Alabama Historic Tax Credits for Property Rehabilitation
Yes, Alabama offers valuable tax credits for rehabilitating historic properties through the Alabama Historic Rehabilitation Tax Credit Program. Here are the key details:
Available Tax Credits:
- Up to 25% of qualified rehabilitation expenses for certified historic structures
- Maximum credit of $5 million for commercial properties
- Maximum credit of $50,000 for residential properties
- Annual program cap of $20 million through 2027
Eligibility Requirements:
- Property must be listed in or eligible for the National Register of Historic Places
- Located within Alabama
- Rehabilitation must meet Secretary of Interior’s Standards
- Minimum investment of $25,000 for residential properties
- Commercial projects must exceed 50% of purchase price or $25,000
Frequently Asked Questions
Q: How do I apply for the tax credit?
A: Submit Part A application to the Alabama Historical Commission before starting work.
Q: Can I combine state and federal tax credits?
A: Yes, eligible commercial projects can use both 20% federal and 25% state credits.
Q: How long do I have to complete the rehabilitation?
A: Projects must be completed within 24 months of approval.
Q: Are there holding requirements?
A: Yes, you must maintain ownership for 3 years after claiming the credit.
Q: Can I sell or transfer the credits?
A: Yes, credits can be transferred to other taxpayers.
Q: What expenses qualify?
A: Most hard construction costs for rehabilitation qualify, but new additions do not.
Q: When are credits awarded?
A: Credits are awarded on a first-come, first-served basis when Part A applications are approved.
The Bottom Line
Alabama’s historic tax credit program provides significant financial incentives for rehabilitating historic properties. While the application process requires careful planning and documentation, the potential 25% credit can make restoration projects more financially viable. Consulting with preservation experts and tax professionals is recommended before undertaking a historic rehabilitation project.