(US) Give Me Some (Tax) Credit

by Reed Smith
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The Texas Historic Preservation Tax Credit (THPTC) is a little known incentive program established through Texas House Bill 500 during the 83rd Texas Legislative Session. With the goal of making historic preservation projects more economically viable and feasible in the state, the THPTC offers a 25 percent franchise tax credit for eligible rehabilitation costs for buildings listed in the National Register of Historic Places, as well as in the Recorded Texas Historic Landmarks and Texas State Antiquities Landmarks.

The THPTC went into effect on January 1, 2015 and mirrors the Federal Historic Preservation Tax Incentive Program (which offers a 20 percent income tax credit for the rehabilitation of historic buildings) with its three-part application process:

(1) Part A: Evaluation of Significance

(2) Part B: Description of Rehabilitation

(3) Part C: Request for Certification of Completed Work

Applicants must apply for the THPTC before commencing on a project or while a project is still underway. Unless completed between September 1, 2013 and January 1, 2015, in which case the THPTC may be applied retroactively,[1] any major portion of a project that is completed and paid for is not eligible for the THPTC.  In order to qualify, an applicant will need to spend a minimum of $5,000.00 on building rehabilitation, which must conform to the Secretary of Interior’s Standards for Rehabilitation.

The THPTC  includes several features that are likely to appeal to a broad base of investors, such as being a fully transferable (by sale or assignment) certificated credit with a five-year carry forward, carrying a dollar-for-dollar reduction on Texas franchise tax, being uncapped, and having no recapture.

Applicants also have the option of taking the THPTC concurrent with or independent of the federal credit, but applicants are well-advised to take advantage of both financial incentives when possible and apply to both programs together.

For more information on the application process of the THPTC, Administrative rules for implementation of the program can be found in the Texas Administrative Code, Title 13, Part II, Chapter 13. The program is administered jointly by the Texas Historical Commission in cooperation with the Texas Comptroller of Public Accounts.

[1] Contact a representative at the Texas Historical Commission for more information about retroactive application.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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