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 program provides transferable tax credits to eligible entities rehabilitating certified historic buildings. 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:

Certified Historic Buildings:

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 building must meet the following specifications:

  • The property is listed in the National Register of Historic Places or the State Register of Historic Places, or is 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, or is 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 is an outbuilding of an otherwise eligible property certified by the SHPO as contributing to the historic significance of the property.

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.
  • 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.
  • Evidence that the rehabilitation was recommended by the SHPO for approval by the secretary of the interior.

WEDC’s CEO 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.

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). An eligible building must meet 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 Building.
  • 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.

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’s CEO 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.

Incentives and Available Funding (FY17):

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

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 IRS Form 3468 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 IRS form 3468 to claim the Federal 10 percent Rehabilitation Tax Credit for non-historic buildings OR a copy of WEDC completed work certification with IRS form 3468 to follow, if applicable.

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