Federal Historic Tax Credit Program
Since the federal historic tax credit program began, more than 50,000 projects have been rehabilitated across the country, generating nearly $100 billion in private investment in historic buildings nationwide. In Tennessee, buildings of almost every size and type imaginable have benefited from the Federal Historic Tax Credit (HTC) program, including bed and breakfasts, hotels, shotgun houses, former hospitals, and factory and mill complexes. Today, over 1,000 buildings in Tennessee have been rehabilitated using the ITC program, generating over $1.5 billion in investments in Tennessee's historic buildings.
The program provides a 20% historic tax credit for certified historic structures. In order to become certified, projects must be reviewed by the State Historic Preservation Office and the Technical Preservation Services division of the National Park Service (NPS). Applicants should contact the Tennessee Historical Commission (THC) before starting a project.
The rehabilitation project must meet the "substantial rehabilitation test," which means the applicant must spend the adjusted value of the building or $5000, whichever is greater. The figure is derived by subtracting the value of the land from the cost of the building and land together. After rehabilitation, the structure must be income producing for five years (commercial, rental, B&B). The rehabilitation must meet The Secretary of the Interior's Standards for Rehabilitation the Treatment of Historic Properties. The building must be individually listed in the National Register of Historic Places, or listed as a contributing building within a National Register Historic District. The first step is to have the building certified as historic with the Part 1 application. NPS requires current photos, existing plans with a photo key, and a description of the current state of the building and why it is significant and contributes to the historic district. The next step is Part 2 which describes the rehabilitation and requires a description of the scope of work and how it will meet the Secretary of the Interiors Standards. NPS requires two copies of all applications/photos/plans to be printed and mailed to our office. Please email Holly Barnett a draft for review before printing.
More detailed guidance about the process is here.
The THC does not give tax advice.
NOTE: On December 22, 2017, Public Law No. 115-97 amended the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses. Section 13402 changed the ITC and repealed a 10% credit for non-historic buildings. There will be a transition rules and the amended law may affect a taxpayer's ability to take advantage of the HTC. Property owners interested in the HTC are strongly advised to consult an accountant, tax attorney, legal counsel, or the Internal revenue Service regarding changes to the law.
The recent webinar by the National Trust for Historic Preservation's Preservation Leadership form titled "Coronavirus Response: The Historic tax Credit as an Economic Recovery Tool" showed how beneficial the Historic Tax Credits are.
Above: Two work-in-progress HTC projects in Memphis. Left is the Crosstown Concourse, a multi-use rehab in a former Sears distribution center. Right is Clayborn Temple, an important building in the 1968 sanitation strike. It will also be a multi-use facility. Below: Left is an image from the August issue of Traditional Building, which has a full page add for lighting in Knoxville's Tennessee Theater. The property was listed in the National Register as the Burwell Building Tennessee Theater in 1982 and owners took advantage of the ITC in 2005. The theater is now a vibrant part of downtown Knoxville. Right is a photograph from the 1982 National Register nomination.
To receive an application and instructions for the HTC program: