Starting a historic rehab project can be daunting, and with significant requirements to meet to qualify for Historic Tax Credits (HTC), choosing the right contractor can make the process much easier. Selecting a contractor with historic project experience can offer helpful knowledge in many areas of the project.
How Experienced Historic Tax Credit Contractors Can Help Your Project
Contractors who have worked on HTC projects before know how to craft the appropriate invoices. If they are not familiar with the program, the contractor may draft very generic invoices that lack the proper detail to be eligible for HTC. For example, if the contractor framed out a specific room, they may just have an invoice description of “framing”. For a historic project, the DED requires a specific description of what was done, such as, “framing of master bedroom on second floor.”
Asking a contractor to revise their invoice or provide more detail months after they performed their work if they are not familiar with the process can be a headache. If a timely response is not provided, your expense may potentially be disallowed for the credit.
Knowledge of Program Requirements
HTC-experienced contractors understand the various and assorted requirements for certain types of windows, doors, colors, and respect the importance of these rules. You have to adhere to specific guidelines during a historic rehab, so having a contractor on your side that knows the ropes makes things a lot easier.
Thorough Record Keeping
Contractors familiar with historic projects generally appreciate the record keeping requirements, and can be very helpful in building a complete and thorough support file. It’s a lot easier to request the detail on the invoices and a lot easier to follow up with them with questions if they understand the process and why you are asking them to go above and beyond what they may normally do.
Your contractor must be properly registered to do business in the state of the project. The state can disallow expenses if the contractor is not up to date on their state filings or registered to do business. The state will vet each contractor, and if they are not registered it’s your responsibility to go back to the contractor and have them update their state information. This creates a lot of work on the contractors end, which could result in the work not being done. Be sure to verify with your contractors that they are properly registered before you begin work.
As CPAs and advisors, we do not imply we can judge the quality of work of certain contractors. Contractors that are familiar with the program though and have worked on HTC projects can help you efficiently move through this process. If you have any questions on selecting a contractor or reaping the benefits of historic tax credits, please contact an Anders advisor.All Insights