Historic Tax Credits News Briefs – July 2020
The Internal Revenue Service published in the May 22 Federal Register proposed amendments to Treasury Regulation 1.47-7 concerning the historic tax credit (HTC), including rules to coordinate the new five-year period over which the credit may be claimed with other special rules for investment credit property. The proposed regulations include a general rule for calculating the HTC, definitions of “ratable share” and “rehabilitation credit determined,” and rules coordinating the changes to Internal Revenue Code (IRC) Section 47 with special rules in Section 50 related to dispositions, basis adjustment and income inclusion. The proposed regulations will assist taxpayers in understanding the changes to IRC Sections 47 and 50 and make it easier for taxpayers to comply with those changes. Comments on the proposed regulations are due July 21.
The Maryland state HTC for commercial properties is now transferrable, due to legislation enacted May 8. H.B. 862 allows the state HTC for commercial properties to be transferred and the credit is now refundable. The new provisions go into effect July 1 and apply to taxable years beginning Jan. 1, 2020.
Legislation enact May 8 in Maryland makes changes to the state HTC. H.B. 759 includes a new definition of “small commercial project” and adds the common areas for condominiums and cooperative housing to the list of areas for which the HTC can be claimed in a small commercial project.
Legislation introduced in Mississippi May 28 and passed by the House of Representatives would make several changes to the state HTC, including extending the sunset date by 10 years. H.B. 1729 would extend the sunset date for the state HTC from the end of 2020 to the end of 2030 and would allow single-family dwellings to qualify for the credit. The legislation would also allow a taxpayer to receive a rebate of 75 percent of the credit in lieu of a 10-year carryforward (current law allows a 75 percent credit on the amount beyond $250,000 in that circumstance), permit the sale or transfer of state HTCs, remove the annual statewide cap and set the statewide limit for credits through 2030 at $180 million.
Bills introduced June 1 during a 30-day special session of the Louisiana state Legislature would extend and expand the state HTC. H.B. 4 would extend the sunset date for the state’s 20 percent credit from the end of 2021 until the end of 2027. H.B. 16 would retain the current HTC, but add a state HTC of 30 percent for costs and expenses incurred while rehabilitating a structure that is included on the National Register of Historic Places between July 1, 2020, and June 30, 2026, with a project cap of $750,000.