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Federal Rehabilitation Tax Credit
To encourage the preservation of historic buildings the federal
government offers a program of tax incentives to support the
rehabilitation of historic and older buildings for income-producing
purposes.
The AHPP serves as the state liaison between the property owners
and the National Park Service, the federal agency that administers the
federal Rehabilitation Tax Credit program. The main goal of the AHPP
and NPS will be to:
- determine if the structure in question is a "qualified historic property"
- provide a technical review based on the Secretary of the Interior's
Standards for Rehabilitation on the proposed work planned for the
historic structure and
-
approve the final work by the owner to the historic property.
Anyone interested in pursuing the credit should consult an
accountant, tax attorney other professional tax advisor, legal counsel,
or the Internal Revenue Service for help in determining the tax and
other financial implications.
For more information from the AHPP about the federal Tax Rehabilitation program click here to download the 
PDF file
State Rehabilitation Tax Credit
A state law passed in 2009 allows Arkansans to claim a portion of
their investment in historic properties as a credit on their state
income taxes. This new program, administered by the Arkansas Historic
Preservation Program (AHPP), will encourage the rehabilitation of
historic properties and will foster revitalization efforts in Arkansas’s
historic downtowns and neighborhoods.
What structures are eligible?
Properties that are listed on the National Register of Historic
Places or are listed as “contributing” within a historic district on the
National Register. Properties that will be eligible for listing
following rehabilitation will also be considered.
Any individual or firm who pays personal or corporate income tax in
Arkansas. Persons or firms without sufficient tax liability to take
advantage of the credits they earn are allowed to sell their credits to
another taxpayer.
What kind of work is eligible?
The AHPP uses the US Secretary of the Interior’s Standards for
Rehabilitation to determine what kinds of work are appropriate for
historic buildings and eligible for the tax credits. These ten broad,
common-sense principles of preservation guide property owners around the
country in projects that accommodate new uses and revitalization while
retaining the overall historic character of their buildings. For more
information on the Standards, contact the AHPP or visit //www.nps.gov/history/hps/tps/standards/rehabilitation.htm
How much are the tax credits worth?
Twenty-five percent (25%) of the approved rehabilitation expenses on a
historic building may be claimed as a tax credit. Owners of
income-producing properties (commercial, office, rental residential,
etc.) may claim up to $125,000 per project. Property owners may claim
up to $25,000 per project for work on their private residences. In
either case, an owner must invest a minimum of $25,000 to claim any
credits.
Which projects will be awarded credits?
State law allows the AHPP to award up to $4 million in tax credits
per year. In addition to meeting all the requirements described above,
projects should address one of the program’s community / economic
development goals listed below. In order of priority, projects
receiving tax credits must contribute to the:
1. Creation of a new business
2. Expansion of an existing business
3. Establishment of a tourist attraction
4. Revitalization of a business district
5. Revitalization of a neighborhood.
Can my project also take advantage of the federal historic rehabilitation tax credit?
The federal government has its own tax credit program for historic
rehabilitation, with its own rules. It is similar to Arkansas’s tax
credit in some ways, but different in others. (For example, the federal
tax credit is only available for work on income-producing properties.)
However, projects that meet the requirements of both programs should be
able to take advantage of both federal and state tax credits. Talk to a
tax professional before pursuing any tax credits.
Where can I learn more about the Arkansas historic rehabilitation tax credit?
It is strongly recommended that any interested property owners
contact the Arkansas Historic Preservation Program for application
materials before beginning a historic rehabilitation project. Contact
us at info@arkansaspreservation.org or 501-324-9880 or 323 Center
Street, #1500, Little Rock, Arkansas 72201.
This information is available in PDF format, as a Microsoft Word document, and as a text file. For PDF, you will need the Acrobat Reader to view this file. It is available, free of charge, at Adobe's website.
Or if you don't have Microsoft Word, you may use the free Microsoft Word Viewer to open the Word document. The text file should open properly in your browser window.
Links:
For more information from the National Park Service:
For more information from the Internal Revenue Service: