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<br />n1 'IH n' 'c" ]-'" ;1) Xc," Cl~]~) <br />;, ,li'" In; ,U::,~" ~j J't\~! J' _ ,1\ <br /> <br />:'-.....>-J:;',), ~.,.-. < >~" ~-~~~ ' <br /> <br />.. <br /> <br />-In <br /> <br /> <br />~ . <br /> <br />ormation <br /> <br />One ina series of Historic Preservation Information Booklets <br /> <br />Con I Use the Historic <br />Reltobilitotion Tox Credit? <br /> <br />Rehabilitation of a historic structure <br />can provide the investor with a sizable <br />tax credit. A tax credit is a dollar-for- <br />dollar reduction of income ,tax liability. <br />Qualifying investors in historic reha- <br />h;ilitation projects are eligible for a tax <br />credit equal to 20 percent of the <br />rehabilitation expenditures. <br /> <br />For a project to qualify for the historic <br />tax credit, certain tests must be met: <br /> <br />1. The building must be a "certified <br />historic structure." A certified <br />historic struCture is one that is: a) <br />individually listed in the National <br />Register of Historic Places; or.b) is <br />a contributing building in a historic <br />district listed in the National <br />Register of Historic Places; or c) is <br />. a contributing building in a <br />designated local histonc district <br />that has been certified as substan- <br />tially meeting the criteria for listing <br />in the National Register. <br /> <br />e <br /> <br />2. The project must constitute a <br />"substantial rehabilitation." <br />Substantial rehabilita,tion is the" <br />greater of $5,000 or the basis in the <br />building. <br /> <br />3. The building must be a depreciable <br />property held for use in trade or <br />business or as an investment <br />property. One;s own personal <br />residence does not qualify. <br /> <br />4. The project must be certified by <br />the National Park Service as having <br />been rehabilitated according to the <br />Secretary of the Interior's Stt.mtJartls <br />for R8halJilitati01Z. <br /> <br />The passive activity loss limitations <br />restrict the amount of the tax credit an <br />individual taxpayer can use ~ any <br />given year. If adjusted gross income is <br />less than $200,000, the taxpayer may <br />use the tax credit to offset taxes due <br />on active income (wages, salaries, <br />business income). The amount that <br />may be used is calculated by multiply- <br />ing the taxpayer's marginal tax rate by <br />$25,000. Thus an individual in the 36 <br />percent tax bracket coulCl use $9,000 of <br />the credit each year under this excep- <br /> <br />cion ($25,000 x 36% ).Additionally the <br />credit can b~ used to offset any tax <br />liability generated from passive <br />investments (i.~. real estate). <br /> <br />For individuals with an adjusted gross <br />income greater than $250,000, this.. <br />exception to pUsive loss rules does not' <br />apply< For those with incomes between' <br />.$200,000 and $250,000 the exception <br />amount is phased out. Corporate <br />taxpayers ordinarily are not subject to <br />passive activity loss limitations. . <br /> <br />Any tax credits not used in the first <br />year Can be carried forward until the <br />entire benefit has been received. . <br /> <br />The historic rehabilitation tax credit <br />program is administered by the <br />National Park Service in the Depart- <br />ment of the Interior. For more inior- <br />matio~ or to obtain the necessary <br />certification forms, contact your state <br />historic preservation office. To find <br />the Qffice that serves your state, <br />contact the National Conference of <br />State Historic Preservation Officers <br />at (202) 62+5465. <br /> <br />- <br /> <br />~ <br />_....... National Trust for Historic Preservation <br />