Article Date:
May 2021

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How Renovating a Historic Building Can Put Money in Your Pocket

The federal Rehabilitation Tax Credit, or rehab credit, offers significant financial incentives for owners or leaseholders of historic buildings to renovate those structures.1


What’s the big deal? Why are tax credits so exciting?


Tax credits, unlike deductions, reduce your tax bill dollar-for-dollar. If you spend $100,000 and get a 20 percent tax credit, you reduce your tax bill by $20,000. That’s Uncle Sam putting $20,000 in your pocket. And there’s more.


You likely reduce your taxes with depreciation deductions on the other $80,000 and also qualify for a rehab credit from your state (most states grant rehab tax credits).


The rehab credits give you a leg up on your property because you can have the feds and states giving you money without asking for any equity in your building.


On a sad note, the 2017 Tax Cuts and Jobs Act (TCJA) imposed restrictions on the rehab tax credit. This damper reduces (but does not eliminate) the significant tax savings available to you.


To find this tax money in your pocket, you need to navigate some tricky tax rules, as we explain here. ... Log in to view full article.

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