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Tax Incentives for Rehabilitation

Effective July 1, 2014, new legislation will improve the State Historic Preservation and Cultural & Entertainment District Tax Credit Program.

The Governor’s office worked with the State Historic Preservation Office, Iowa Department of Revenue, the Iowa Legislature and Governor-appointed stakeholders to develop program improvements, including:

  • Eliminate lottery-based reservation system; implement more predictable readiness-based application process
  • Elevate emphasis on project pre-planning, financing and timeline
  • Transition from three-year reservation system to a “use-when-you’re-ready” system with more predictability in establishing project completion dates and submissions
  • Retool the review process to be more predictable for the applicant and the state
  • Use similar approach to other state tax incentive programs to promote consistency for tax preparers and ease of administration

Since the program began in 2001, the state has invested $177 million in historic preservation tax credits, which have been the catalyst behind the rehabilitation of 283 historic buildings and the revitalization of 64 communities across Iowa. That investment has leveraged and attracted $890 million in investments, including $800 million for rehabilitation activities and an additional $90 million in related new construction. The new legislation will bring more predictability to this already-successful program.

Registration and Application Periods

  • The July application window has been eliminated under the new law. The new Part 1 and Part 2 Applications and Instructions are now available. The Part 3 and Registration Applications along with a sample Agreement are forthcoming.

  • UPDATE: The first Registration period for projects over $750,000 will be open from January 26 to February 6, 2015. Part 2 Applications must be approved by the State Historic Preservation Office prioir to the Registration period.

  • Effective July 1, 2014 potential program applicants must schedule and attend a 1.5 Pre-Application Meeting prior to submitting a Part 2 Application. Please use the online scheduler to arrange for your Pre-Application Meeting after you have submitted a Part 1 Application.

(Multiple program use encouraged)

The State Historic Preservation Office (SHPO) of the State Historical Society of Iowa administers the State Historic Preservation and Cultural and Entertainment District Tax Credit Program, and participates in the certification process for the Federal Historic Preservation Tax Incentives and county Historic Property Tax Exemption programs. All of these programs encourage the reuse of historic properties while retaining their character-defining features. Ultimately, each of these programs contributes to the revitalization and preservation of historic properties across the state.

Federal Historic Preservation Tax Incentives Program

20% or 10% of qualified rehabilitation costs

Description: 20% of qualified rehabilitation costs are available as a credit against federal income taxes on income-producing historic properties. Rehabilitation work on historic properties must be “substantial” (an IRS test) and meet the Secretary of the Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings. Applications and photos must be reviewed by the SHPO and be approved by the National Park Service.

Eligibility Requirements: Properties must be listed on the National Register or be evaluated as National Register eligible and then listed within 30 months after claiming the credit on IRS tax forms. (A 10% tax credit is also available for non-historic, non-residential, income-producing properties built before 1936. These properties can neither be listed on the National Register nor be a contributing resource in a National Register-listed historic district.)

Projects with QRE's over $750,000

Description: This program uses a three-part certification process similar to the Federal Historic Preservation Tax Incentives Program, but provides an additional tax benefit of up to 25% for the sensitive rehabilitation of historic buildings. The state tax credit is fully refundable and transferable. Because the Historic Preservation and Cultural and Entertainment District (HPCED) Tax Credit is currently capped at $45 million, the state program requires applicants to complete additional Registration and Agreement components in order to be eligible for the tax benefit.

Eligibility Requirements: The state tax benefit is available to non-profit entities and eligible tax payers that qualify for the federal program. Additionally, single-family residences and barns built prior to 1937 are eligible for the state tax credit. The entire rehabilitation project must meet the Secretary of the Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings.

Projects with QRE's under $750,000

Description: This program uses the same description, eligibility requirements and regulations as the program described above, but the funding is from a separate allocation reserved for small projects which have qualified rehabilitation expenditures less than $750,000.

Eligibility Requirements: In addition to the eligibility requirements for the program above, properties must have qualified rehabilitation expenditures that do not exceed $750,000. The entire rehabilitation project must meet the Secretary of the Interior’s Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings.

Temporary Historic Property Tax Exemption

4-year “freeze” on property tax increases, then 25% increase per year to adjusted value after rehabilitation.

Description: Local property tax incentive for the sensitive, "substantial rehabilitation" of historic buildings. Property taxes remain the same for four years followed by increases of 25% per year for the following four years. Two applications are required – one from SHPO and one from the county assessor.

Eligibility Requirements: Properties must be listed on or eligible for listing on the National Register, contributing to National Register or local historic districts, or designated by a county or municipal landmark ordinance.

The property must also be eligible based on the specific county's priority list for that tax year. The County Board of Supervisors will establish priorities for which an exemption may be granted and will annually designate real property in the county for a historic property tax exemption. A public meeting must be held, with notice given, at which the proposed priority list will be presented.

State Historical Society of Iowa Grants

Grant programs administered by the State Historical Society of Iowa may also be used to preserve historic properties. Find out more about State Historical Society of Iowa Grants.

The Secretary of the Interior’s Standards for Rehabilitation

To receive historic tax credits and/or grants, rehabilitation work must meet the Secretary of Interior’s Standards for Rehabilitation.

Preservation Program Manager
Department of Cultural Affairs
State Historic Preservation Office
600 E. Locust Street
Des Moines, IA 50319-0290
(515) 281-8742
SHPOTaxCredit@iowa.gov

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