Federal Historic Tax Credit Program
Since this program began, more than 43,328 projects have been rehabilitated across the country, generating over $89.97 billion in private investment in historic buildings nationwide. In Tennessee, buildings of almost every type imaginable have benefited from the Federal Historic Tax Credit (HTC) program, from Bed and Breakfasts and hotels and shotgun houses to large-scale business developments. Today, over 1,000 buildings in Tennessee have been rehabilitated using the ITC program, generating over $1 billion in investments in Tennessee's historic buildings.
The recent webinar by the National Trust for Historic Preservation's Preservation Leadership form titled "Coronavirus Response: The Historic tax Credit as an Economic Recovery Tool" showed how beneficial the Historic Tax Credits are.
Above: Two work-in-progress HTC projects in Memphis. Left is the Crosstown Concourse, a multi-use rehab in a former Sears distribution center. Right is Clayborn Temple, an important building in the 1968 sanitation strike. It will also be a multi-use facility. Below: Left is an image from the August issue of Traditional Building, which has a full page add for lighting in Knoxville's Tennessee Theater. The property was listed in the National Register as the Burwell Building Tennessee Theater in 1982 and owners took advantage of the ITC in 2005. The theater is now a vibrant part of downtown Knoxville. Right is a photograph from the 1982 National Register nomination.
There is a 20% HTC for certified historic structures. In order to become certified, projects must be reviewed by the State Historic Preservation Office and the Technical Preserevation Services division of the National Park Service (NPS). Applicants should contact the Tennessee Historical Commission (THC) before starting a project.
Also, the building must be individually listed in the National Register of Historic Places, or listed as a contributing building within a National Register Historic District. The rehabilitation project must meet the "substantial rehabilitation test," which means you must spend the adjusted value of the building or $5000, whichever is greater. The figure is derived by subtracting the value of the land from the cost of the building and land together.After rehabilitation, the structure must be income producing for five years (commercial, rental, B&B).The rehabilitation must meet The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitation of Historic Buildings.
NOTE: On December 22, 2017, Public Law No. 115-97 amended the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Section 13402 changed the ITC and repealed a 10% credit for non-historic buildings. There will be a transition rules and the amended law may affect a taxpayer's ability to take advantage of the HTC. Property owners interested in the HTC are strongly advised to consult an accountant, tax attorney, legal counsel, or the Internal revenue Service regarding changes to the law.
The THC does not give tax advice.
Examples of rehabilitation projects using the Investment Tax Credit program:
- Nineteenth Century Club/Rowland J. Darnell House, Memphis
- Fire Hall for Engine Company No. 18, Nashville
- Farmers Exchange, Johnson City
- Jackson Terminal, Knoxville
- James Lee House, Memphis
- Municipal Public Works Garage/Bus Barns, Nashville
- Hotel Chisca, Memphis
- Newcomers Pharmacy, Knoxville
For additional general information on the HTC program, see the NPS web-site at https://www.nps.gov/tps/tax-incentives.htm
ALERT! NPS is now requiring all HTC certifications applications to be submitted on new forms. Please contact our office for the new required forms. Also, we can now review applications digitally before they are submitted on paper. The cover sheet of each part must be the updated NPS-provided form and must bear the applicant’s original signature and two signed copies of each form must be submitted to THC. As in the past, applicants and consultants who have developed their own versions of the narrative pages that follow the cover sheets may continue to use their versions.
To receive an application and instructions for the HTC program: