Historic Tax Credits

The Federal Historic Tax Credit (HTC) provides a 20% tax credit for the certified rehabilitation of National Register-listed historic buildings used for income-producing purposes. The credit applies to qualified rehabilitation expenditures (QREs)—essentially the cost of rehabilitation work, excluding land acquisition and new additions. A $1 million rehabilitation generates a $200,000 federal tax credit.

Properties must be: 1) Listed in the National Register of Historic Places, or contributing to a National Register historic district, 2) Depreciable (income-producing)—commercial, rental residential, or mixed-use, 3) Substantially rehabilitated (rehabilitation costs exceed the greater of $5,000 or the adjusted basis of the building). Owner-occupied personal residences don't qualify for federal credits.

Yes, Florida's Historic Preservation Tax Credit (FHPTC) provides an additional 20% state credit for certified rehabilitations. Combined with the 20% federal credit, qualifying projects can receive 40% of rehabilitation costs back in tax credits. The state credit has an annual cap of $30 million statewide, with individual project caps based on project size.

Qualified rehabilitation expenditures (QREs) include: structural work, mechanical/electrical/plumbing upgrades, interior finishes, exterior restoration, and architectural/engineering fees. Costs that don't qualify include: land acquisition, building acquisition, new additions (though they can be part of the project), furniture and equipment, and landscaping. Work must meet Secretary of Interior Standards.

The process has three parts: Part 1 certifies the building is historic (unless already individually listed). Part 2 describes proposed work and must be approved before construction begins. Part 3 documents completed work and requests credit certification. All three parts are submitted through Florida SHPO to the National Park Service.

Technically yes, but it's risky. Work completed before Part 2 approval that doesn't meet the Standards may not qualify for credits, and required corrections can be expensive. We strongly recommend waiting for Part 2 approval before beginning rehabilitation work. Emergency stabilization can usually proceed with documentation.

If your building is in a National Register historic district, it may qualify as a 'contributing' resource—Part 1 of the application establishes this. If it's not in a district, you can pursue individual National Register nomination, which typically takes 12-18 months. We can help determine the best path for your property.

Tax credit projects require extensive documentation at every stage—before, during, and after construction. Material choices, methods, and changes must align with approved Part 2 submissions. Any deviation requires amendment approval before implementation. We build these requirements into project management from the start.

Add 4-6 months for Part 2 review and approval before construction. Part 3 review takes 2-4 months after construction completion. Plan for 18-24 months total from project initiation to credit certification for substantial rehabilitations. We coordinate schedules to minimize delays while ensuring compliance.

Nonprofits don't pay taxes, so they can't directly use tax credits. However, they can benefit through syndication—partnering with investors who can use the credits in exchange for equity investment or project financing. This is complex but can make historic projects financially viable for nonprofit owners.