Rehabilitation Investment Tax Credit

Income tax credits are the principal governmental subsidy available for privately owned and funded historic preservation activities. Both the federal government and the state of Indiana offer a Rehabilitation Investment Tax Credit (RITC) equaling 20% of rehabilitation costs for qualified work at income-producing properties that are certified historic buildings. A net subsidy equaling 40% of qualified rehabilitation costs may be yielded by participation in both programs.

Eligible properties include commercial buildings, factories, or even old houses but they must be income producing, such as rental properties.

Certified Historic Buildings

A certified historic structure includes any building which is (1) listed in the National Register of Historic Places or (2) located in a registered historic district and certified by the Secretary of the Interior as being of historic significance to the district.

If you live in the following neighborhoods, you property would a certified historic building:

 Irvington Historic District

 Irvington Terrace Historic District
 North Irvington Gardens Historic District
 Pleasanton in Irvington Historic District
 Emerson Heights

To find out if your property is on the National Register for Historic Places, check out http://www.nationalregisterofhistoricplaces.com/in/state.html#pickem

Qualified Rehabilitation

A qualified rehabilitated building includes any building, together with its structural components, which has been substantially rehabilitated, which was placed in service before the beginning of the rehabilitation, and which retains 75% or more of the existing external walls in place after the rehabilitation has been completed.

When Can the Credit be Claimed

The Historic Rehabilitation Credit can be claimed only in the year in which the property which is subject to the credit is "placed in service", or, if later, when the building has been substantially rehabilitated. Thus, in some cases, credits may be claimed over multiple years.

Qualified Expenses

Any expenditure for a structural component of a building will qualify for the rehabilitation tax credit. Treasury Regulation 1.48-1(e)(2) defines structural components to include walls, partitions, floors, ceilings, permanent coverings such as paneling or tiling, windows and doors, components of central air conditioning or heating systems, plumbing and plumbing fixtures, electrical wiring and lighting fixtures, chimneys, stairs, escalators, elevators, sprinkling systems, fire escapes, and other components related to the operation or maintenance of the building.
In addition to the above named "hard costs", there are "soft costs" which also qualify. These include construction period interest and taxes, architect fees, engineering fees, construction management costs, reasonable developer fees, and any other fees paid that would normally be charged to a capital account.

For more information about Residential Tax Credits, contact David Duvall, Historical Architect and Tax Credit Administrator

dduvall@dnr.in.gov

or visit Indiana's Division of Historic Preservation and Archaeology @

http://www.in.gov/dnr/historic/