What are Historic Tax Credits?
Historic tax credits are an important tool and potential source of equity for congregations seeking to undertake large capital projects. HTCs typically represent 20% to 40% of rehabilitation costs (hard and some soft costs) depending on the location and the use of the building. Applications are typically reviewed and approved before construction begins, and credits are awarded once construction has been completed.
Eligibility Requirements
To qualify, projects must meet three criteria:
- Historic Designation: The building must be listed in the National Register of Historic Places. (Some states allow credits for buildings listed in a state historic register.)
- Minimum Investment: Qualified Rehabilitation Expenses (QRE) must exceed a minimum threshold. See chart below.
- Appropriate Rehabilitation: The project must follow design guidelines that protect the building’s historic character.
How Can a Nonprofit Use HTCs?
Certain states allow nonprofit entities to apply for and then transfer their state HTCs. This option is currently available in nine states: CO, DE, IA, KS, KY, MO, TX, VT, and WI.
Does Our Building Qualify?
- Yes, most likely, if it is listed in the National Register or a state historic register.
- If not on a historic register, it may still be eligible if:
- The building is more than 50 years old, and
- It retains its historic features, particularly on the building’s exterior.
What Type of Work Is Eligible?
Historic Tax Credit projects can include a wide range of exterior and interior building improvements, including:
- Masonry cleaning and repointing
- Wood repair and painting
- Roof repair/replacement
- Structural repairs
- Window repair or replacement, including repair of decorative windows
- Accessibility updates
- Building systems updates
- Building code-related updates
- Updates to secondary spaces, such as offices, classrooms, social halls, etc.
What Work Does Not Qualify?
While the program provides flexibility, certain modifications may affect a project’s eligibility for HTCs, including:
- Extensively subdividing sanctuary or assembly spaces
- Removing decorative windows
- Lowering ceiling heights in historic spaces
- Demolishing part of the historic building or complex
- Constructing large new additions to the historic building or complex
Considering improvements to your historic religious property? Contact Heritage Consulting Group to discuss your project: 215-248-1260 or info@heritage-consulting.com.
State Historic Tax Credit Programs for Nonprofits
| State | % of Qualified Rehabilitation Expenditures Covered by HTC | Max. HTC | Min. Investment | Transfer Mechanism |
|---|---|---|---|---|
| Colorado | 20–35% depending on size of project and location | $1M | $20,000 | Transferable |
| Delaware | 30% (nonprofits) | No max | $5,000 | Transferable to a DE taxpayer or to a bank |
| Iowa | 25% | No max | Lesser of 50% adjusted basis or $50,000 | Transferable or refundable |
| Kansas | 40% | No max | $5,000 | Transferable |
| Kentucky | 20% | $10M | Greater of $20,000 or 100% adjusted basis | Transferable or refundable |
| Missouri | 25–35% depending on location | No max | 50% of purchase price | Transferable |
| Texas | 25% | No max | $5,000 | Transferable |
| Vermont | 10–50% depending on scope | Varies by scope | $5,000 | Transferable to VT banks or insurance companies |
| Wisconsin | 20% | $3.5M | $50,000 | Transferable |
State Historic Tax Credit program rules and requirements are frequently updated. Please verify current program details with Heritage Consulting Group or your State Historic Preservation Office prior to starting a project. Federal HTCs are not directly available to nonprofit entities.
