Developers working with certified historic structures or qualified abandoned structures now have more incentive options due to recently passed amendments to state laws. Specifically, developers working with historic structures can now claim a 25 percent tax credit – more than twice the original 10 percent tax credit – and the abandoned building tax credit can now be applied to insurance premium taxes.
Introduced in 2013, these tax credits were designed to offset rehabilitation costs for developers that might not otherwise rehabilitate these structures.
If developers elect the 25 percent credit for historic structures, the law caps out at $1 million per building, and the credit must be taken in equal installments over a three-year period starting with the year the property is placed in service.
The abandoned building credit cannot exceed $500,000 for any taxpayer in a year, and must also be taken in equal installments over three years. Unused credit can be carried over for five years.
The amendment also included a definition of “state-owned abandoned building,” defined as a project consisting of a building or buildings that have a combined size of more than 50,000 square feet that have been abandoned for five years, and that most recently belonged to the state, or an agency, instrumentality or political subdivision of the state.