IRS Section 47
Historic Rehabilitation Tax Credit

Summary:

The Historic Rehabilitation Tax Credit (HTC) is a federal incentive program pushing the rehabilitation of buildings deemed a “certified historic structure”. Depreciable historic buildings are eligible for a 20% income tax credit for rehabilitation expenses that fall under the Qualified Rehabilitation Expenditures (QRIs). This program, administered by the National Park Service and IRS, breathes life back into abandoned structures, boosting local economies and preserving the unique character of communities. Tax incentives attract private investment, create jobs, and even help develop affordable housing within historic walls. To qualify for Section 47 tax credit the building must be substantially renovated, placed in service before the start of the renovation, a certified historic structure, and depreciable by IRS tax law.

Date in Effect:

1981 - Currently no expiration date

Calculation Details:

Determine the Qualified Rehabilitation Expenditures (QRE). QRE’s are costs properly charged to the Taxpayer for property where depreciation is allowable which is nonresidential and residential real property, real property which has a class life of more than 12.5 years, or an addition to the property previously mentioned and that is made with the connection of the rehabilitation of a qualified rehabilitated building.

Credit is equal to 20% of total QRE.

Filing Requirements:

• Completion of IRS Form 3468 Register and obtain unique “identifier number” from the Internal Revenue Service

• File tax return for self, or if transferring the credit for cash, then reflect the sale on both buyer and seller’s tax return

Direct Pay:

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