July 30, 2013

Historic Tax Credits

There has been much in the news recently about the fate of the Missouri Historic Tax Credit Program. As it turns out, the Missouri legislative session that ended on May 17, 2013, failed to take action on a pending bill which would have reduced the state-wide historic tax credit cap from $140 million to $90 million. Many felt such a reduction would have caused significant harm to St Louis’s continuing efforts to revitalize historic buildings. The Missouri Historic Tax Credit Program, along with the Federal Historic Preservation Tax Incentive Program, promotes private sector rehabilitation of historic buildings and economic development.

Following are some of the basic program guidelines: 

Eligibility of a structure for the Missouri program requires that it be individually listed on the National Register of Historic Places, be a contributing structure in a National Register historic district, or be in a local historic district certified by the U.S. Department of the Interior. Renovation costs must be 50% or more of the acquisition cost of the property, and the renovation plans must also be approved by the Missouri State Historic Preservation Office.

The Missouri program tax credit is equal to 25% of the eligible costs of the renovation. These credits can be used to offset Missouri income tax liability in the year issued, carried back 3 years, or carried forward 10 years. The credits can also be sold or exchanged by eligible applicants.

The Missouri Department of Economic Development (MODED) has established specific guidelines governing the eligibility of project costs, and the issuance of the related tax credits.  If total project costs (excluding acquisition) are less than $250,000, the applicant must engage a CPA to compile the list of project expenditures in the format specified by MODED.  If total project costs are $250,000 or more (excluding acquisition), a CPA licensed in the State of Missouri must be engaged to audit the list of project expenditures, and certify all costs adhere to program guidelines.

The Missouri Historic Tax Credit Program continues to provide a valuable incentive for the redevelopment of both commercial and residential historic structures. If you are considering a project of this nature, be sure to contact an Anders adviser for assistance.

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