DRS: Historic Preservation Tax Credit 01MAR2012

Historic Preservation Tax Credit  

Conn. Gen. Stat. §10-416b


(Formerly referred to as the Historic Investment Tax Credit)

 

Description and Applicable Taxes

A tax credit administered by the Connecticut Department of Economic and Community Development (DECD) is available to an owner rehabilitating a certified historic structure for nonresidential use or mixed residential and nonresidential use or a taxpayer named by the owner as contributing to the rehabilitation. A taxpayer is entitled to claim this tax credit once a voucher is issued by DECD.
 

The tax credit can be used to offset the taxes imposed under Chapters 207, 208, 209, 210, 211, or 212 of the Connecticut General Statutes. This tax credit may be assigned, transferred, or conveyed.

 

 

Definitions

Certified rehabilitation means any rehabilitation of a certified historic structure for mixed residential and nonresidential uses consistent with the historic character of such property or the district in which the property is located as determined by regulations adopted by the commissioner.

Owner means any person, firm, municipality, limited liability company, nonprofit or for-profit corporation or other business entity which possesses title to an historic structure and undertakes the rehabilitation of such structure.


Certified historic structure means an historic, commercial, industrial, institutional, former municipal, state, or federal government, cultural, nonresidential, or mixed residential and nonresidential property that:

  • Is listed individually on the National or State Register of Historic Places; or
  • Is located in a district listed on the National or State Register of Historic Places, and has been certified by DECD as contributing to the historic character of such district.

Placed in service means that substantial rehabilitation work has been completed which would allow for issuance of a certificate of occupancy for the entire building or, in projects completed in phases, for an identifiable portion of the building.

 

Qualified rehabilitation expenditures means any costs incurred for the physical construction involved in the rehabilitation of a certified historic structure for nonresidential or mixed residential and nonresidential uses excluding:

  • The owner’s personal labor;
  • The cost of the new addition, except as required to comply with any provision of the State Building Code or the State Fire Safety Code; and
  • Any nonconstruction costs such as architectural fees, legal fees, and financing fees.

 

Tax Credit Amount

The tax credit is equal to the lesser of 25% of the projected qualified rehabilitation expenditures or 25% of the actual qualified rehabilitation expenditures. If the project creates qualified affordable housing units and the owner provides DECD information to show that the owner is compliant with the affordable housing certificate then the tax credit is equal to the lesser of 30% of the projected qualified rehabilitation expenditures of 30% of the actual qualified rehabilitation expenditures.

 

The maximum tax credit allowed for any project shall not exceed $5 million for any fiscal three-year period.

 

 

Carryforward and Carryback Limitations

The tax credit may be carried forward for five succeeding income years following the year in which the substantially rehabilitated structure was placed in service. No carryback is allowed. An assignee is entitled to carry forward any unused tax credit as provided in the statute.

 

 

How to Apply

Prior to beginning certified rehabilitation work on a certified historic structure, the owner must submit to DECD a rehabilitation plan and, if such rehabilitation work is planned to be undertaken in phases, a complete description of each such phase (with anticipated schedules for completion) along with an estimate of the qualified rehabilitation expenses. If the owner is claiming a 30% tax credit for creating qualified affordable housing units then the owner shall also submit the number of affordable housing units, the rent or sales price of such units, and the median income for the municipality where the project is located to DECD. DECD will provide the owner with an affordable housing certificate if the owner is eligible for the 30% tax credit.

 

In the case of projects completed in phases, DECD may issue vouchers for the substantially rehabilitated identifiable portion of the building placed in service, regardless of whether such portion contains residential uses. However, the rehabilitation plan submitted to DECD must describe the residential uses that will be part of the rehabilitation and must include a schedule for completion of the residential uses.

 

Applications for tax credit voucher must be made with DECD. Contact DECD at 860-256-2756 for application information.

 

 

Assignment and Transfer

Any owner allowed this tax credit (assignor) may assign the tax credit, in whole or in part, to any individual or entity (assignee). An assignee may not further assign the tax credit. An assignee must claim the tax credit in the same year in which the assignor would have been eligible to claim the tax credit.


 

Flow Through of the Tax Credit

Any tax credits that are provided to multiple owners of certified historic structures shall be passed through to persons designated as partners, members, or owners, either pro rata or according to an agreement among such persons.

 

 

How to Claim the Tax Credit

The amount listed on the tax credit voucher must be entered on Form CT-1120HP, Historic Preservation Tax Credit, and Form CT-1120K, Business Tax Credit Summary, and/or Form CT-207K, Insurance/Health Care Tax Credit Schedule. The holder shall retain the voucher and make it available to the Department of Revenue Services upon request.

 

The tax credit shall be claimed in the tax year in which the rehabilitated certified historic structure is placed in service. If the project is completed in phases then a pro rata portion of the tax credit is available in the year in which an identifiable portion of the rehabilitated certified historic structure is placed in service.

 

 

Recapture

In the case of projects completed in phases, if the residential portion of the project described in the rehabilitation plan is not completed within the schedule outlined in such plan, the owner shall capture 100% of the amount of the tax credit for which a voucher was issued. The recapture tax credit shall be reported on the tax return required to be filed for the income year immediately succeeding the income year during which such residential portion was not completed. DECD, in its discretion, may provide an extension of time for completion of such residential portion, but in no event shall such extension be more than three years.

 

 

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Economic and Community Development

State Historic Preservation Office

One Constitution Plaza Office, 2nd Floor

Hartford CT 06103

860-256-2756

www.cultureandtourism.org

 

 

Statutory and Regulatory References

Conn. Gen. Stat. §10-416b; Conn. Agencies Regs. §§10-416b-1 through 10-416b-12

 

 

Last updated March 1, 2012