Historic Tax Credits News Briefs - November 2020
The Internal Revenue Service published final regulations in the Sept. 15 Federal Register concerning the five-year period over which the federal historic tax credit (HTC) may be claimed, along with other special rules for investment credit property. Proposed regulations were published in May and adopted as final without modification. The regulations include a general rule for calculating the HTC, definitions for the terms “ratable share” and “rehabilitation credit determined,” and rules to coordinate changes to Internal Revenue Code (IRC) Section 47 with special rules in IRC Section 50 relating to dispositions, basis adjustment and income inclusion. The rules were effective upon publication in the Federal Register.
South Carolina Gov. Henry McMaster signed H. 3485 into law Sept. 29 to make changes to the state HTC. The legislation removes a provision allowing the Department of Archives and History to establish fees, provides that a taxpayer claiming the HTC must pay a fee to the Department of Archives and History for the state historic preservation grant fund and provides that the department shall develop an application process for distributing funds from the state historic preservation grant fund. The new fee is a percentage of the qualified rehabilitation expenditures (QREs), with developments of less than $500,000 QREs having no fees and the percentage increasing as properties have more QREs. The bill also allows individuals to make a voluntary contribution to the Department of Archives and History by an income tax return check-off. The changes are applicable to income tax years beginning after 2019.
Research released in September commissioned by Maine Preservation in partnership with CEI, Greater Portland Landmarks, GrowSmart Maine and Maine Real Estate & Development Association shows that Maine’s state HTC has had strong, far-reaching impacts on Maine’s economy and quality of life. The “Maine Historic Tax Credit Economic Impacts Report,” says that HTC-aided renovations added over $166 million to local property tax rolls in host communities, including $17 million in new property tax revenue since 2010. The research participants urged the Maine Legislature to protect its historic preservation tax incentive.
The Maryland Department of Planning has adopted amended regulations pertaining to the Maryland state HTC program. To qualify for the small commercial HTC, a “structure” includes a condominium or cooperative project and the rehabilitation impacts only common elements of the condominium or cooperative project. For a rehabilitation of a condominium or cooperative housing project, a Part 2 application for the small commercial tax credit must be submitted by the governing body of the condominium or cooperative housing project. The amendments also provide for the allocation and transfer of tax credits under the program.