Historic Preservation Tax Credit

Program Goal:

The goal of the Historic Tax Credit (HTC) Program is to incent reinvestment into historic main streets, downtowns, and commercial districts in the state of Wisconsin.

This program supports the following WEDC Strategic Pillar and Focus Area:

Community and Economic Opportunity: Downtown Development

Program Description:

The Historic Preservation Tax Credit Program provides transferable tax credits to eligible entities rehabilitating certified historic buildings.

  • The Certified Historic Structure Program provides tax credits for rehabilitating “certified historic structures,” which means any building (and its structural components) which–
    • is listed in the National Register, or
    • is located in a registered historic district and is certified by the Secretary of the Interior to the Secretary as being of historic significance to the district.
  • The Qualified Rehabilitated Buildings Program provides similar credits to pre-1936 non-historic properties in Wisconsin.

Both credits are 20 percent of qualified rehabilitation expenses and may be transferred to a third party in exchange for cash. Historic rehabilitations incented through this program must be recommended by the State Historic Preservation Officer (SHPO) as certified historic properties. Qualified Rehabilitated Buildings will apply directly to WEDC for the non- historic credit; however, the Qualified Rehabilitated Buildings Program is on moratorium effective June 23, 2014.

Eligibility Requirements:

Nonprofits are not eligible for certification unless 1) the entity is a 501(c)3 and the entity intends to sell or otherwise transfer the tax credit, or 2) the entity is a nonprofit other than a 501(c)3 as described above and WEDC receives approval of the proposed project from the Joint Committee on Finance under 14-day passive review.

Certified Historic Structure:

For taxable years beginning after December 31, 2013, applicants may be certified to claim tax incentives for qualified rehabilitation expenditures on eligible buildings and projects.

An eligible project is one in which:

Certification requires that the claimant provide the following to WEDC:

  • Evidence that the rehabilitation was recommended by the State Historic Preservation Officer (SHPO) for approval by the Secretary of the Interior before the physical work of construction, or destruction in preparation for construction, began.
  • Taxpayer obtained written certification from SHPO that the property qualifies under any of the following:
    • Listed in the national Register of Historic Places or the State Register of Historic Places;
    • Determined by the Wisconsin Historical Society (WHS) to be eligible for listing in the National Register of Historic Places or the State Register of Historic Places;
    • Located in a historic district that is listed in the National Register of Historic Places or the State Register of Historic Places and is certified by the SHPO as being of historic significance to the district; or
    • An outbuilding of an otherwise eligible property certified by the SHPO as contributing to the historic significance of the property.
  • The costs were not incurred before the Wisconsin Historical Society approved the proposed preservation or rehabilitation plan.
  • The cost of the person’s qualified rehabilitation expenditure, as defined in section 47 (c)(2) of the Internal Revenue Code, is at least $50,000.
  • The rehabilitated property is placed in service after December 31, 2013.
  • The proposed preservation or rehabilitation plan complies with standards promulgated under Wis. Stat. §44.02(24) and the completed preservation or rehabilitation substantially complies with the proposed plan.
  • No physical work of construction or destruction began prior to the recommendation of the proposed preservation or rehabilitation by the SHPO.
  • The eligible costs are not incurred to acquire any building or interest in a building or to enlarge an existing building.

WEDC may deny certification to an otherwise eligible project based on funding availability or other application criteria. Funding certifications will be effective for three years commencing on the initial date of certification and must be claimed based on actual qualified rehabilitation expenditures by the conclusion of the three-year period; however, a project may be approved for six years if the rehabilitation is substantial and occurring in phases. WEDC may extend certification windows at its discretion.

If a person who claims a credit under this subsection and a credit under section 47 of the Internal Revenue Code for the same qualified rehabilitation expenditures is required to repay any amount of the credit claimed under section 47 of the Internal Revenue Code, the person shall repay to the department a proportionate amount of the credit claimed under this subsection.

Qualified Rehabilitated Buildings:

For taxable years beginning after December 31, 2013, applicants may be certified to claim tax incentives for qualified rehabilitation expenditures related to qualified rehabilitated buildings (non-historic).

“Qualified Rehabilitated Buildings” means any building (and its structural components) that meets all of the following–

  • Has been substantially rehabilitated;
  • Was placed in service before the beginning of the rehabilitation;
  • Qualifies as an eligible project as defined below; and
  • Depreciation (or amortization in lieu of depreciation) is allowable with respect to such building.

WEDC also requires the following specifications:

  • The building was placed in service before 1936 and has not been relocated.
  • The building must not be, nor be eligible to be, a Certified Historic Structure.
  • The building will be placed in service after December 31, 2013.

An eligible project is one in which:

  • The cost of the person’s qualified rehabilitation expenditure, as defined in section 47 (c)(2) of the Internal Revenue Code, is at least $50,000.
  • At least 50 percent of the building’s external walls existing at the time the rehabilitation began must remain in place as external walls at the work’s conclusion.
  • At least 75 percent of the building’s existing external walls must remain in place as either external or internal walls.
  • At least 75 percent of the building’s internal structural framework must remain in place.
  • Depreciation (or amortization in lieu of depreciation) is allowable with respect to the building.
  • No physical work of construction or destruction began prior to WEDC certification.

No credit may be claimed under this subdivision for:

  • A property listed as a contributing building in the state register of historic places or in the national register of historic places; or
  • For nonhistoric, nonresidential property converted into housing if the property has been previously used for housing.

Important Note: Applicants may be certified to claim tax incentives for qualified (non-historic) rehabilitation expenditures for taxable years beginning after December 31, 2014 if all of the following provisions apply:

  • WEDC previously certified the qualified rehabilitation expenditures prior to January 1, 2015.
  • The proposed project is located in the City of Green Bay.
  • The proposed project is located on the same parcel as the previously certified project or on a parcel contiguous to the previously certified project.
  • WEDC determines the applicant is eligible to claim the credit under section 47 of the Internal Revenue Code for the previously certified qualified rehabilitation expenses.

WEDC may deny certification to an otherwise eligible project based on funding availability or other application criteria. Funding certifications will be effective for three years commencing on the initial date of certification and must be claimed based on actual qualified rehabilitation expenditures by the conclusion of the three-year period. WEDC may extend certification windows at its discretion.

If a person who claims a credit under this subsection and a credit under section 47 of the Internal Revenue Code for the same qualified rehabilitation expenditures is required to repay any amount of the credit claimed under section 47 of the Internal Revenue Code, the person shall repay to the department a proportionate amount of the credit claimed under this subsection.

Incentives and Available Funding (FY18):

The incentive through this program is a 20% transferable tax credit of qualified rehabilitation expenses. Fund certifications are awarded on a rolling basis, at the discretion of WEDC.

Activities and Expected Outcomes:

Assist 40 community projects and achieve a 5:1 leverage of other investment.

Performance Reporting:

Recipients will be required to submit the following performance reports:

  • For Certified Historic Building projects, recipients will be required to submit to WHS Part III of the Historic Preservation Certification Application upon project completion.
  • For Qualified Rehabilitated Building projects, recipients will be required to submit DOR Form Schedule HR upon project completion.

WEDC may impose additional reporting requirements to evaluate project performance and to ensure compliance with contract deliverables.

Application and Awards Process:

Certified Historic Buildings:

WEDC HTC certifications for Certified Historic Buildings will adhere to the following process:

  1. Applicant must submit Part I and II of the Historic Preservation Certification Application to WHS.
  2. WHS will provide to WEDC evidence that the planned rehabilitation is recommended by the SHPO.
  3. WEDC, upon review, may issue a Historic Preservation Tax Credit Certification.
  4. Upon completion of work, the applicant will submit to WHS Part III of the Historic Preservation Certification Application.
  5. WHS will provide to WEDC evidence that the completed rehabilitation complies with WHS standards.

Certifications may be amended by submitting the project through SHPO’s Part II amendment process or upon completion of the Part III Historic Preservation Certification Application. WEDC will determine if the amendment warrants an increase in certified funds.

Qualified Rehabilitated Buildings:

  1. Applicant must submit to WEDC a Qualified Rehabilitated Buildings Application.
  2. WEDC, upon review, may issue a Historic Preservation Tax Credit Certification.
  3. Upon completion of work, the applicant will submit to WEDC a copy of DOR Form Schedule HR claim the Federal 10% Rehabilitation Tax Credit for non-historic buildings, if applicable.

For more information on application review, internal process and award distribution, please refer to WEDC’s award administration policies and procedures.