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Category Archives: Financial Assistance (hist bldgs)

Tax Credit Forms

Historic Tax Credit Approvals

Do you have a current Utah State Historic Tax Credit project underway? Are you finishing your project and need the final forms? See below for forms.

Historic Preservation Tax Credit Application

Part 3 – Request for Final Approval form

Remember that your project should be complete by December 31, 2016 in order to claim the credit on your 2016 taxes.

Interested in Historic Tax Credits? Find out more.

Federal Tax Credit

studebaker garage

The Studebaker Garage on 2nd South in Salt Lake City has been restored and is now the Stratford Apartments.

 

 

 

Do you just need an application?

Federal tax credits — your questions answered

What are the federal tax credits?

The Federal Investment Tax Credit (ITC) program gives:

  • A 20% tax credit (not just a deduction) to owners who rehabilitate historic buildings
  • A 10% tax credit to owners who renovate non-historic buildings constructed before 1936.

In both instances the ITC is based on a percentage of the rehabilitation costs and does not include the purchase price.

The tax credit applies to the building owner’s federal income tax for the year in which the project is completed and approved. If it is not all needed in that year, the tax credit may be carried back one year or forward up to 20 years.
Example:  20% of a $75,000 rehabilitation = $15,000 federal tax credit.

Does my building qualify?

The 20% ITC is available for buildings listed in the National Register of Historic Places that, after renovation, are used for commercial or residential rental use.

The 10% ITC is available for any pre-1936 building that is not listed in the National Register and is being used for commercial but not residential rental purposes. The work does not have to be reviewed for this credit.

Neither federal ITC is available for the rehabilitation of a private residence. However, the Utah Tax Credit is available for the certified rehabilitation of historic residential buildings.

What rehabilitation work qualifies?

20% ITC:  The work may include interior and/or exterior repair, rehabilitation, or
restoration, including historic, decorative, and structural elements as well as mechanical systems.

All of the work must meet the Secretary of the Interior’s Standards for Rehabilitation or the tax credit cannot be taken on any portion of the work. See a great illustrated guide from the NPS

Depending on the historic conditions and the specifics of the proposed rehab work, some examples of eligible work items include:

  • repairing/upgrading windows
  • plumbing repairs and fixtures
  • refinishing floors, handrails, etc.
  • repairing or replacing roofs
  • compatible new kitchens & baths
  • reversing incompatible remodels
  • painting walls, trim, etc.
  • repointing masonry
  • reconstructing historic porches
  • new furnace, A/C, boiler, etc.
  • new floor and wall coverings
  • electrical upgrades
  • necessary architectural, engineering, and permit fees

The purchase price of the building, site work (landscaping, sidewalks, fences, driveways, etc.), new additions, work on outbuildings, and the purchase and installation of moveable furnishings or equipment (window coverings, refrigerators, etc.) do not qualify for the credit.

How do I apply for the credit?

The National Park Service requires that you work through us (the State Historic Preservation Office, or SHPO) on your application. You should submit the first two sections of the NPS’s three-part application to us as early as possible.

We strongly recommend that you submit an application before starting work. Any work you begin without prior NPS approval is done at your own risk. Once you have begun work, changes to bring the project into conformance with the Secretary of the Interior’s Standards for Rehabilitation can be difficult, expensive, or occasionally impossible to make. 

As part of the application you will need to submit:

  • Photographs showing all areas of work (interior and exterior) prior to the beginning of the rehabilitation.
  • Any construction drawings or other technical information necessary to completely understand the proposed project.
  • Photographs of the completed work.

Feel free to contact us during any part of the process.

How much money must I spend to qualify for the federal tax credit?

The rehabilitation expenditures must exceed the greater of either the “adjusted basis” of the building or $5,000.  “Adjusted basis” is the purchase price minus the value of the land, minus any depreciation already taken by the current owner of the building, plus any capital improvements.

Example 1 (a recent purchase):
$130,000 (purchase price)
– $33,000 (land)
$97,000 (adjusted basis)
Rehabilitation expenses must exceed the adjusted basis ($97,000).

Example 2 (long-time ownership):
$130,000 (purchase price)
–  $70,000 (depreciation)
–  $33,000 (land)
+ $15,000 (capital improvements)
$42,000 (adjusted basis)
Rehabilitation expenses must exceed the adjusted basis ($42,000).

When can I sell my rehabilitated building?

In order to avoid any recapture of the tax credit by the federal government, you must keep the building for least five years from the date you complete the project. The recapture amount ranges from 100% of the tax credit if the building is sold within the first year, to 20% of the credit if it is sold within the fifth year.

For more information, contact:

Roger Roper, 801-245-7251
State Historic Preservation Office
Utah State History
300 S. Rio Grande Street
Salt Lake City, Utah  84101
Fax: 801-355-0587

Or visit the National Park Service’s website:

Tax Incentives
IRS Connection

Utah Historic Preservation Tax Credit

house-in-springville

A home in Springville, Utah

 

Historic Preservation Tax Credit Application

Do you just need Part 3 – Request for Final Approval form

 

What is the Utah Historic Preservation Tax Credit?

A 20% nonrefundable tax credit(not just a deduction) for the rehabilitation of historic buildings occupied by owners or used as residential rentals. You can deduct 20% of all qualified rehabilitation costs from your Utah income or corporate franchise taxes.
Example: $22,000 in qualified rehabilitation cost = $4,400 state income tax credit.

Does my building qualify?

Any building listed in the National Register of Historic Places qualifies if, after rehabilitation, it is used as a residence (owner-occupied or rental).

You can’t take the credit for any property used for commercial purposes, including hotels or bed-and-breakfasts. (However, if the historic B&B is also owner-occupied, this portion of the rehabilitation may qualify.)

The building does not need to be listed in the National Register at the beginning of the project, but a complete National Register nomination must be submitted when the project is finished. The property must be listed in the National Register within three years of the approval of the
completed project.

Staff of the Historic Preservation Office can evaluate the eligibility of your building and provide instructions on nomination requirements.

See more information about the National Register.

What rehabilitation work qualifies?

The work may include interior and/or exterior repair, rehabilitation, or restoration, including historic, decorative, and structural elements as well as mechanical systems. All of the proposed, ongoing or completed work must meet the Secretary of the Interior’s Standards for Rehabilitation and be approved by the State Historic Preservation Office (SHPO).

Depending on the historic conditions and the specifics of the proposed rehab work, some examples of eligible work items include:

  • repairing/upgrading windows
  • plumbing repairs and fixtures
  • refinishing floors, handrails, etc.
  • repairing or replacing roofs
  • compatible new kitchens & baths
  • reversing incompatible remodels
  • painting walls, trim, etc.
  • repointing masonry
  • reconstructing historic porches
  • new furnace, A/C, boiler, etc.
  • new floor and wall coverings
  • electrical upgrades
  • necessary architectural, engineering, and permit fees

The purchase price of the building, site work (landscaping, sidewalks, fences, driveways, etc.), new additions, work on outbuildings, and the purchase and installation of moveable furnishings or equipment (window coverings, refrigerators, etc.) do not qualify for the credit.

All of the work must meet the Secretary of the Interior’s Standards for Rehabilitation  (See a great illustrated guide from the NPS) or the tax credit cannot be taken on any portion of the work.

How do I apply for the credit?

You should submit a complete application to us (the State Historic Preservation Office, or SHPO) as early as possible. The state law requires application and approval by the SHPO prior to completion of the project.

We strongly recommend that you submit an application before starting work. Any work you begin without prior SHPO approval is done at your own risk. Once you have begun work, changes to bring the project into conformance with the Secretary of the Interior’s Standards for Rehabilitation can be difficult, expensive, or occasionally impossible to make.

As part of the application you will need to submit

  • photographs showing all areas of work (interior and exterior) prior to the beginning of the rehabilitation
  • any construction drawings or other technical information necessary to completely understand the proposed project

Feel free to contact us during any part of the process.

How much money must I spend to qualify?

Total rehabilitation expenditures must exceed $10,000. (The tax credit applies equally to this first $10,000.) The purchase price of the building and any donated labor cannot be included. The project must be completed within 36 months. (There is no limit to subsequent $10,000+ projects; separate applications are required.)

When can I claim the credit?

The credit may be taken for the tax year in which the project was completed and the SHPO approves the rehabilitation work (as well as a National Register nomination, if needed). A unique certification number will be issued to the owner at that time. Credit amounts greater than the amount of tax due in that year may be carried forward up to five years.

Are there any restrictions placed on my building?

All work done to the building during the rehabilitation project, and for three years following the certification of the project, must meet the Secretary of the Interior’s Standards for Rehabilitation. Please consult with the State Historic Preservation Office if you have any questions.

What if I already have approval from my local landmarks commission?

The local review process will be helpful to tax credit application process but state law requires application to the State Historic Preservation Office (SHPO). Local preservation commissions sometimes have different requirements and other considerations than the Secretary of the Interior’s Standards for Rehabilitation.

To qualify for the state tax credit, all of the work must meet the Standards and receive state approval. Application for the state tax credit must be made before the project is completed, preferably before work even begins (see the caution above).

How do I claim the tax credit?

After the work is completed and certified, we (SHPO) will provide you with a tax form, TC-40H, Historic Preservation Tax Credit. Do not submit this form with your tax return; keep it and all related documents with your tax records. If you carry forward an excess portion of this tax credit, you must attach a copy of the signed, original TC-40H form, with the new carry-forward amount, to your subsequent tax return(s).

Note that carry-forward amounts must be applied against tax due before the application of any historic preservation tax credits earned in the current year and on a first-earned, first-used basis. Please consult with the State Tax Commission if you have any questions. Original records supporting the credit claimed must be maintained for three years following the date the return was filed claiming the credit.

For more information contact:

Roger Roper, 801-245-7251
State Historic Preservation Office
Utah State History
300 S. Rio Grande Street
Salt Lake City, Utah 84101
Fax: 801-355-0587

For tax-related questions, contact:

Utah State Tax Commission at 297-2200 or 800-662-4335.

For information on low-interest preservation loans, contact:

Preservation Utah (formerly Utah Heritage Foundation) at 801-533-0858.

For information on low-income housing tax credits (for developers) or low-interest, first-time home buyer programs contact:

Division of Housing and Community Development at 801-538-8888

Additional local requirements may also apply:

Salt Lake City Landmarks Commission, 801-535-7757
Park City Planning Department, 435-615-5060
Ogden Planning Department, 801-629-8920
Provo Planning Department, 801-852-6400 
Contact us for additional local preservation contacts.