2003-03-12 CC Packet - Laserfiche WebLink

Home Browse Search

- ':: :;':'7; :::J)\~?);.t, " .' \, ,. ,', ~. " .-1'. .At. I Certification decisions may be ap-' '.~I ',pealed to the Washington, D.C., office of the National Park Service. - Nonhistoric,RehabUitatiolllS " No certification of rehabilitation work is necessary to obtain the 10 percent credit for nonhistoric rehabilitation. However, certain existing building elements must be retained to qualify .for this credit. Specifically, 50 percent or more of the existing external walls must be retained in place as external walls; 75 percent or more of the existing external walls must be retained in place as internal or external walls; and 75 percent or more of the existing internal structural framework must be retained in place. ' No similar requirements apply to certified historic structures. II Use oj tIJe historic relttUJilitotion tax credits often sparks 1tfIlII) interest in historic dofttmtOfJlJ1t oreas. The reluzlJilitotion of severol com1l'l6f7io1 lmildi'f&r. mrroufuling tIte. Old TOfJIJ1t plttzo in Los Veg4S, New Me:cico served 4S 0 ctIttI!jst for tulditiOlZlJI commerciol reviklliMtWn efforts. Whot Expenditures QuaIi.fJ? .;~~.~. Rehabilitation expenditures mustbe' .~ capital in nature and depreciable as real property to qualify for a credit. This includes new plumbiJ1,g, me- 6hanical, and electrical systems, sprinklers, "life saf~ty systems," elevators, brick and facade cleaning, and any other work including cosmetic changes to the structural components of the buildings. Architect's fees, consulting fees, developer fees, and construction period interest and taxes are also allowable as part of the qualified rehabilitation expenditures. . Acquisition, site work such as landscaping, parking lots, sidewalks, and building enlargement costs. do not qualify. Furniture, appliances, and other personal property iteII1s do not qualify. Rehabilitation expenditures allocable to that portion of a building that is, or . is reasonably expected to be, "tax: exempt use property" also do not qualify (see page 8). _~. When Con tIte Credit be Claimed? G~nerally, ~e credit .is cl~~.q fo~ the , taxable year in which the" rehabilitation '. . is completed. For historic rehabilitations, an ap- proved Request for Certification of Completed Work must be submitted to the Internal Revenue Service within , 30 months of claiming a credit. The credit may be claimed before comple- tion if construction is planned for two or more years and a taxpayer elects to claim the credit on the basis of."quali- fied progress expenditures." Who Con roke the Credit? . The credit is availlible to the owners and, in certain situations, renters of a qualified rehabilitated building. " .. a~ Rehters may obtain the credit for '8' rehabilitation expenditures that they have incurred, provided that the lease ;term remaining on the date the 'rehabilitation is completed is at least as long as the depreciable life of the building. Under current tax law that would mean a lease in e~cess of 39 ' years for a commercial tenant. Pur- chasers of a rehabilitated building before the completion of its rehabilita- tion are eligible to receive the credit. How Is Depreciation Computed? A taxpayer may deduct annually a portion of the adjusted basis of a rehabilitated building. The deduc- tion generally is computed using the straight-line method over a period of 39 years for commercial properties and 2.7.5 years for residential rental property. The depreciable basis 'of a rehabilitated building must be r~duced by the amount of rehabilita- tt, bon credit claimed.