Illinois Historic Tax Credits for Property Rehabilitation
Yes, Illinois offers tax incentives for rehabilitating historic properties through the River Edge Historic Tax Credit (RETC) and federal Historic Tax Credit programs.
State-Level Tax Credits
The River Edge Historic Tax Credit program offers:
- A 25% state income tax credit for qualifying rehabilitation costs
- Available in specific River Edge cities: Aurora, East St. Louis, Elgin, Peoria, and Rockford
- Property must be listed on the National Register of Historic Places or contribute to a historic district
- Minimum investment of $5,000 required
Federal Historic Tax Credit
Illinois property owners can also access the federal Historic Tax Credit program which provides:
- 20% tax credit for certified historic structures
- 10% tax credit for non-historic buildings built before 1936
- Must meet Secretary of Interior’s Standards for Rehabilitation
- Property must be income-producing (commercial, industrial, or rental residential)
Frequently Asked Questions
Q: How long must I own the property after rehabilitation?
A: The property must be held for five years after completing rehabilitation to avoid tax credit recapture.
Q: Can I combine state and federal tax credits?
A: Yes, eligible projects can utilize both state and federal credits simultaneously.
Q: What expenses qualify for the credit?
A: Qualifying expenses include architectural, engineering, construction costs, and most hard costs directly related to rehabilitation.
Q: Is there a deadline to apply?
A: Applications must be submitted before rehabilitation work begins and are reviewed quarterly.
Q: Do I need to work with specific contractors?
A: While you don’t need specific contractors, all work must meet preservation standards and be approved.
Q: What’s the minimum investment required?
A: State credits require $5,000 minimum investment; federal credits require rehabilitation costs exceeding the adjusted basis of the building.
Q: How long does the approval process take?
A: The review process typically takes 60-90 days from application submission.
The Bottom Line
Illinois historic tax credits offer significant financial incentives for rehabilitating historic properties, particularly in designated River Edge cities. When combined with federal credits, property owners can potentially recover up to 45% of qualified rehabilitation costs. However, projects must strictly adhere to preservation guidelines and undergo thorough review processes. Consulting with preservation experts and tax professionals before starting any rehabilitation project is strongly recommended.