What Is the Rehabilitation Credit?

The rehabilitation ൩credit is a federal tax incentive for preserving historic♊ structures in the U.S. It offers a tax credit for 20% of the expenses for substantially rehabilitating buildings for business or income-generating use.

Those who take advantage of the credit are required to preserve the historic character of the propertyꦓ.

Understanding the Rehabilitation Credit

The rehabilitation credit is administered by the National Parks Service's Federal Historic Preservation Tax Incentives Program. Created in 1976, the program attempts to preserve historic properties while economically revitalizing rural areas and stagnating Main Streets across the country.

It has incentivized the rehabilitation of an estimated 49,000 properties with investments of about $131.71 billion since the creation of the program. A majority of the projects green-lit under the program were relatively small, with 32% under $1 million and 14% under $250,000.

In administering the program with the Internal Revenue Service (IRS), the National Parks Service also relies upon state historic preservation offices. For instance, in California—which had over $718.5 million in total rehabilitation costs between 2019 and 2023—the program is administered in cooperation with the California Office of Historic Preservation’s Architectural Review and Incentives Unit.

Other expenditures related to historic preservation can possibly be written off as well. For example, tax benefits are available for historic preservation easements, according to the IRS.

Legislative Changes

The rehabilitation credit underwent a significant legislative restriction during the Trump presidency, but several other legislative proposals in recent years have sought to expand it. In 2017, the U.S. Congress amended it and eliminated a 10% credit that was available for properties that were in service before 1936 but weren’t designated as historic. The changes, made through the Tax Cuts and Jobs Act, spread the 20% credit over five tax years.

Two newer proposals have looked at both expanding access to and increasing the credit, which proponents argue is an effective job-creation tool. In 2021, the House of Representatives and the Senate introduced two different versions of the Historic Tax Credit Growth and Opportunity Act that—if they became law—would raise the 澳洲幸运5官方开奖结果体彩网:tax credit to 30% (for expenses less than $2.5 million in the House version and for less than $3.75 million, capped at $750,000, in the Senate version) and would make accessing the credit easier.

The National Conference of State Historic Preservation Officers, a professional organization for state preservation officials, has called the credit “one of the most powerful historic preservation tools we have.” The association has also said that even if the legislative attempts to expand it and make it easier to access don’t pass, they will probably become templates for future legislation.

Historic Preservation ♕and Margi🍃nalized Communities

Historic preservation has not always aimed to preserve properties connected to the history of everyone in the country. Cornell University professor Sara Bronin, an authority on historic preservation law, wrote in an editorial published in 2020 that the National Register of Historic Places, the designation that qualifies a property for a historic tax credit, reflects mostly white history. Indeed, the first ᩚᩚᩚᩚᩚᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ⁤⁤⁤⁤ᩚ𒀱ᩚᩚᩚLatino/Latina commemoration, Bronin says, was the César E. Chávez National Monument, which was included only eight years before her article was🔯 published.

Bronin argues that an “overly technical, legalistic approach to determining what merits designation” has limited the inclusion of underserved community sites. The law requires that sites become listed for historical significance and integrity, but the interpretations of historical significance have tended to center on association with rich, white historical figures and architectural styles that are connected to white forebears, according to Bronin.

Activists say that the requirement for architectural significance prevented historically significant buildings, such as slave quarters, from being preserved. In the absence of protections, those properties were intentionally destroyed for a variety of reasons, including racial terrorism in the years after Reconstruction, as well as more modern efforts to build highways, gentrify, and ensure urban renewal.

Other writers, such as Michael deHaven Newsom, have written that historical preservationism actually displaced Black residents by driving up housing prices and causing Black homeowners to sell their land in Georgetown, a rich neighborhood in Washington, D.C., in the 20th century. Newsom intimated that this had also happened in Philadelphia and Charleston, S.C. Similar stories exist for other under-recognized groups. Andrew Dolkart, for example, has written that the U.S. has been slow to preserve LGBTQ+ spaces, only picking up steam in the past few years.

However, some efforts are being made to correct the imbalance in American preservationism. The National Trust for Historic Preservation, for instance, started the African American Cultural Heritage Action Fund in 2017 to preserve Black history. The fund has pulled in more than $150 million and assisted in the preservation of 304 projects to date.

The Bottom Line

The federal historic preservation tax incentives program offers tax credits from the U.S. government to encourage the preservation of historic properties around the country. Qualified expenses for rehabilitating properties that are ide✅ntified as historically significant ma🧜y be eligible for a 20% tax credit.

The credit encourages private investment that revitalizes communities and creates jobs. It is one of the few tax credits that actually returns money to the federal government through GDP growth and tax revenue. However, there are imbalances regarding which properties have been considered historically significant, with p✱roperties linked to the history of under-represented populations frequently overlooked by preservationists.