Commercial
Both the federal and state government have established income tax credits for historic rehabilitation work done on depreciable buildings which would include commercial buildings, manufacturing and office buildings, rental residential including single family rentals, agricultural outbuildings, Bed & Breakfast use and any other depreciable usage. These benefits are available to the owner or long term lessee of any depreciable building that is rehabilitated according to the Secretary of the Interior’s Standards for Rehabilitation. The building must be listed on or eligible to be listed on the National Register of Historic Places either individually or as a contributing building in an historic district that is listed on the National Register of Historic Places. It must be listed on the National Register within 30 months of the owner taking the tax credit.
There are separate federal and West Virginia state income tax credits. These credits are substantial, as the federal credit is equal to 20% (4% taken over a period of 5 years for a total of 20%) of the capital investment in the building and the West Virginia state income tax credit is equal to 25% of the capital investment in the building. In order to qualify for the credits an owner must undertake substantial rehabilitation which is the expenditure of more than $5,000 or more than the adjusted basis in the building whichever is greater. If all of the appropriate conditions are fulfilled the owner will benefit from a total nominal tax credit of 45% of investment. The expenditure necessary to qualify as a substantial rehabilitation must take place in a 24 month period or a 60 month period with the starting date determined by the taxpayer. Any portion of the state income tax credit which cannot be fully used for the taxable year in which it is earned may be carried forward for up to ten years. Sale of the building within five years of the time the owner claims the credit will result in recapture by the Internal Revenue Service of a portion of the claimed credit.
The credit is not automatically available to any owner of an historic building. An application must be filed with the West Virginia State Historic Preservation Office. Although not recommended, applications can be accepted after initiation of rehabilitation work. However, the Part One portion of the application must be submitted prior to the building’s placement in service. The credit is based on approved capital investment in the building which could include the cost of essential, fixed equipment and changes to mechanical, electrical and plumbing systems as well as roof and foundation work. The credits are limited to work performed on the interior and exterior of the listed building. Costs of landscaping, fences, sidewalks, new additions, wastewater treatment and other work performed outside the building are not eligible for the credit.
For additional information, application forms or a site visit to discuss your particular project contact the West Virginia State Historic Preservation Office at (304)558-0240.
The program receives Federal funds from the National Park Service. Regulations of the U. S. Department of Interior strictly prohibit unlawful discrimination in departmental Federally Assisted Programs on the basis of race, color, national origin, age or handicap. Any person who believes he or she has been discriminated against in any program, activity or facility operated by a recipient of federal Assistance should write to: Director, Equal Opportunity Program, U. S. Department of the Interior, National Park Service, P. O. 37127, Washington, D. C. 20013-7127
Residential
The 1999 West Virginia legislature approved a state income tax credit for homeowners. The Rehabilitation Investment Tax Credit Program provides a West Virginia state income tax credit for the rehabilitation of historic private residences. This is a 20% state income tax credit which is based on qualified expenditures undertaken as part of the rehabilitation to a historic private residence. The credit is applied directly against taxes owed by the owner. This credit is available to private homeowners for approved rehabilitation work on their own residence. This benefit is available to the owner of a private residence that is rehabilitated according to the Secretary of the Interior’s Standards for Rehabilitation. The building must be listed on the National Register of Historic Places either individually or as a contributing building in an historic district that is listed on the National Register of Historic Places. It must be listed on the National Register prior to submission of the Historic Preservation Certification Application Request for Certification of Completed Work.
In order to qualify for the credit an owner must undertake “material” rehabilitation which is an expenditure of more than 20% of the assessed value of the building, not including the value of the land. The expenditure necessary to qualify as “material” rehabilitation must take place in the 24 month period ending on December 31 of the taxable year for which the credit will be claimed. Any portion of the credit which cannot be fully used in the taxable year for which it is earned may be carried forward for up to five years.
The credit is not automatically available to any owner of an historic residence. An application must be filed with the West Virginia State Historic Preservation Office. The owner must complete and submit the authorized application form as early in the rehabilitation process as is feasible. The application form must be approved before work on the project begins. The credit is based on all approved capital investment in the building which could include the cost of essential, fixed equipment and changes to mechanical, electrical and plumbing systems as well as roof and foundation work. The credits are limited to work performed on the interior and exterior of the listed building. Costs of landscaping, fences, sidewalks, new additions, wastewater treatment and other work performed outside the building are not eligible for the credit. All work must be completed in conformance with the Secretary of the Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings.
The application form and more information about the Secretary of the Interior’s Standards for Rehabilitation are available from the West Virginia State Historic Preservation Office. There is a sliding scale fee for the review of the Historic Preservation Certification Application Part 2- Description of Rehabilitation. Please contact our office about the tax credits available for private residences. We will be happy to provide you with additional information, application forms or a site visit to discuss your particular project. Contact the West Virginia State Historic Preservation Office at (304)558-0240.
The program receives Federal funds from the National Park Service. Regulations of the U. S. Department of Interior strictly prohibit unlawful discrimination in departmental Federally Assisted Programs on the basis of race, color, national origin, age or handicap. Any person who believes he or she has been discriminated against in any program, activity or facility operated by a recipient of federal Assistance should write to: Director, Equal Opportunity Program, U. S. Department of the Interior, National Park Service, P. O. 37127, Washington, D. C. 20013-7127