About the Historic Tax Credit

The federal historic rehabilitation tax credit (HTC) program is an indirect federal subsidy to finance the rehabilitation of historic buildings with a 10 percent or 20 percent tax credit for qualified expenditures.



The HTC has its roots in the National Historic Preservation Act of 1966, which created the National Register of Historic Places, which helped coordinate and support public and private efforts to identify, evaluate and protect historic and archeological resources. A decade later, in 1976, the federal government began providing tax incentives for historic building renovations in the form of accelerated depreciation. Congress introduced a HTC in 1979, with anyone who rehabilitated a building 20 years or older receiving a 10 percent credit based on qualified expenditures. In 1981, the program became three-tiered: 15 percent for buildings 30-39 years old, 20 percent for buildings 40 or older and 25 percent for buildings deemed historic structures.

During the 1986 federal tax reform, the credit was changed to a two-tier system with a 10 percent credit for nonresidential buildings placed in service before 1936 and a 20 percent credit for structures deemed historic by the National Park Service. It is administered jointly by the Department of the Interior and the Department of the Treasury.

State Credits

Most state tax credit programs mirror the national program, although often with different percentages. A building owner generates credits by completing a certified rehabilitation on a qualified rehabilitation building.

10 Percent Credit

To qualify for the 10 percent credit, a building must have been placed in service before 1936 and must not be considered a certified historic structure. Non-contributing buildings with a historic district can use the 10 percent credit but buildings that will be used as residential rental property don’t qualify.

20 Percent Credit

To qualify for the 20 percent credit, a building must be a certified historic structure (buildings individually listed on the National Register of Historic Places or listed as a contributing building in a National Register or state or local historic district certified by the Secretary of the Interior. The National Park Service determines if a building is a certified historic structure by approving Part 1 of the application.