Historic Tax Credits for Commercial Buildings
Maximize your return on historic property investment with federal and Florida tax credits. Understanding eligibility, application process, and compliance requirements.
Up to 40% Cost Offset: Combined federal (20%) and Florida (up to 20%) historic tax credits can offset a significant portion of rehabilitation costs, making challenging projects financially viable.
Available Historic Tax Credits
Multiple programs can be combined to maximize your tax credit benefit.
of qualified expenses
Federal Historic Tax Credit (HTC)
Qualified Rehabilitation Expenditures (QREs)
Certified historic structures; income-producing use
National Park Service / IRS
Dollar-for-dollar reduction in federal tax liability
of qualified expenses
Florida Historic Tax Credit
Qualified expenses per Florida standards
State-recognized historic properties
Florida Division of Historical Resources
Can be combined with federal credit for up to 40% total
of qualified expenses
Ad Valorem Tax Exemption
Assessed value of improvements (10-year term)
Properties in participating jurisdictions
Local Property Appraiser
Significant property tax savings during payback period
Eligibility Requirements
All five requirements must be met to claim the federal historic tax credit.
Certified Historic Structure
Building must be listed on National Register of Historic Places individually or as a contributing building in a registered historic district
NPS Part 1 application confirms historic status
Ybor City, Hyde Park, parts of downtown Tampa, various individual listings
Substantial Rehabilitation
Qualified expenditures must exceed the greater of $5,000 or the adjusted basis of the building
Adjusted basis = purchase price minus land value, plus prior improvements, minus depreciation
Most significant rehabilitations easily meet this threshold
Income-Producing Use
Building must be used for income-producing purposes (not owner-occupied residential)
Commercial, rental residential, mixed-use all qualify
Offices, retail, apartments, hotels, restaurants all eligible
Secretary of Interior Standards
Work must comply with Secretary of Interior's Standards for Rehabilitation
NPS Part 2 review ensures compliance before construction
FCS works with preservation architects familiar with these standards
5-Year Hold Period
Property must be held for at least 5 years after placed in service
Sale or change of use triggers credit recapture
Plan ownership structure accordingly; partnerships common
NPS Application Process
The three-part NPS application process must be followed in sequence for credit certification.
Part 1: Historic Significance
30 days SHPO review + 30 days NPS reviewBefore acquisition or early planning
Confirms building qualifies as certified historic structure
State Historic Preservation Office (SHPO) then NPS
Approval confirms eligibility; denial can sometimes be appealed
Part 2: Description of Rehabilitation
30 days SHPO + 45-60 days NPSBefore construction begins (strongly recommended)
Reviews proposed work for compliance with Secretary's Standards
SHPO then NPS
Approval is conditional on work being completed as proposed
Part 3: Certification of Completed Work
30 days SHPO + 90 days NPSAfter construction complete, before claiming credit
Confirms completed work matches approved Part 2
SHPO then NPS
Approval allows credit to be claimed; IRS Form 3468
Qualified vs Non-Qualified Expenditures
Only certain costs count toward the tax credit. Understanding what qualifies is essential for project planning.
| Category | Qualifies? | Examples | Notes |
|---|---|---|---|
| Structural Work | Yes | Foundation repairs, structural steel, load-bearing walls, roof structure | Core structural work typically qualifies if building is retained |
| Building Systems | Yes | HVAC, plumbing, electrical, fire suppression, elevators | New systems in historic building shell qualify |
| Interior Finishes | Yes | Walls, ceilings, flooring, millwork, built-ins | Both restoration of historic and compatible new work |
| Exterior Restoration | Yes | Windows, doors, facade repair, masonry restoration, roofing | Character-defining features especially important |
| Architectural/Engineering Fees | Yes | Design fees directly related to rehabilitation | Must be clearly allocated to rehabilitation work |
| Site Work | No | Parking lots, landscaping, fencing, site utilities | Site improvements outside building footprint do not qualify |
| New Construction/Additions | No | Building additions, new structures on site | Only work on existing historic structure qualifies |
| Furniture and Equipment | No | FF&E, moveable equipment, appliances | Only permanently attached building components qualify |
| Acquisition Costs | No | Building purchase price, closing costs | Only rehabilitation expenditures, not acquisition |
Sample Tax Credit Calculation
Hypothetical Tampa Bay historic rehabilitation project demonstrating potential tax credit benefits.
Effective cost reduction: 22.4% of total project
Example for illustration only. Actual credits depend on project specifics, tax situation, and program availability.
Common Mistakes to Avoid
These errors frequently result in lost or reduced tax credits. Planning ahead prevents costly problems.
Starting Work Before Part 2 Approval
Work may not qualify; must be redone or credit denied
Submit Part 2 early; wait for approval before construction
Preliminary work (stabilization) may proceed with documentation
Removing Character-Defining Features
Violates Standards; Part 3 denial; credit lost
Identify and protect all character-defining features in planning
Windows, cornices, and interior details are common problem areas
Incompatible New Work
Standards violation; rework required; delays
Work with experienced preservation architect; coordinate early with SHPO
New work must be distinguishable but compatible
Inadequate Documentation
Cannot prove expenses; reduced credit
Maintain detailed records; photograph before/during/after
Allocate costs clearly between qualified and non-qualified
Ownership Structure Issues
Credit may be unusable or lost
Structure ownership for tax credit utilization; consult tax attorney
Syndication common when owner lacks tax liability
Frequently Asked Questions
Maximize Your Historic Tax Credit Return
Florida Construction Specialists has completed tax credit projects throughout Tampa Bay. We coordinate with preservation architects and SHPO to ensure your project qualifies for maximum credits.