Pennsylvania Offers New Historic Preservation Tax Credit
Pennsylvania has recently established a historical tax credit for qualifying rehabilitation expenditures for commercial buildings, including rental housing, located in historic districts. In doing so, Pennsylvania joins 29 other states that have already enacted legislation that allows for a credit similar to the popular Federal Historic Preservation Tax Incentives Program. The Pennsylvania Historic Preservation Incentive Act was signed into law on July 2, 2012, and becomes effective July 1, 2013. The credit encourages both short-term and long-term job creation as these buildings are income-producing in nature. In addition, property values will increase, which will provide additional revenues for localities through real estate taxes.
The Act will provide for a 25% credit against state income tax, and can be used in conjunction with the federal tax credit. The credit is issued after the project is complete, similar to the federal program. Unused tax credits can be carried forward for up to seven years. For a building to be considered located in a historic district, it must be listed on the National Register of Historic Places or locally designated as a historic district.
The credit will mostly likely be very competitive at first as the total annual credit limit for the program is $3,000,000. Additionally, no project is eligible to receive more than $500,000 in any given year. The bill also provides for equitable distribution of the credits across Pennsylvania in order to avoid Philadelphia and Pittsburgh applicants from receiving all of the available credit. Applicants must file with the Pennsylvania Department of Community and Economic Development on or before February 1st of each year to report qualified expenditures incurred in the prior calendar year or to be incurred in the current year.
Between now and the commencement of the program, the Pennsylvania Historical and Museum Commission and the Department of Economic and Community Development will work on developing detailed guidelines for the program. If you have questions concerning this article, please feel free to contact McKonly & Asbury’s State and Local Tax Group (Mike Eby at [email protected] or Jason Skrinak at [email protected]).
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