Alabama Legislature Reauthorizes Historic Rehabilitation Tax Credit
The Alabama Legislature and Governor Kay Ivey approved a new Historic Preservation Tax Credit program in May that will have a tremendous impact on historic preservation projects across the state, fueling significant investments in historic downtowns, neighborhoods and rural countrysides. The newly approved program funds $20 million dollars in tax credits annually through 2022, for a total of $100,000,000 in available tax credits.
Both commercial and residential historic properties are eligible for the tax credit project.
The initial program, which lasted from 2013-2016, fueled the renovation of 52 projects in Alabama for an estimated investment of $346.7 million. 69 percent of these projects were in Birmingham and Mobile; Huntsville had one approved tax credit project, a residential project in the Old Town Historic District received a $33,750 credit for a rehabilitation in-vestment of $135,000. Four Birmingham commercial projects each received $5 million in tax credits; one Montgomery commercial project received a $5 million tax credit.
Features of the 2017 law include:
- $20 million dollars in tax credits are available per year, for a total of $100,000,000 in preservation funds. A project project can receive up to $5 million in tax credits.
- 40 percent of funds are reserved with counties with fewer than 175,000 people. If projects in rural counties do not reserve funds by the first two quarters of the fiscal year, then any project, regardless of its location in the state, can apply for the remaining tax credits.2. 40 percent of funds are reserved with counties with fewer than 175,000 people. If projects in rural counties do not reserve funds by the first two quarters of the fiscal year, then any project, regardless of its location in the state, can apply for the remaining tax credits.
- Eligible properties must be at least 60 years old; eligible proper-ties must be listed to the National Register of Historic Places or a contributing structure in a National Register Historic District.
- A Historic Tax Credit Evaluation Committee, comprised of state officials, will review applications, rank and reserve tax credits for approved projects.
- A rehabilitation plan must be sub-mitted to the Alabama Historical Commission for approval. Modifi-cations to the exterior must comply with Department of Interior Rehabilitation standards; all work is subject to review for compliance.
- 25 percent of allowable rehabilita-tion expenditures can be refunded through tax credits. Allowable expenditures include but are not limited to: repair and stabilization of historic structural systems; resto-ration of historic plaster; energy efficiency measures except insulation in frame walls; repairs or rehabili-tation of heating, air conditioning, or ventilation systems; repairs
or rehabilitation of electrical or plumbing systems exclusive of new electrical appliances and electrical or plumbing fixtures; and architectural, engineering, and land surveying fees.
Allowable expenditures do not include the cost of acquisition of the Certified Historic Structure or Cer-tified Historic Residential Structure, the personal labor by the Applicant, enlargement of the Certified His-toric Structure or Certified Historic Residential Structure, or any cost associated with the rehabilitation of an outbuilding unless the outbuilding is certified by the Commission to be of historical significance.
- The tax credit is an Alabama state tax credit. The tax credit is applied toward the property owners state income tax; if the credit is greater than the tax owed, the credit comes back to the property owner as a tax refund.7. The tax credit is an Alabama state tax credit. The tax credit is applied toward the property owners state income tax; if the credit is greater than the tax owed, the credit comes back to the property owner as a tax refund.
- Applications for the 2018 cycle will be available through the Alabama Historical Commission on November 1, 2017.
Redemption of the credit occurs only after completion of the project, certified by the Alabama Historical Commission. For more information, contact Donna Castellano, email@example.com or consult the Alabama Historical Commission website at ahc.alabama.gov.