What are the tax credits for rehabilitation of historic buildings?

Updated

1999
Klein Farm-New Bremen, OH after rehabilitation.

Answer:

There are two levels of federal tax credits available for rehabilitation of historic buildings: a 20% tax credit for rehabilitation of buildings eligible for listings on the National Register, and a 10% tax credit for buildings built before 1936 that are not eligible for the Register.

A tax credit is a direct credit on the amount of taxes you owe (as opposed to a tax deduction). The credit is applied against the investment made into your rehabilitation expenses.

To use the tax credit, your rehabilitation project must cost a minimum of $5,000 or the adjusted cost basis of your building (whichever is greater). The barn must also be part of an income producing activity.

To use the 20% tax credit, your building must be certified as historic by your SHPO, and your rehabilitation work must be approved by the SHPO. To use the 10% credit, request "Form 3468—Investment Credit" from the IRS and follow the instructions included with the form. The form can be found on the IRS website under Forms and Publications #3468.

Several states also have state income tax credits (some which can be used in conjunction with federal income tax credits), or property tax credits or abatements, for rehabilitation of historic buildings. Check with your SHPO to find out what is available in your state. Also, check the "Resources" section of the BARN AGAIN! program.