Are you planning on undergoing a major renovation? Contact Samantha for a free consultation to see if you can receive historic preservation tax credits.
North Carolina Historic Preservation Tax Credits
Do you own property that is individually listed on the National Register of Historic Places? Do you own a home or commercial property in a National Register District that is contributing to a National Register District? Do you have plans to rehabilitate, restore, or renovate your property? If so, you may be eligible for tax credits in the state of North Carolina. (If you’re unsure if your property is listed or if you are interested in listing your property, please contact Samantha for a free consultation). If your property is income-producing, you are also eligible for a federal tax credit.
Non-Income Producing Property Credits
Non-income producing properties are, essentially, residential properties that are owner-occupied.
In the state of North Carolina, residential historic preservation credits are structured in this manner:
- Your property must be National Register listed or be contributing to a National Register Historic District.
- Your tax credit will be 15% of eligible rehabilitation expenses
- Your project threshold must be at least $10,000 of rehabilitation expenses within a 24 month period.
- Your maximum project cap for eligible rehabilitation expenses total $150,000, with a maximum credit of $22,500.
- Eligible rehabilitation expenses must be incurred within any 24 month period.
- As of January 1, 2016, the mandatory five year carry-forward has been eliminated.
- Now, credit may be taken in the year your structure is placed in service and carried forward for nine years.
- Credits may be transferred with the property so long as the transfer of property occurs before it is placed in service.
- You are now allowed to claim credits for a rehabilitation once every five years.
RESIDENTIAL TAX CREDIT EXAMPLE:
A home-owner spends $50,000 in Rehabilitation Expenses. He did his rehabilitation under the guidance of a preservation consultant to ensure it followed the Secretary of Interiors Standards. He has the consultant handle all the paperwork, and he receives a 15% State Tax Credit totaling $7,500.
Income Producing Property Credits
Income producing properties include commercial, industrial, and residential rental properties.
The commercial tax credit offers owners of historic buildings a federal tax credit of 20% and a base state tax credit of 15% for qualifying rehabilitations of income-producing historic structures. Bonus state tax credits may be available up to 25%. In the state of North Carolina, income-producing historic preservation credits are tiered in this manner:
- A 10% tax credit for rehabilitations costing between $10 million and $20 million (with no credit exceeding $20 million)
- Development Tier Bonus (5%): For projects in Tier 1 or Tier 2 counties, a Development Tier Bonus of 5% may be available for rehabilitation expenditures up to $20M.
- Targeted Investment: If your property is Manufacturing or Agricultural related and at least 65% vacant for two years preceding eligibility certification, you may be eligible to receive a 5% Targeted Investment Bonus credit.
- Mills also get special bonus credits
- The maximum credit you can receive is $4.5 million (based on a $20 million project of a vacant mill in distressed county).
- As of January 1, 2016, the mandatory five year carry-forward has been eliminated. Now, credit may be taken in the year your structure is placed in service and carried forward for nine years.
COMMERCIAL TAX CREDIT EXAMPLE:
If a developer spends $1,000,000 in Rehabilitation Expenses, she receives a 20% Federal Tax Credit and a 15% Base Level State Tax Credit, totaling $350,000 before applying any eligible bonus credits.