Historic and Neighborhood Preservation Tax Credit Services
The Federal Historic Preservation Tax Incentives program encourages private sector rehabilitation of historic buildings and is claimed to be one of the nation's most successful and cost-effective community revitalization programs. It generates jobs and creates housing in historic buildings. The program is administered by the National Park Service and the Internal Revenue Service in partnership with State Historic Preservation Offices. In Missouri, a state rehabilitation tax credit incentive is available for projects that qualify. According to the Missouri Department of Natural Resources and the National Park Service, in 2007 Missouri ranked first in the nation with 189 federal historic rehabilitation tax credit projects completed and almost $535 million in up-front investment in labor and materials for these projects.
Schowalter & Jabouri, P.C. and Preservation Tax Credits: For all projects with a total project cost less than $250,000, the applicant must engage a CPA to prepare the expenditures list using the prescribed form and must submit the invoices and proofs of payment for the CPA to compile. For all projects with a total project cost of $250,000 or greater, a CPA licensed in the state of Missouri must perform an examination.
Schowalter & Jabouri, P.C. can assist individual home owners, developers or other organizations with these services. Our team of tax credit specialists will review your itemized project costs along with your invoices, disbursement records, closing statements and other supporting documentation to verify that the information meets the Missouri Department of Economic Development's requirements. We have been working with employees at the Missouri Department of Economic Development (DED) for more than five years on projects ranging from small single family rehabs to multi-building mixed use projects. Our breadth and depth of experience ensures you will get cost effective service. Our team will identify and notify you of any potential issues prior to completing your final forms for submission to the DED.
Or are you looking just to purchase credits that are available? Because of the work we do in this area and our contacts, we can help you find state tax credits that are available for purchase.
Before you start your tax credit rehabilitation project, don't forget to apply early, research the guidelines available on the DED's website and seek the advice of a qualified tax professional. Schowalter & Jabouri, P.C. is available to assist you with your accounting, examination and tax needs during all phases of your project.
Tax Credits for Historic Preservation: Federal law provides an investment tax credit equal to 20 percent of approved costs for qualified rehabilitation of certain historic buildings for income-producing use. Missouri law provides an investment tax credit equal to 25 percent of approved costs associated with qualified rehabilitation made after January 1, 1998. Homeowners as well as commercial developers can qualify for the state credit. The state credits are administered by the Community Development Division of the DED. The State Historic Preservation Office is responsible for reviewing and approving rehabilitation work for the state credits.
The federal and state credits can be used in combination for the rehabilitation of commercial or income-producing properties. Rehabilitation of non-income producing residential properties qualifies for the state credits only. The federal tax credits can be carried back one year and forward 20 years or until the credit is exhausted. The state tax credits can be carried back three years and forward 10 years. The credits are to be claimed against the taxes imposed pursuant to §143 and §148 RSMo, except for §143.191 to §143.265, RSMo. In addition, the state tax credits may be transferred, assigned or sold.
Tax Credits for Neighborhood Preservation: The Missouri Neighborhood Preservation Act was passed during the 1999 Missouri General Assembly and became effective January 1, 2000. The law's intent is to aid in the rehabilitation and new construction of homes in certain census blocks in the state of Missouri. The DED is responsible for the administration and issuance of tax credits under this program.
There are three types of credits available. For rehabilitation, there is a 25 percent tax credit on a minimum expenditure of $10,000 in Level 1 neighborhoods and $5,000 in Level 2 neighborhoods. For substantial rehabilitation, a 35 percent tax credit on a minimum expenditure of 50 percent of the base value of the property is available in neighborhoods below 70 percent of Metro Area Median Income. For new construction, there is a 15 percent tax credit. Each type of credit has additional requirements that need to be met in order to qualify for the credit. The tax credits may be applied to the past three years of tax returns and to the next five years of tax returns. In addition, the tax credits may be transferred, assigned or sold.