In a recent musical retrospective piece, Drake exclaims "[w]e started from the bottom, now we're here!" He reminds us how important it is to stop and think about how far we have come. In a similar vein, the Alabama, Virginia and West Virginia state legislatures are reviewing their historic rehabilitation tax credits with an eye to the future. Like Drake looks over his life and accomplishments in his song, these states are reviewing the purposes, goals and results of these credit programs as a way to measure their effectiveness and how far they have come.
Generally, historic rehabilitation tax credits provide taxpayers an incentive to purchase, restore and put historic properties to use. The goal of historic rehabilitation credits is often twofold: preserving history and creating jobs. Although the focus of these credits is usually on commercial property, historic rehabilitation credits are often times also available to individuals for personal residences. The federal government and about two-thirds of states offer a historic rehabilitation tax credit.
In Alabama, the credit may be in line for a resurrection this year, according to an article from AL.com. After May 15, 2016, applications for the state’s historic rehabilitation credit were no longer being accepted, signaling the end of the program. Although an extension of the credit was proposed in 2016, it did not pass the state’s legislature, according to the article.
However, a recent evaluation of the program conducted by the University of Tennessee has many expecting the credit to make a comeback, the article stated. The resulting report gave Alabama’s historic rehabilitation credit generally good reviews, but also highlighted areas were future iterations of the program can be improved.
While the discussion of bringing back the credit is going on in Alabama, Virginia is instead focused on keeping its credit.
Recently, S.B. 1540 was unable to make it out of committee in the Virginia Senate. This bill would have placed several limitations and phase-out provisions on a handful of the state’s tax credits. Although the historic rehabilitation credit was one of multiple credits being effected by the proposed bill, it was the star of the show, according to the Richmond Times-Dispatch. More than a dozen different lobbyists came together to oppose the bill.
In West Virginia tax credits for historic rehabilitation are facing a different issue—their supporters want to raise the amounts available. Credit advocates recently hosted a forum to both promote the credit and urge the state’s lawmakers to increase it, according to The Fairmont News.
Currently the credit is equal to 10 percent of qualified rehabilitation expenditures. Proponents of raising the credit want to see that more than doubled, arguing that it will bring West Virginia more in line with surrounding states, according to the article.
Legislators in these states have a lot to consider when deciding on the future of their state’s respective historic rehabilitation tax credits. However, when looking to the future it is always helpful to know where you started.
*Continue the discussion on Bloomberg BNA's State Tax Group on LinkedIn: Should states continue to offer historic rehabilitation tax credits?
For more information about tax credits, check out Bloomberg BNA’s Credits and Incentives Portfolios by signing up for a free trial of the Bloomberg BNA Premier State Tax Library today.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)