Historic Tax Credit (United States)

Historic Tax Credit (United States)
Name	Historic Tax Credit (United States)
Established	1976
Jurisdiction	United States
Administered by	National Park Service; Internal Revenue Service
Legal authority	Tax Reform Act of 1976; Revenue Reconciliation Act of 1981
Purpose	Rehabilitation of historic buildings; economic development; preservation

Contents

Historic Tax Credit (United States) The Historic Tax Credit is a federal rehabilitation tax incentive enacted to encourage preservation and adaptive reuse of certified historic structures through federal income tax credits administered by the National Park Service and the Internal Revenue Service, created amid debates involving the National Trust for Historic Preservation, the Department of the Interior, and members of Congress such as proponents from the House Committee on Ways and Means and the United States Senate Committee on Finance. The program intersects with efforts by the Advisory Council on Historic Preservation, state historic preservation offices like the Massachusetts Historical Commission and the Texas Historical Commission, developers including firms active in New York City and Chicago, and financing mechanisms employed by institutions such as the Federal Reserve and private equity firms; it has informed projects at sites like the Empire State Building, the Pabst Brewery Complex, and the Old Post Office Pavilion.

Overview

The federal Historic Tax Credit provides a percentage income tax credit for certified rehabilitation of historic buildings listed on the National Register of Historic Places or contributing to a registered historic district; project proposals are reviewed by the National Park Service in partnership with state historic preservation offices such as the California Office of Historic Preservation and the Virginia Department of Historic Resources and often involve stakeholders like the National Trust for Historic Preservation, preservation advocates tied to entities such as the Getty Conservation Institute, and municipal agencies from cities including Baltimore, Philadelphia, and Seattle. Credits are widely used by developers represented by firms registered with the American Institute of Architects and financed by lenders connected to institutions like Wells Fargo and the Bank of America, and have been cited in studies by organizations such as the Brookings Institution and the Urban Land Institute.

Federal incentives trace to debates in the United States Congress following the Tax Reform Act of 1976, with subsequent amendments under the Economic Recovery Tax Act of 1981, the Revenue Reconciliation Act of 1981, and significant modernization in the Tax Reform Act of 1986; major policy changes and temporary extensions occurred during legislative actions involving the American Recovery and Reinvestment Act of 2009, the Tax Cuts and Jobs Act of 2017, and bills considered by members such as Senator Sherrod Brown and Representative Tom Reed. Advocacy by organizations like the National Trust for Historic Preservation and research by the Government Accountability Office influenced Congressional debates within committees including the House Ways and Means Committee and hearings before the United States Senate Committee on Finance.

The federal credit historically offered a 20% rehabilitation credit for certified historic structures and a 10% credit for non-historic, pre-1936 structures meeting specific rules; eligibility requires listing on the National Register of Historic Places or certification by a State Historic Preservation Office such as the New York State Office of Parks, Recreation and Historic Preservation and adherence to the Secretary of the Interior's Standards for Rehabilitation, overseen by the National Park Service and coordinated with local preservation commissions in municipalities like New Orleans and San Francisco. Qualified rehabilitation expenditures interact with tax treatments governed by the Internal Revenue Code and require coordination with financiers including commercial banks and syndicators based in markets like Manhattan and Los Angeles.

Project applications follow a multi-part submission to the National Park Service and state historic preservation offices, often starting with preliminary discussions with offices such as the Pennsylvania Historical and Museum Commission and culminating in Part 3 Certification by the National Park Service; applicants include developers represented by firms active in cities like Cleveland, Detroit, and Pittsburgh and consultants formerly affiliated with the Advisory Council on Historic Preservation. Reviews consider conformity with the Secretary of the Interior's Standards for Rehabilitation, documentation standards consistent with the Historic American Buildings Survey, and coordination with financing structures used by lenders including regional banks and national institutions such as the U.S. Department of Housing and Urban Development in redevelopment initiatives.

Scholars at institutions such as the Brookings Institution, the National Bureau of Economic Research, and the Urban Land Institute have documented job creation, private investment leverage, and downtown revitalization attributable to the credit in cities including Boston, Denver, and Cincinnati, while preservation outcomes have been championed by the National Trust for Historic Preservation and state agencies like the Ohio History Connection; projects financed by syndicators and insurers in collaboration with entities like the Federal Reserve Bank of New York have converted industrial sites like the Tobacco Warehouse District and former Armory complexes into mixed-use developments.

Critiques published by analysts at the Government Accountability Office, the Tax Policy Center, and scholars at universities such as Harvard University and Yale University highlight concerns about fiscal cost, displacement in gentrifying neighborhoods like Bushwick and Harlem, and complexity favoring large developers represented by firms in Wall Street and partnership structures common to firms in Boston and Chicago; debates before the United States Congress and in media outlets involving reporters at the New York Times and Washington Post have addressed alleged misuse, subsidy capture, and distributional equity.

Many states operate complementary tax credit programs administered by state historic preservation offices such as the Maryland Historical Trust, the Georgia Department of Natural Resources Historic Preservation Division, and the Pennsylvania Historical and Museum Commission, with notable activity in states like New Jersey, Missouri, North Carolina, and Texas; local incentives in cities such as Portland, Cleveland, and St. Louis often integrate with federal credits and involve partnerships with economic development authorities like the New York City Economic Development Corporation and preservation trusts including the Historic Charleston Foundation.