The PHMC, serving as the State Historic Preservation Office, administers the federal Rehabilitation Investment Tax Credit (RITC) program in partnership with the National Park Service (NPS) and the Internal Revenue Service (IRS). The tax credit program is one of the most successful and cost-effective programs that encourage private investment in rehabilitating income producing, historic properties such as office buildings, rental housing, hotels, bed and breakfasts, and retail stores. Since the inception of RITCs in 1976, Pennsylvania has been a national leader in certified tax credit projects, completing over 2,194 projects and generating over $3.9 billion in private reinvestment back into Pennsylvania communities.
We also assist with the charitable contribution deduction, which is a donation of the value of a historically important land area or certified historic structure and is available to owners of income-producing properties as well as private residences. We provide property owners with application forms, instructions, publications, and technical assistance for the appropriate treatment of historic buildings according to the Secretary of the Interior's Standards for Rehabilitation. Many of these documents can be downloaded below or are available through various links.
On July 2, 2012, Pennsylvania became the 30th state in the country to offer a state historic tax credit when Governor Tom Corbett signed HB 761 (an amendment to the Tax Reform Code) and enacted Act 85 (See page 103) that established the Historic Preservation Incentive Act. This tax credit will be a companion to the federal tax credit program. The Pennsylvania Historical and Museum Commission and the Department of Economic and Community Development will develop the program guidelines. The credit goes into effect July 1, 2013. At the outset, the program is limited to $3 million annually with an individual project cap of $500,000. For more infomration on the legislation, please visit Preservation Pennsylvania's website.
For more information on the tax credit program or to confirm the status of your project, please contact Scott Doyle at (717) 783-6012 or firstname.lastname@example.org or Karen Arnold at (717) 783-9927 or email@example.com.
Rehabilitation Investment Tax Credit (RITC)
RITCs are the most widely used incentive program. Certain expenses incurred in connection with rehabilitating an old building are eligible for a tax credit. RITCs are available to owners and certain long term leases of income-producing properties. There are two rates - 20% for a historic building and 10% for a non-historic building, with different qualifying criteria for each rate.
To be eligible for the 20% Tax Credit:
- The building must be listed on the National Register, either individually or as a contributing building within a National Register Historic District, or be a contributing building to a Certified Local District (a locally designated historic district that has been certified by the National Park Service).
- Building must be used for income producing purposes, for example office, retail, residential rental, bed and breakfast, and light manufacturing uses. The building must be a depreciable building and not used as a private residence.
- Rehabilitation work itself must be undertaken according to the Secretary of the Interior's Standards for Rehabilitation.
- The project must meet the "substantial rehabilitation test." This test is where the amount of money to be spent on the rehabilitation must exceed the adjusted basis of the building or $5,000, whichever is greater. Generally, projects must be finished within a 24-month period.
- After rehabilitation, the building must be owned by the same owner and operated as an income producing property for five years.
Two government agencies, the State Historic Preservation Office (SHPO) and the National Park Service (NPS), must review the project. In Pennsylvania, the Bureau for Historic Preservation of the Pennsylvania Historical and Museum Commission serves as the SHPO. The owner submits the application form to the SHPO. The project is reviewed and passed on to the NPS for their review and comment and final certification decision.
The application is a three part process. Part 1 documents the building as a certified historic structure and one that is eligible to receive the tax credit. Buildings that are individually listed in the National Register of Historic Places are automatically designated as "certified historic structures." If a building is located within a National Register Historic District, a Part 1 must be submitted. Part 2 explains the scope of the rehabilitation work and should be filed before work begins. Part 3, a Request for Certification of Completed Work, documents the completed work and is proof (for the IRS) that the rehabilitation is "certified." The application is substantiated by "before" and "after" photographs and plans. The SHPO provides ongoing technical assistance throughout the application process and encourages early communication with their office.
Additional information, tax application forms, and instructions are available from the Bureau for Historic Preservation upon request. As with any tax law, there are restrictions which may affect your ability to make use of these tax benefits, particularly Passive Activity rules and Alternative Minimum Tax rules, so you should seek the advice of a tax accountant.
If you plan to download application information, it is highly suggested that you download all of the information that is highlighted in the dark red and indicated by the asterisks (*). The Fact Sheet gives you a brief overview. The Application is downloaded from the National Park Service Web site. The Additional Instructions provide additional information on how to complete the application and submit it to our office and the Secretary of the Interior's Standards for Rehabilitation are used by our office to evaluate the applications.
REVISED HISTORIC PRESERVATION CERTIFICATION APPLICATION:
The PHMC was notified by Technical Preservation Services of the National Park Service that the fillable PDF version of the Historic Preservation Certification Application, revised 2011, is now available. Copies of the forms are attached and are also available on the TPS website at www.nps.gov/tps/tax-incentives/application.htm.
Applicants will be able to type directly into the forms and save the information. Please note that the narrative boxes on the Part 1, Part 2, and amendment forms are limited, not expandable. Applicants and consultants who have developed their own versions of the narrative pages and continuation sheets beyond the cover sheets may continue to use their versions.
PA SHPO staff was instructed not to accept applications on the old forms after December 31, 2011. Please use the new cover sheets for all future submissions, including new Part 2 Amendments and Part 3’s for your current projects.
If you have any questions about these forms, please contact the PA SHPO tax credit review staff.
Tax Credit Assistance
Amendments to Completed Projects (PDF, 9 KB)
Amendments to Current Projects (PDF, 11 KB)
Certification of Phased Projects (PDF, 119 KB)
Lead Paint Guidance (PDF, 21 KB)
Link to IRS Tax Credit Page
Link to NPS Tax Credit Page
Sample Work Description (PDF, 14 KB)
Secretary of the Interiors Standards for Rehabilitation* (PDF, 1.2 MB)
Supplementary Instructions* (PDF, 540 KB)
Tax Credit Application*
Tax Credit Fact Sheet* (PDF, 100 KB)
Technical Preservation Services at NPS
Window Replacement Guidance (PDF, 1.5 MB)
To be eligible for the 10% Tax Credit:
1. The building must be built before 1936 and be non-historic - that is, not listed on the National Register, either individually or as a contributing building within a district, or it has been determined eligible for listing in the National Register of Historic Places.
2. Building cannot be used for rental residential purposes.
3. A building must meet the Wall Retention Requirement:
a. 50% or more of the building’s external walls remaining as exterior walls
b. 75% or more of the building’s external walls retained as exterior or interior walls
c. 75% or more of the building’s internal structural framework remaining in place
4. The project must meet the "substantial rehabilitation test," where the amount of money to be spent on the rehabilitation is greater that the adjusted basis of the building and is at least $5,000. Generally, projects must be finished within a 24 month period.
5. After rehabilitation, the building must be owned by the same owner and operated as an income producing property for 5 years.
There is no application for the 10% credit, and rehabilitation work is not subject to review by any state or federal agency. If the building is located within a National Register Historic District, then an owner cannot apply for the 10% credit. He/she must apply for the 20% credit. If the above criteria are met, the 10% rehabilitation credit can be claimed as an investment credit on an owner's federal income tax return.
Charitable Contribution Deduction
The charitable contribution deduction is taken in the form of a conservation easement and enables the owner of a "certified historic structure" to receive a one-time tax deduction. A conservation easement usually involves the preservation of a building's facade by restricting the right to alter its appearance. If you would like to see your building preserved for future generations and/or you could benefit from a significant tax deduction, a conservation easement is something to consider. Qualified professionals should be consulted on the matter of easement valuations and the tax consequences of their decision.
To be eligible for the charitable contribution deduction:
- The property must be listed in the National Register of Historic Places, either individually or as contributing building within an historic district. Buildings that are individually listed are automatically designated as certified historic structures. Buildings within National Register historic districts must have a Part 1 application reviewed by the SHPO and certified by the NPS.
By submitting materials with respect to state or federal historic preservation programs administered by the Pennsylvania Historical and Museum Commission (PHMC), you grant to the PHMC the rights to:
- use the materials for education and promotional purposes and to promote the mission of the PHMC;
- publish the materials on the PHMC Web site; and
- make the materials available to researchers and scholars.