  Seek advice BEFORE you begin work—plan with SHPO, Architect, Tax Pros  Photograph, Photograph, Photograph  Ongoing Communication—beware of change orders!  Only a completed project that meets the Standards of Rehabilitation is approved as a “Certified Rehabilitation”  Submission of Part 3 Triggers Tax Credits
  9. 9. HPC Application OverviewHPC Application Overview HPCA Part 1 Evaluation of Significance HPCA Part 2 Description of Rehabilitation HPCA Part 3 Evaluation of Significance  Documents the physical appearance of the building States the Significance of the building  Building and rehabilitation project data gathered Records anticipated costs of project Itemized documentation of proposed project Document Final Costs Owner attests the completed project conforms to “approved” HPCA Part 2
  10. 10. Requirements Standards &Requirements Standards & FeesFees NPS Processing Fees  If Total Renovation is under $20,000 there is no fee Preliminary Fee of $250 assessed before Review of HPCA Part 2 Final Fee assessed before review of HPCA Part 3, Fee Schedule based on total rehabilitation, less Preliminary Fee IRS Requirements  Building must be depreciable, used in trade Rehabilitation must be substantial Property must be placed in service Must be Historic Structure at time placed in service, HPCA Part 1 must be filed prior to placing in service Costs must be Qualified Rehabilitation Expenditures
  11. 11. Requirements Standards &Requirements Standards & FeesFees Secretary of Interior’s Standards for Rehabilitation  Certified Rehabilitation projects must meet the standards as interpreted by NPS  Standards are applied in a reasonable manner with the consideration of economic and technical feasibility  Apply to all historic building of all types  Apply to interior and exterior  Encompass related landscape features, site, and environment  Encompass attached, adjacent, and related new construction
  12. 12. Thank You!Thank You! Christopher C. Fields Benchmark Community Development (405) 625-1793