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The Federal Rehabilitation Tax Incentive Program for historic buildings has catalyzed the revitalization of downtowns and entire neighborhoods as well as the rehabilitation of individual landmarks. The program permits the owner of an income-producing historic building to seek an income-tax credit equal to 20% of the qualified rehabilitation expenditures. An income-producing property may encompass commercial space, office space, rental apartments, a bed and breakfast inn, etc., or a mixture of such uses. The building must be listed in the National Register of Historic Places, either individually or as a contributing property of a historic district. Further, the rehabilitation must meet the Secretary of the Interior’s Standards for Rehabilitation.
With regard to the financial requirements of the program, the structure must be substantially rehabilitated, which means that the qualified expenditures must exceed the greater of $5,000 or the adjusted basis of the building (adjusted basis: cost of the property minus cost of the land, plus any capital improvements already made, minus any depreciation already taken). Generally, this expenditure test must be met within a 24-month period.
The program is administered at the federal level by the US Department of the Interior and at the state level by the Delaware Division of Historical and Cultural Affairs through their Preservation Section (HCA). It is strongly recommended that the property owner contact the HCA staff before any work begins so that they may receive assistance in meeting all program requirements during the early stages of project planning. All federal applications must be reviewed by HCA staff prior to their submission to the federal government for approval.
For further information regarding the federal tax credit program, the application forms, the IRS information governing the program, and guidance on the Secretary of the Interior’s Standards, please go here.
To contact the HCA staff to discuss the federal tax incentive program, please contact:
Tax Credit Program Coordinator
Division of Historical and Cultural Affairs
21 The Green
Dover, DE 19901